The next London Mayor, whether it is Sadiq Hall or Tory underdog Susan Hall will have to make a difficult decision about awarding a contract worth £3 billion to a Chinese-backed company to operate the Elizabeth Line.
Boris Johnson, then the British Prime Minister, awarded MTR, an Hong Kong-based company with British roots, now controlled by Beijing, a contract in 2014 to manage what was known at that time as Crossrail, during a period when Sino-British ties were much more positive.
This contract will expire in 2025. With a dramatic shift in geopolitics since then, rival operators see an opportunity to drive out the Chinese.
Transport for London is currently laying the foundations for the next contract to be put out to tender. The London Mayor will chair the committee. The contract will initially be for seven years, with an option to extend by two and half years.
According to industry sources, Go-Ahead Group – Britain’s largest train company – Keolis – which operates the Docklands Light Railway – FirstGroup – the listed transport group – and France’s Transdev – are all preparing offers alongside MTR.
London commuters are likely to be surprised by the fact that the contract will soon be up for renewal, just a few months after the first service began in September 2022. The delays in the construction of the 13-mile tunnel system under London are partly to blame. Crossrail was originally scheduled to open by December 2018.
MTR was founded in 1972 by the British colony to run public transport in Hong Kong. Beijing’s influence on MTR increased gradually in the years after the British handed over Hong Kong to Chinese in 1997. This was in line with political maneuvers. MTR was partially privatised by the government in 2000. However, it still retains a large majority of its shares. The company has expanded into mainland China, including Shenzhen and Beijing.
MTR operates in Australia as well, and in conjunction with the London listed FirstGroup for South Western Railway. MTR is part of the consortium that will redevelop London’s Liverpool Street Station, much to heritage activists like the comedian Griff Rhys Jones’ chagrin.
Last week, Go-Ahead, the operator of the Southern, Thameslink, and Great Northern rail routes, beat incumbent operator MTR to win the Stockholm metro tender. This has sparked hopes that this feat can be replicated on the Elizabeth Line tender.
City Hall and Department for Transport who both overseen the construction of Elizabeth Line chose to hire a private operator for the services. Transport for London (TfL), owned by Greater London Authority, operates the London Underground.
TfL is currently contacting interested parties to fill the next Elizabeth Line contract. The operator who wins the contract will be paid a set fee and receive performance-based incentives for running trains on time.
MTR’s Elizabeth Line service generated £291 millions in revenue for the year ending March 2023. Profit before tax was £4.1million. The current financial year is expected to see revenue and profit increase due to the increased demand following the Covid pandemic.
In the last 100 days before the mayoral elections, candidates Khan and Hall refused to say whether they would accept keeping a Chinese government-backed operator.
Sadiq Khan, who has been criticised for increasing TfL fares, has announced that fares will remain frozen until March of next year.
Transport, which represents more than three fifths of London’s £17 billion budget, will play a major role in the campaign. Khan is credited for “delivering” his promise to build Crossrail but criticised for the fare hikes. He is expected to win his third term and has a large lead in the polls.
Last year, the Labour mayor risked offending China by refusing to intervene in the dispute over the construction of a “Super Embassy” next to the Tower of London.
Tower Hamlets planning officials rejected Chinese plans for a sprawling development after residents protested. Tower Hamlets is home to one of the UK’s largest Muslim communities. Residents expressed concern about the treatment given to minorities in China, such as the Uighur. The residents also expressed concern that the £255million embassy might be used as a secret police station.
China did not appeal the August decision, which effectively ended the hopes that the country had for the new complex.
Hall stated at the time that if he were to become mayor, he would speak out for local residents in issues such as this.
Transport for London, Keolis, and Go-Ahead declined to comment. MTR Transdev FirstGroup and MTR did not respond to comments.