Britain moves closer to rail privatization

Posted on March 1, 2002

A $20 billion proposal to modernize the London Underground through a public-private partnership (PPP) has been given the green light by the Board of London Transport, the body that oversees the subway. Transport Secretary Stephen Byers said the 15-year plan would be $2.8 billion cheaper than traditional public funding. He also stressed that the London Underground would remain publicly owned and that private companies would be required under contract to provide improvements or be penalized. The remaining obstacle for the government plan is the approval of safety standards, which can be vetoed by the Health and Safety Executive (HSE) if found to be inadequate. The HSE was scheduled to make a decision by late March. Major opposition to the controversial plan remains, with some critics attacking the funding and safety proposals. “This is not a Railtrack for the Underground,” said Byers in a statement responding to criticism. “There will be no shareholders, just ticket holders … it will be the private sector working under contract to London Underground.” The partial privatization plan, which comprises $17 billion of public funds and $5.7 of private, allows for two consortiums, Metronet and Tube Lines Group, to take over responsibility for repairing the underground system. Contracts for the PPPs show an expected profit between 15% and 20% per year. Modernization plans for the Tube include the addition of 336 new trains by 2014 (with an additional 42 by 2019), replacement of 80% of 250-plus miles of track over the lifetime of the contract and installation of modern signal and control systems on all lines by 2016. By 2010, 70 stations will be modernized and 139 stations upgraded, with station refurbishment occurring again every 7 1/2 years. As well as improving reliability, the plans were also designed to increase the capacity of every line, with priority given to those lines with the highest ridership and most growth. The London Underground forecasts a 20% increase of overall capacity across the entire system by 2020.

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