London Underground generally did not dispute the market-based pricing that TfL put forward, but did not expect Treasury approval "recognising that this is not the way public infrastructure projects have historically been financed in the UK". As a related matter, London Underground advised their Board not to assume, under a radically changed approach, the same level of grant support as that available for a PPP that met policy objectives.
Of the contract structure, London Underground said that it would not deliver the PPP policy objectives on risk and contract responsibility, noting "Some of the contracting structures proposed by TfL, requiring equity contributions from suppliers or parent company guarantees, are not standard ways of doing business with the UK public sector, and may add to the time needed to put contracts in place." Adding to timing problems, a new procurement competition would have been required.
Publicly, the advisers to TfL and London Underground showed themselves unable to agree on a common set of assumptions for making undistorted bond financed price comparisons. Little common ground exists, and Ernst & Young,17 as further discussed below, largely discarded London Underground's bond comparison (see NAO Report "London Underground PPP: Were they good deals?" para 2.42 on page 26).
London Underground's May 2002 "Update to the Final Assessment Report" gave a high level summary of TfL's objections to London Underground's findings. In addition to maintaining that the PPP was not value for money, TfL challenged the findings about the extent of delay and the availability of grant.
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17 The Department retained Ernst & Young to provide independent advice to the Secretary of State.