A financial appraisal of the London underground public-private partnership

This article examines whether the Government's policy of Public-Private Partnerships (PPP) in the context of London Underground is likely to satisfy the financial criteria for approving a partnership proposal: value for money (VFM), including risk transfer, and affordability. After analysing the implications of the Underground's cost structure for the PPP, the author looks at the methodology for appraising the PPP. She concludes that the methodology cannot be relied upon to provide a sound decision-making tool for London Underground. She demonstrates that the London Underground project is not affordable, and questions the appropriateness of the partnership policy in the context of vital capital-intensive industries.