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Finance row risk to Olympic upgrades
Dick Murray25.08.09
A row over the cost of the next stage of the Tube modernisation could prevent large-scale improvements being ready for the London Games.
Transport for London and private contractor Tube Lines are locked in negotiations over the value of Tube Lines' second seven-and-a-half-year contract to continue modernisation of the Jubilee, Northern and Piccadilly lines.
TfL only wants to pay £4.1billion - but Tube Lines says it needs £7.2billion. An independent arbiter says the final figure is likely to be between £5.1 and £5.5billion.
This would create a massive financial headache for TfL, which has seen passenger numbers and fare revenue slump in the recession, and mean that upgrades are scaled back. Plans to refurbish Tube stations every seven and a half years have already slipped to every 10 years.
A TfL spokesman said the row, which has to be resolved by June, would not impact on the main upgrades for services to the Olympic Park in Stratford, which include extensions to the East London line and Docklands Light Railway, and more capacity on the Jubilee line.
But the collapse of the Tube's other maintenance firm Metronet in 2007, which had debts of £2billion, means that money is no longer available for certain upgrades. Some 51 station upgrades have been shelved until TfL can find new sources of income.
Richard Parry, LU managing director, said: "The legacy of inheriting programmes that were overspent and behind schedule has hit us hard. But we've taken steps to deal with this, removing £2.5billion of projected costs from these programmes going forward by making sensible changes to the scope and timing of work by re-tendering contracts that did not provide the greatest value for money and by removing the duplication of roles."
Mr Parry's report found the improvements to the Victoria line were progressing well since being brought in-house after Metronet's collapse.
