How Tube bosses spent £900m

The full details of the £900 million spent on the break-up of London Underground can be reported today.

Evening Standard has uncovered the identities of dozens of City banks and a full list of advisers who gained more than £1million each from the controversial Public Private Partnership (PPP) for the modernisation of the network.

It follows a report from MPs on the Public Accounts Committee (PAC) last week, which criticised the way the contracts were set up.

The committee's chairman, Edward Leigh, said they had led to "enormous costs" for taxpayers running to "the best part of £1 billion". Critics say the money would have been better spent on new trains, renewing track and upgrading signalling.

Under the PPP plan, the Underground was broken into three chunks, with responsibility for maintenance and modernisation handed over to private consortia on 30-year contracts. Much of the funding for the projects was providedby groups of City banks. The PAC report said the banks required about £450 million more in interest payments than if the Treasury had provided all the financing.

We can reveal the banks included Abbey National, Royal Bank of Scotland and Bank of Scotland as well as foreign lenders.

The complexity of the contracts also meant that LU, the successful - and unsuccessful - bidders, as well as their lenders, all hired armies of costly advisers.

The biggest single advisory bill was from City law firm Freshfields where the "meter" for its advice to LU only stopped ticking at £29.2 million. Last year partners at Freshfields earned an average of £675,000 each.

Next was accountancy firm PricewaterhouseCoopers, which charged £21.4 million for its work for LU and the Government. PWC was appointed by the Treasury in 1998 after its model for the partial privatisation of the Tube was selected by New Labour. It has worked on the project ever since.

Other smaller bills picked up by the taxpayer include the £150,000 spent on pension advice, more than ?200,000 that went on "interest rate hedging strategy" and £30,000 on a "mystery shopper" exercise. In total, LU's costs ran to £180 million and the bidders' to £275 million - a grand total of £905 million.

Professor Stephen Glaister, a member of the board of TfL, said Gordon Brown's determination to drive through PPP was largely to blame. He added: "The bidders had the Treasury over a barrel."

Government sources said the contracts would yield savings of "much more than £1 billion" over 30 years.