Tube braces itself for £50m losses

London Undergruond will lose £50 million in the next year as passengers continue to desert the network, it is revealed today.

It is thought that many of the missing customers are tourists who have been staying at home since 11 September, while others are suburban residents who are shopping locally and avoiding central London - to save money and stay away from the capital's notorious transport collapses.

Since the attacks LU has witnessed a sharp drop in ticket sales - viewed by economic forecasters as an immediate and accurate barometer of the state of the capital's financial wellbeing.

But poor service on mainline rail routes serving the capital - particularly in the evening, with late and cancelled trains - has also exacerbated the decline and made people feel they are better off staying local.

Paul Godier, LU's new managing director, said: "We are predicting a dip in demand and expect to lose about £50 million in fare income over the next year."

Mr Godier said a reluctance to travel and the general world economic situation since September "are the two facts combined which are driving the drop in passenger numbers". He forecast that the situation would improve with passengers returning "but a lot depends on how the war against terrorism goes".

He said the reduction in travel was on a par with the concentrated bombing campaign mounted on London by the IRA in the Eighties.

The recent dramatic drop in passenger numbers on both the Tube and mainline rail was revealed six weeks ago by the Evening Standard.

In one particular four-week period, 1.4 million fewer mainline rail journeys were made in London and the South-East. The Underground reported 300,000 fewer journeys in a week.

London's business leaders will warn MPs in a special report that the private sector is preparing itself for lower growth expectations next year that during the past 12 months.

The London Chamber of Commerce says that, since the attacks on the World Trade Center, some sectors - particularly hotels and catering - report turnover during 2002 will be the lowest for several years. The chamber will stress, however, that the "general mood of pessimism" was already darkening before 11 September and events on that day only damaged confidence further.

The chamber's forecast for the future is mixed - on a brighter note, both the services and manufacturing sectors expect business to return back to normal in the next few months. Many London retailers, however, are preparing for their most "difficult" Christmas for years.

The mood is worse in central London than in the suburbs, confirming what Mr Godier said about people preferring to spend locally.

? Plans to part-privatise the Tube by next April - a date already two years late - may be delayed yet again because safety procedures for the private-sector takeover might not be ready in time.

Mr Godier admitted that having the public-private partnership (PPP) in place by April would be "very tight". New safety regulations governing the takeover have still to be drawn up and agreed by the Health and Safety Executive, the national watchdog.

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