London Mayor powerless to stop Underground sale

The first elected London Mayor will be powerless to stop the sale of the Tube system. Nor will he be able to alter any joint venture agreement the Government may have with the private sector.

Labour's official candidate, Frank Dobson, and the independent, Ken Livingstone, made the row over funding the Underground central to their bids to be Mayor. The reality is whoever wins cannot influence funding plans.

Downing Street is resigned to a Livingstone victory, but senior Cabinet sources say the Prime Minister is increasingly relaxed about it because of the Mayor's lack of powers.

The Junior Transport Minister, Keith Hill, has said the Mayor takes responsibility for some transport services from July - but not the Tube. He gets control of that only after partial privatisation of the system.

Small print on the tender document for the three parts of the Tube network to be sold says the deals will be done in early 2001 - before the Mayor takes charge - and the contracts cannot be altered for seven-and-a-half years.

So pledges by Mr Livingstone to block PPP (Public, Private Partnership) cannot be met unless he wins a second term. And bullish promises by Mr Dobson to give the Government "a real fight" if he was prevented from making his own Tube improvement policy are worthless.

The Mayor will be restricted to hiring and firing staff and setting fares. Even the latter will be restricted, because the PPP contracts stipulate how much the Underground must raise from fares to pay private operators to run it. Mr Livingstone proposed bonds to pay for the estimated £16.5bn investment the Underground needs. John Prescott, the Deputy Prime Minister, and Lord Macdonald, the Transport Minister, say the bond option would be up to £4.5bn more expensive.

Yesterday Mr Livingstone insisted the Mayoral contest would remain a "referendum on whether to privatise the Tube". He said the Government was obliged to discuss any PPP deal with the Mayor and to choose the best funding deal or risk a judicial review.

"The Government's not stupid," he added. "They have an election next year and they don't want a drawn-out row with the Mayor defending the Tube against privatisation."