There is no certainty that the London Underground public-private partnerships will provide value for money, parliament's spending watchdog has reported.

According to the National Audit Office, there is "limited assurance" that the price of the three Tube PPPs is reasonable, and "some uncertainty about the eventual price although any price revisions have to meet tests of economy and efficiency".

The contracts, which were strongly opposed by London mayor Ken Livingstone, cover £15.7 billion of investment over the next 30 years.

Shareholders in the consortiums involved in the deals stand to receive nominal returns of up to 20 per cent a year, about a third higher than on other recent PFI deals.

But London Underground said the potential profits were in keeping with the risks being borne.

"If the private companies achieve the lower performance levels set by benchmarks, their real returns would be between 10 and 17 per cent a year," said the report.

Uncertainty

The NAO said the deals "offer the improved prospect, but not certainty, that the expected improvements will be delivered".

"The work will start two years later than originally planned. Recovering the maintenance backlog is now expected to take over 22 years rather than the 15 years originally intended," added the report.

"It is too early to judge how successful the PPPs will be.

"There are financial incentives to deliver better performance but possible limitations in their impact.

"Given the volatility inherent in operations, it is hard to determine whether the benchmarks are easy or difficult to achieve."

NAO chief Sir John Bourn reported that those involved in the deal are now building a "good partnership in most respects".

"These are complicated deals, worth a great amount of money and spanning a long period into the future," he added.

"I welcome the fact that there are prospects for improvement to the tube.

"But in the face of the inevitable uncertainty about what the next 30 years will bring, only time will tell whether these prospects are fully realised and, therefore, whether the eventual price that the taxpayer pays is worth it."

Liberal Democrat London spokesman Simon Hughes said the report confirmed his party's fears over PPP.

"The public-private partnership route is a high risk road to go down," he said.

"Not only was there initial delay, it will now be two decades before the necessary work is done.

"There are also no guarantees that the PPP will provide good value for money or deliver the world class tube system that London needs.

"The mayor and the assembly should review performance and negotiate to improve the deal."

'Jury out'

A separate report from London Underground concluded that "the jury is still out on PPP".

It said engineering over-runs and inadequate planning had hampered the tube in the first year of the contracts.

"In key areas, such as asset reliability, performance has, in general, not improved on the previous year of LU operations," it found.

But the report acknowledged that trains and stations have become cleaner and more comfortable for passengers.

Tube managing director Tim O'Toole said: "For LU to provide a better Tube service, we need the provision of key assets such as trains, track and signals to improve."