PPP firms 'to make extra £1bn'
Stephen Byers today faced more criticism of his plan to hive off sections of the Tube to the private sector as Bob Kiley claimed their profits will be even higher than previously forecast.
His claim centres on a £1 billion contingency payment which his aides say they have found detailed in the report by government auditors Ernst & Young in their investigation into the public-private partnership (PPP) calculations.
As part of the process, Mayor Ken Livingstone and Mr Kiley, his transport commissioner, are evaluating the report. The £1 billion, said a senior source at Transport for London, the Mayor's authority, has been set aside by London Underground to cover any "contingencies" that may be experienced by the three private sector consortia which are taking over the network.
TfL now expects the consortia to convert the contingency payment, or part of it, to profit.
This could make the rate of return for the private sector as high as 45 per cent, say sources. Unusually, continues TfL, the contingency payment will not be split between the owner - in this case LU - and the contractors as it would in other large scale contracts if it is not spent.
Mr Byers said earlier this month: "The return will be nothing like the 35 per cent the Mayor has claimed. The shareholders' rate of return is in the range of 15 to 20 per cent." Andy Cole and Jonathan Greening. But the club also broke the British transfer record twice with the purchase of Veron and Van Nistelrooy for a total of £47 million, further underlining the gulf between them and their rivals.
The figures come as leading stockmarket quoted rivals Leeds and Newcastle both reported first half losses.
Even before the effects of playing trading, on an underlying operational basis United remains in rude health. Total revenues lifted 14 per cent to £81million as the new three-year Premier League television contract pushed up media income by 60 per cent to £24 million.
At the gate all 17 home games - 13 league and four European - were sold out increasing receipts by 11 per cent to £31 million.
Conference and catering revenues at £5 million and sponsorship income at £11 million also showed increases during the year.
The one black mark was a 30 per cent slide in merchandising income to £9 million though the club said that was because it had been deliberately scaling down operations ahead of the Nike sponsorship contract kicking in from this summer.
