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TREASURY UNDERWRITES LIGHT RAILWAY EXTENSION

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The treasury has agreed to undewrite the£180m cost of extending the Docklands Light Railway to City Airport, repor...
The treasury has agreed to undewrite the£180m cost of extending the Docklands Light Railway to City Airport, reported The Sunday Telegraph (Business, p1).

The decision to back the project with public money raises hopes that the logjam in other UK infrastructure schemes will now be broken. The deal will allow Transport for London, the mayor's transport authority, to press ahead with a private finance scheme for the PFI upgrade.

The agreement, hammered out between mayor Ken Livingstone and transport minister John Spellar in meetings over the past few months, will see the Treasury provide a credit note for the full£180m.

The treasury refused to say whether the note will be counted as part of the government's borrowings. There has been controversy over the way the treasury has guaranteed£9bn of borrowings for Network Rail, the successor body to Railtrack, but kept the debts off its own balance sheet.

Under normal local government spending rules the whole£180m would have to be set aside from TfL's budget in the first year. That effectively blocked the project until the treasury agreed to provide the note.

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