Negotiations will resume today when Tony Blair meets chancellor Gordon Brown and John Prescott in a bid to avert a complete breakdown between the government and Bob Kiley, the American appointed by London mayor Ken Livingstone as the capital's transport commissioner. Sources close to the talks say the treasury is refusing to back down on allowing Mr Kiley control of the tube network and accuse him of not being
familiar with public sector borrowing limits. 'In America, if they want to build a train line they just do it,' said a treasury source. 'We have limits here. He's just beginning to understand that.'
Mr Kiley, who is credited with rescuing the New York subway, is battling to keep the system under a unified management structure. A senior government transport official said: 'So far Kiley has failed satisfactorily to define what he means by this. But the door is still open.' Despite the impasse, Mr Kiley's camp remains convinced that agreement can be reached by Wednesday's deadline.
The row over who runs London Underground has been running for more than three years, since the treasury imposed its public-private partnership plan on Mr Prescott. Under PPP the network would be split into three sections, with private companies investing£8bn to maintain and refurbish it for 30 years and London Underground owning the rolling stock. Critics fear the funding model replicates the mistakes in the controversial privatisation of British Rail.
'...PRESCOTT AND KILEY SET FOR TUBE DEAL'
John Prescott and London transport commissioner Robert Kiley are expected to bury the hatchet this week in the long-running battle over the future of the Tube, according to Sunday Business (p2). Mr Kiley is poised to offer an olive branch by withdrawing his demand for a majority equity stake in the infrastructure companies that
would be created in the government's plans to part-privatise London Underground through a PPP scheme.
Mr Prescott is understood to have delivered an ultimatum at a meeting last Thursday saying that unless they could reach an acceptable compromise, he would forge ahead with the privatisation as planned - or simply hand the system back to Mr Kiley without an upgrade plan or funding in place.
While Mr Kiley and London mayor Livingstone have threatened the government with a judicial review over the privatisation plans, the consortia bidding for the sell-off do not expect a legal challenge. 'I think we are heading for a deal within the next 10 days,' said the chief executive of one consortium.