Tories will sell off Underground if they win poll

John Major will take an election gamble today with the announcement that London Underground is to be privatised if the Tories are returned to office.

The go-ahead for the privatisation of the Tube, which carries millions of voters in the crucial South-east, was sanctioned at a Downing Street strategy meeting of cabinet ministers to approve the manifesto. It will be announced in the Commons today by Sir George Young, the Secretary of State for Transport, although the plan alarmed some ministers earlier this month when it was first approved at the Chequers cabinet meeting on the draft election manifesto.

The announcement was delayed by a damaging and embarrassing leak, but Sir George persuaded colleagues to go ahead with the plan on the grounds that the Tube needs investment, and it can only get it if it is put in private hands. Labour believes it is a gilt-edged gift for its own election campaign against the "fat cats" who have profited from other privatisations. The Underground would carry with it some highly lucrative real estate in the capital, and the leaked document suggested it could be sold off at a knock-down price.

The statement in the Commons today will mark clear differences between the two parties. John Prescott, the deputy leader of the Labour Party, said last night that the Government had adopted the "Prescott formula" for keeping the Post Office in public hands, while allowing it to raise private finance. "It shows that they are privatising the Tube system out of pure political spite," he said.

Andrew Smith, shadow Transport Secretary, said Labour would build partnerships with private firms to raise investment for the Tube, as well as retaining public control over the system. He attacked the Tory plan as a "nightmare vision" for a fifth term, which could lead to closures of stations in the outer London suburbs.

The leaked cabinet memo to the Prime Minister by Sir George said: "The Underground will be a unique and very difficult privatisation to sell to the public".

Although the details of the sell-off have yet to be finalised, Downing Street favours a model which would see a single body regulating levels of service and fares and then franchise groups of lines. Another scheme, which would have floated London Underground on the stock market and given shares to commuters, was quickly shelved after criticisms that it would have created a "private monopoly".

The cabinet committee meeting yesterday approved the final draft of the Tory manifesto, including more parental choice in schools, an expansion of Workstart in which those on the dole will have to work for their benefits, and a switch to more self-provision in welfare through insurance. Kenneth Clarke, the Chancellor, will today return to the attack on Labour over tax with alleged new Treasury calculations, which he claims will mean higher taxes under a Labour government, a charge Labour denies.

Comment, Donald Macintyre, page 15