"To be honest my gut feeling is that there’s some serious gamesmanship going on from TfL – they tried the “softly, softly” approach to get the DfT to devolve more last year with talk of Overground quality, the NERA report highlighting cost savings etc. etc.
As that doesn’t seem to be yielding much in the way of results, and with time running out, they’re now beginning to at least hint that they’re prepared to “go nuclear” if necessary and start bidding on things themselves.
Nuclear in this sense being exactly what you outline – causing the kind of paperwork/State Aid headache that neither the DfT or the Government in general will want. It’s quite Livingstonesque as an approach if that is indeed the case, and I’m slightly impressed."