Crikey’s Westminister Correspondent

In the red corner we have the duo of London Mayor Ken Livingstone and his American sidekick Bob “killer” Kiley up against Tony Blair and his Treasurer Gordon “tightarse” Brown.

The row is over how to pump the much need investment into the dilapidated underground network. This is now about to enter the courtroom as Livingstone’s Transport for London (TfL) challenges the government’s partial privatisation plans or public/private partnership (PPP).

Amid much fanfare, Livingstone, the government’s least preferred candidate for the mayoral job, said he wanted to see a public bond issue used to provide the funds and brought in Kiley to crunch the numbers and run the tube.

Kiley’s credentials cannot be argued with. He salvaged the New York subway and did a similar job in Boston, but he may have a tougher job on his hands this time dealing with a dogmatic and childish government.

Brown just hates spending money – even when it isn’t his own. He wants to see the private sector take on the financial burden so the money doesn’t come out of government coffers, conveniently making his public spending figures look a little leaner.

Under the PPP, the Tube would be separated into three parts, with its infrastructure and maintenance handed over to private firms on 30 year contracts.

Livingstone, the unions and Tube users argue that this could force private companies to put profit before safety, while a bond issue offered to the people who use the system would attract a better take up and leave the system in Public ownership.

Blair and Brown have tried everything to demonise the alternative (and popular) scheme and Kiley himself. Blair even went so far as to suggest in a newspaper interview that Kiley had bankrupted New York with his bond issue there.

“Ken’s proposal is that London raise bonds for the Underground. Yet in New York, when the City produced bonds for the subway, the City went bankrupt and central government had to deliver the bonds for New York,” he said.

“Bonds are just a way of borrowing money, but it would saddle London with an enormous amount of debt. In addition, Ken is proposing to freeze fares, so there will not be the revenue coming in to service the debt.”

He was forced to recant in the House of Commons when Liberal Democrat leader Charles Kennedy had the good sense to actually contact someone at New York’s City Hall and check the facts, find it was absolute rubbish and challenge Blair on the matter.

Other attacks on Kiley include claims that the New York subway had an injury rate 40 times that of the Tube by the time he had finished his six year stint as chairman of the Metropolitan Transportation Authority in 1990.

Transport Minister Keith Hill did his masters’ bidding on this occasion and even gave the argument a racial dimension when he asked: “The question is who delivers the safest system, London Underground, the Brits or Mr Kiley?”

Kiley himself has gone public on several occasions complaining that Brown and his slavish minions at the Treasury won’t even agree to meet to discuss the most minor points.

You have to ask why, if the government plan is so good, does it feel it has got something to hide? Simple, Livingstone has embarrassed them once just by getting elected, and if he pull this off he could be mayor for life as far as most Londoners are concerned.

Kiley has called the PPP “fatally flawed” adding it will not deliver the goods. He also wants total control of the operation.

“On the basis of the information made available to me, I have concluded that the basic structure of London Underground’s PPP as presently conceived is fatally flawed and will not promote an improvement in the service offered to Londoners,” he said.

Livingstone said: “If the Tube had been passed to me last year, by now we would be starting improvements works. As it is we are still arguing with lawyers and so on – and there is no clear sign any work will start before the end of the year, if then.”

TfL’s lawyers are set to argue that lives will be put at risk because Tube maintenance and management will be separated under the government’s plans.

They will also seek to show that they are too expensive and fail in their legal requirements to allow London Livingstone to promote “safe, integrated, efficient and economic” transport facilities and services.

Now Mr Crikey runs a broad church and I know he approves of the odd sell off. However, he allows a little dissent, so I think at this point it’s fair to say that privatisation, total or half-arsed, is NOT A GOOD THING.

Two major fatal crashes on the old British Rail network, now run by the criminally inept Railtrack PLC, have shown what happens when a government seeks a short term gain to get expenditure off its books.

The outcry over Railtrack making annual 1 bln plus profits and having the cheek to ask for more subsidy from the taxpayer to do the job it was entrusted with in the first place has not gone down well with the average punter especially when they don’t know if the company will land them at their destination or the morgue.

There is even some dark talk of the government taking a stake in the company a perverse kind of partial renationalisation, or a PPP in reverse. There’s an irony for you.

The fears about private sector companies who couldn’t run a bath let alone a train set taking over have increased with the leaking of two reports that show at least 70 safety issues would have to be resolved before the government even thinks about starting the PPP.