Angry contractors condemn “completely unnecessary” decision to scrutinise £7bn refurbishment.
MPS are launching an inquiry into the government’s preferred method of funding the £7bn renovation of London Underground.

It is understood that the powerful DETR transport select-committee, which will start taking evidence on 5 April, will seek to establish if alternatives to a public-private partnership offer better value.

The move has increased fears among contractors bidding for Tube work that the government may abandon the PPP. A spokesperson for bidding consortium Metronet, which includes Balfour Beatty and WS Atkins, reacted angrily.

“We see absolutely no point in this inquiry. We have no intention of going to it and we will not be submitting evidence to it. It is a completely unnecessary exercise.”

A committee insider said: “It has the potential to be very embarrassing for the government if the committee find that PPP isn’t a good performer.”

However, a spokesperson for the DETR played down its significance. He said: “If the committee decides to look at something, it can. But as far as government is concerned, the PPP is going ahead.”

It is understood that the committee has begun taking written evidence from interested parties, although it is not yet clear if it will seek evidence from bidders.

A source at one of the consortia said: “We’ve always been concerned about the government’s commitment to PPP and this news is bound to make us more nervous.

We see no point in this inquiry and we will not be submitting evidence to it


“The PPP looks less attractive to government ever since it became tied into the mayoral election.”

Another insider said: “The committee could pose real problems for the government because the bids for the deep lines are being decided around the same time as the London mayoral election. The committee could really bring political pressure to bear at the worst time.”

Mayoral race favourite Ken Livingstone is opposed to the PPP.

Bill Tallis, head of the Major Contractors Group, said: “I am concerned that the decision could be made on political grounds instead of financial sense. Private investment has played a very positive role in other public sector areas and can do the same for the Underground.”

The government also announced this week that unsuccessful bidders would be eligible for compensation under certain circumstances.

In a parliamentary answer, DETR junior minister Keith Hill said London Underground would make payments of up to £1m if the government scrapped PPP and if costs were incurred by an unsuccessful bidder after the client required offers with committed finance.

One contractor said: “The average bid is costing £5m-8m – I don’t see £1m making any difference.”