London Underground PPP

The London underground PPP has been criticised already at an early stage for its high costs and high profits for the private partners. In the end, the PPP was ended when the consortiums were bought by London's public transport company.

Key issues

expensive preparation
little risk transfer
overpriced project
unambitious performance standards
price increases

Initial concerns about the PPP centred on its complexity (the PPP contracts comprised 135 separate contract documents with more than 2,800 pages of contract terms), safety implications, high cost, unambitious targets and high profits for the consortiums with very little risk involved.

In 1998 the UK Government proposed to modernise the London Underground using a PPP, and in 2002 and 2003 London Underground Limited signed three 30-year agreements with the Tube Lines and Metronet consortiums for the maintenance and renewal of the lines.

The deal was backed by loans worth EUR 1.3 billion from the European Investment Bank. London Underground Ltd. operated the transport system, while the engineering consortiums were responsible for modernising the infrastructure.

Initial concerns about the PPP centred on its complexity (the PPP contracts comprised 135 separate contract documents with more than 2,800 pages of contract terms), safety implications, high cost, unambitious targets and high profits for the consortiums with very little risk involved.

However, in spite of the apparently easy ride for Metronet and Tube Lines, in 2007 Metronet went into administration and the publicly owned Transport for London took over its contracts. In 2009 Tube Lines too had a funding shortfall for its works and requested additional public money, and in May 2010 it was announced that Transport for London was also buying out Tube Lines, thus effectively ending the PPP.

The colossal failure of the London Underground PPP has been examined in depth by various people, some of whom foresaw problems from an early stage. Among the resources on the topic are the following:

House of Commons Transport, Local Government and the Regions Select Committee
Second Report: London Underground
5 February 2002


Christian Wolmar
Down the tube: the battle for London's Underground
Aurum Press, November 2002


National Audit Office
London Underground PPP: Were they good deals?
Report by the Comptroller and Auditor General HC 645 Session 2003-2004: 17 June 2004


House of Commons Transport Committee
The Performance of the London Underground: Sixth Report of Session 2004–05, (pdf)
18 March 2005


House of Commons Committee of Public Accounts
London Underground Public Private Partnerships, Seventeenth Report of Session 2004–05 (pdf)
31 March 2005


House of Commons Transport Committee
The London Underground and the Public–Private Partnership Agreements, Second Report of Session 2007–08 (pdf)
25 January 2008


House of Commons Transport Committee
Update on the London Underground and the public-private (PPP) partnership agreements, Seventh Report of Session 2009–10 (pdf)
26 March 2010


Louise Butcher
London Underground PPP: background (pdf)
Standard Note: SN1307, House of Commons Library
updated 16 January 2012