Private sector can carry the burden

Christian Wolmar's article about our public-private partnership plans for London Underground (Special Supplement, 14 February) is flawed. He ignores PricewaterhouseCoopers' recent report that showed that the PPP could save about £4.5 billion over a public-sector bond-financed alternative. He argues that the public sector could finance projects and the private sector manage them. But it is only through the packaging of finance and project management - making the private sector responsible for overrun and maintenance costs - that the PPP will deliver the efficiencies that London Underground needs.

The overall cost of borrowing will be less because less will have to be borrowed. Under the PPP, London Underground will concentrate on the job of running trains, signals, station and safety. The private sector will bring its expertise to bear in building a better infrastructure. The PPP will keep London Underground in public ownership and focused on serving passengers.

Wolmar suggests that the potential need for subsidy is the killer point. This is nonsense. We have always made clear that we shall address any need for subsidy when we have seen the PPP bids. A point he misses is that without the PPP the mayor would need even more subsidy to bring the network up to scratch. If the Jubilee Line extension had been financed by a £2-billion mayoral bond, Londoners would now face a bill for the £1.5-billion cost overruns. The PPP is designed so that the private sector bears the risk of cost overrun, and therefore has the incentive to keep to budget.

Keith Hill MP
Parliamentary under-secretary of state,
Department of the Environment, Transport and the Regions

I was disappointed by what appeared to be a rather complacent attitude towards the state of our railways shown by Lord (Gus) Macdonald. An "airline system" is all very well for long-haul flights, but entirely inappropriate for a day trip by rail from, say, Liverpool to Nuneaton. The potential rail traveller has an alternative - the car, which does not need to be booked 14 days in advance!

Trevor J Rhodes
Wallasey, Merseyside

This article first appeared in the 21 February 2000 issue of the New Statesman, Just wait for the gold rush to end