A Case Study of the London Underground’s PPP failure
17 Pages Posted: 11 Dec 2022 Last revised: 17 Dec 2022
Date Written: October 31, 2022
In the early 1990s, the London Underground was in need of significant investments. The British government argued that privatization would be an efficient solution to improve the quality of the infrastructure. Following the election of Tony Blair as prime minister in 1997, the government instead implemented a public‒private partnership (PPP) to maintain government control while also attracting private investments. By 2010, the renewal of the infrastructure following the PPP had delivered some promising results: Traffic had increased, norms were being respected, and the renewed infrastructure had attracted more passengers. However, the cost overruns were massive, and some projects had been abandoned. Several commissions and reports showed the poor management of the project and the difficulty for public actors in monitoring private companies or becoming involved in this monitoring. Many experts concluded that a fully public or private company would have been more efficient than a PPP. This chapter reviews the pros and cons of PPPs in a setting in which the infrastructure remains public as well as standard issues in the management, negotiation, monitoring, and measurement of PPPs.
Keywords: Public-private partnerships, underground, contract
JEL Classification: L24, L33
Suggested Citation: Suggested Citation