On May 8, 1:38*am, Mizter T wrote:

On May 7, 11:59*pm, Bruce wrote:

Quite a surprise except to those who knew about the negotiations:

"Tube Lines' shareholders agree £310M buyout deal with TfL

Shareholders of London Underground contractor Tube Lines have tonight
agreed a buyout deal with Transport for London (TfL) for the PPP
arrangement with a price tag of £310M.

The dramatic decision follows months of rows between the two parties
over the cost of the upgrade and maintenance of the Piccadilly,
Northern and Jubilee Lines over the next seven and a half years.

However, the parties confirmed that Amey will continue to provide
management and maintenance during that period under the existing
contract with Tube Lines and that Bechtel will remain for an interim
period to ensure a smooth transition of the capital improvement
programme into TfL."

First Metronet, now Tube Lines. *The effective end of the PPP!

Blimey - didn't see that coming, not at all!

More from Tom Edwards of BBC London:
http://www.bbc.co.uk/blogs/mindthega...inning_of.html
or via http://tinyurl.com/2w8w6xx

He quite reasonably asks where TfL will find the £310 million from to
buy Tube Lines, given that TfL said they were going to struggle
finding the £400 or so million for the Tube Lines funding gap (as
determined by the PPP arbiter).

Wouldn't be a massive surprise to hear that some of the Underground
network's upgrades will be put on ice, given the already stretched
state of TfL's finances - given the state of (central govt) public
finances (which TfL is heavily reliant on), things aren't about to get
any easier any time soon.

He quite reasonably asks where TfL will find the £310 million from to
buy Tube Lines, given that TfL said they were going to struggle
finding the £400 or so million for the Tube Lines funding gap (as
determined by the PPP arbiter).

Surely TfL weren't expected to pay the £4.46bn upfront for a 7 year
programme! The £400m shortfall was on top of the £4bn TfL had budgeted
and were willing to pay for the infrastructure works. Surely the £310m
would simply come from this years payment to Tubelines for their work,
AIUI.

On May 8, 2:34*pm, Benamin wrote:
He quite reasonably asks where TfL will find the £310 million from to
buy Tube Lines, given that TfL said they were going to struggle
finding the £400 or so million for the Tube Lines funding gap (as
determined by the PPP arbiter).

Surely TfL weren't expected to pay the £4.46bn upfront for a 7 year
programme! [...]

Well no, of course not!

[...] The £400m shortfall was on top of the £4bn TfL had budgeted
and were willing to pay for the infrastructure works. Surely the £310m
would simply come from this years payment to Tubelines for their work,
AIUI.

That doesn't follow - the payments from LU to Tube Lines are for work
to be done. If that money is simply diverted to the current owners of
Tube Lines so as to pay for the purchase of the company (i.e. to pay
for the shares), then that money won't be available for the newly LU-
owned Tube Lines to use to pay for those works. Therefore if that
money would simply come from this years payment, then £310 million
less worth of work would be done on the relevant part of the network
(Jubilee, Northern and Piccadilly lines).

However, one does rather suspect that this will contribute towards a
scaling back of the upgrade programme. Boris might well argue with the
to-be-newly installed Tory Chancellor Osbourne that this PPP mess was
not of his (or indeed his predecessors) making, but that of central
governments, and therefore they should stump up the extra cash -
indeed this is more or less what Boris has already argued with the
outgoing Labour Chancellor Darling (and whilst things were at an
earlier stage, Ken was putting forward such arguments too). However,
given the coming age of austerity, I wonder if Boris would really put
forward such an argument that strongly given the circumstances - and
if he did I suspect it would be done quietly rather than publicly
(i.e. loudhailer negotiations would be a ting of the past). That said,
it is Boris, so who knows...

(Of course all the above is in the context of there being an incoming
Tory administration of some sort, but given that that's what's going
to happen, I didn't feel the need to add any caveats in. Well, apart
from this one!)

Everyone should be aware this is not the end of pfi ppp within the
london underground.

Powerlink and Connect both remain in place. No doubt someone will post
something to the opposite, but I am not aware of any serious rumours
about bringing those in house.

--
Nick

On May 8, 6:35*pm, D7666 wrote:
Everyone should be aware this is not the end of pfi ppp within the
london underground.

Powerlink and Connect both remain in place. No doubt someone will post
something to the opposite, but I am not aware of any serious rumours
about bringing those in house.

Also the Northern line rolling stock is provided by Alstom under a PFI
deal (a "whole life train service provision contract" or some such
similar thing).

The Northern line trains, Powerlink and Connect are all PFI contracts
- "PPP" solely refers to the infraco arrangements, UIVMM.

On May 8, 6:41*pm, Mizter T wrote:

The Northern line trains, Powerlink and Connect are all PFI contracts
- "PPP" solely refers to the infraco arrangements, UIVMM.

Indeed, but not everybody understands that.

--
Nick

On May 8, 6:47*pm, D7666 wrote:

On May 8, 6:41*pm, Mizter T wrote:

The Northern line trains, Powerlink and Connect are all PFI contracts
- "PPP" solely refers to the infraco arrangements, UIVMM.

Indeed, but not everybody understands that.

Yes, fair point.

I think that politicos use have used the phrase "public private
partnership" in a wide variety of contexts, referring to all sorts of
things (e.g. hospitals), not least because it sounds warmer and rather
less harsh and thrustingly Thatcherite than "Private Finance
Initiative" does - however, UIVMM, in a strict sense (i.e. what was
actually written on the legal documents) PPP was only ever used in
relation to the LU infraco arrangements... or am I wrong?

On May 8, 1:31*pm, Mizter T wrote:

He quite reasonably asks where TfL will find the £310 million from to
buy Tube Lines, given that TfL said they were going to struggle
finding the £400 or so million for the Tube Lines funding gap (as
determined by the PPP arbiter).

Wouldn't be a massive surprise to hear that some of the Underground
network's upgrades will be put on ice, given the already stretched
state of TfL's finances - given the state of (central govt) public
finances (which TfL is heavily reliant on), things aren't about to get
any easier any time soon.

In round figures, as I understood things, when metronet went into TfL
there were direct savings of 0.5 million - 1.0 million depending who
you listed to just by eliminating the duplicated effort of 2 parties
checking each others contracts and works. Proportionately finding 310
million to take in tube lines seems about right. While the
circumstances are different - metronet was in admin and tube lines is
being brought in before (if) that happens, those costs were still
there, they were not a function of collapse but contracts admin on
both sides. At least thats how the gossip wet. The problem is one
never knows if what you get is rumour and speculation or is a leak by
someone who really doesknow the score.

--
Nick

On May 8, 6:31*pm, D7666 wrote:

On May 8, 1:31*pm, Mizter T wrote:

He quite reasonably asks where TfL will find the £310 million from to
buy Tube Lines, given that TfL said they were going to struggle
finding the £400 or so million for the Tube Lines funding gap (as
determined by the PPP arbiter).

Wouldn't be a massive surprise to hear that some of the Underground
network's upgrades will be put on ice, given the already stretched
state of TfL's finances - given the state of (central govt) public
finances (which TfL is heavily reliant on), things aren't about to get
any easier any time soon.

In round figures, as I understood things, when metronet went into TfL
there were direct savings of 0.5 million - 1.0 million depending who
you listed to just by eliminating the duplicated effort of 2 parties
checking each others contracts and works. Proportionately finding 310
million to take in tube lines seems about right. While the
circumstances are different - metronet was in admin and tube lines is
being brought in before (if) that happens, those costs were still
there, they were not a function of collapse but contracts admin on
both sides. At least thats how the gossip wet. The problem is one
never knows if what you get is rumour and speculation or is a leak by
someone who really doesknow the score.

OK, thanks for that. The PPP contracts sounds like they were truly
nightmarish in their complexity. What does interest me is to what
extent the PPP contractual arrangements remained in place, albeit
perhaps in a vestigial sense, w.r.t. the in-house (LU-owned) Metronet,
as I understand they did. Furthermore now that Tube Lines is coming in-
house too, I wonder how much of the old PPP arrangements will remain,
and to what extent it can be dismantled - bearing in mind the whole
setup was created by central govt, had a complex legal background (I
assume there must have been some sort of statutory basis to it all),
and had a regulator of sorts in the person of the PPP arbiter - my
guess is that TfL can't just unilaterally end it (and indeed there
might be a few elements of it that are actually beneficial, even if
it's all internal dealings now). Of course the expert on such matters
here rather has other things on his mind given the context of it all -
I imagine all on here who appreciate his many insightful contributions
will hope that things will work out for the best when the dust settles.

On May 8, 6:54*pm, Mizter T wrote:

What does interest me is to what
extent the PPP contractual arrangements remained in place, albeit
perhaps in a vestigial sense, w.r.t. the in-house (LU-owned) Metronet,
as I understand they did.

ex metronet is now ''lu cmo'' (chief maintenance officer) : as far as
performance targets on items such as time to fix faults etc, the same
criteria remain in place but not even wooden dollars are transferred[*] now. The rumours all suggest the metrics were left in place for
cmo to compare with tube lines. How long things will last now is
anyones guess. Maintenance performance will still have to be measured
- it must be - and I for one do think a form of measurement needs to
remain - but how or even if they re-invent the wheel or continue with
the existing mechanism without money transfer I have no idea.

[*] this is an example of the duplicated people working on contracts -
someone from the infraco side has to do their calculation, someone
from the lu side. No need to do that now.

--
Nick