A report by the left-leaning think-tank entitled 'Getting partnerships going' makes clear that the government plan would cost£2.4bn more than Ken Livingstone's plan for a bond issue scheme to finance London Underground.
Written by Stephen Glaister, Rosemary Scanlon and Tony Travers, of the London School of Economics, the report says the public-private partnership would also undermine the whole mayorality.
The study says that the 'PPP option is not self-financing' and would need government subsidy of between£95m and£262m each year for the full 30 years of the contracts. If the same programme could be delivered using bonds, it would cost between£16m and£182m a year in grant funding from Whitehall.
Meanwhile, The Daily Telegraph (p35) reports that the government's plans for a PPP look likley to cost about£100m in consultancy fees.
On Monday, at a house of commons select committee hearing into the Tube, environment secretary John Prescott said he had already reported that consultants costs were 'over£40m' and promised a further update next month.
But now insiders believe the final costs will reach£100m. But a spokesman for the DETR said: 'The government and London Transport are very keen to manage costs carefully. That's why we have joint advisers. You have to look at the costs in the context of delivering£12.5bn of investement and clearly we have to get it right.'