TfL sent out a dryly worded but terse press release yesterday, detailing the shortfall in funding required to keep up planned maintenance and upgrade work on over a third of the underground network.
The Guardian's reading of the landscape:
The scale of the funding gap emerged this morning in a report by the PPP contract referee, Chris Bolt. He said carrying out vital upgrade work on the Jubilee, Northern and Piccadilly lines up to 2017 would cost between £5.1bn and £5.5bn. TfL projected it would cost £4.1bn and therefore faces a gap of up to £1.4bn.
However, Tube Lines, the private company that owns the PPP contracts for the work, revealed this morning that it thinks the gap could be bigger. It believes the work will cost £7.2bn, implying that it faces an overspend of up to £2.1bn.
TfL maintains that any shortfall should be covered by central Government:
Given this extraordinary circumstance, TfL expects such a shortfall to be met by the Government, which imposed the PPP structure on the Tube and Londoners.
The position is quite extraordinary given that Boris Johnson had dismissed arguments against PPP as being mere "ideological warfare" during the election campaign, supporting PPP but with a stronger role for the arbiter and better contract negotiation. It would now appear that, with a funding gap in his books, he has reverted to fighting Ken Livingstone's argument.
However, the flip-flopping of the Mayor over his ideological stance with regards to PPP is second to the main question - where is the financial plug to fill this hole going to come from?
The Guardian reports that Kulveer Ranger, the Mayor's transport policy chief, has ruled out fare increases. TfL (and by association the Mayor) is agitating for the Government to meet the burden. If the Government says no to this demand, or argues that it will only pay for a portion of the shortfall, then the choices will be stark for the Mayor - further fare rises, or pulling the money from rate-payers.
Either way, this funding gap, whilst not unpredicted, causes problems for other projects which TfL may have had in its sights. The BBC, for example reports today that pessimism surrounds plans for the Cross River Tram.
Given the inevitable belt-tightening at TfL it is hard to imagine that mood changing.