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Tube commuters hit by £1bn bill for Metronet collapse
By Dick Murray, Evening Standard Last updated at 11:57am on 21.09.07London's Tube commuters and taxpayers face a £1 billion bill following the collapse of maintenance giant Metronet.
Work to improve the network, used by 3.2 million people a day, could be drastically cut back to help pay the bill.
The move will infuriate Mayor Ken Livingstone, who has repeatedly condemned Metronet for failing to do the job properly. Transport for London (TfL) responded by saying it was "adamant" fare and taxpayers would not foot the bill.
The station improvement programme will be one of the first casualties as work is reduced.
Chris Bolt, arbiter of the Tube's public-private-partnership (PPP) ruled today that Metronet is due anything between £ 370 million and £1070 million for extra work over and above that specified in the first seven and a half years of its 30-year contract.
Metronet went bust in August as spending soared. It originally demanded more than £2 billion for the extra work - a claim robustly denied by TfL. The consortium-is now in administrationand being run by TfL as "caretaker" manager.
Metronet was responsible for maintaining and improving two thirds of the Tube network including the Circle, District, Bakerloo, Central and Victoria lines.
TfL is submitting a formal bid to take over the Metronet contracts. Mr Bolt today published his "initial thoughts" into how much Metronet could be due.
He said an "appropriate figure" for the Bakerloo, Central and Victoria lines could be anything between £140 million and £470 million.
For the sub-surface Circle and District lines, the figure rises to between £ 230 million and £600 million, meaning a total of up to £1.07 billion.
Mr Bolt said he had reached his preliminary analysis following submissions made by Metronet and London Underground. He expects to conclude final costs mid-November. A TfL spokesman said: "We are at a loss to understand how and why the arbiter has produced these figures. It seems he has made a purely hypothetical judgment on the finances of Metronet had it continued to run and become an efficient and viable company.
"Given it is currently languishing in administration, we cannot see how he (Mr Bolt) has made that judgment."
But a senior Metronet source said: "These figures show that a substantial part of our claim for extra money for extra work was correct.
"LU has said all along that it did not order extra work - that has also been shown not to be true. LU, and the Mayor, have and continue to play a political game over this whole affair."
Metronet's four years in charge have been dogged by administrative, financial and engineering failures.
There have been frequent delays to night engineering work - which meant the lines did not open in time for the morning rush hour. Two years ago there was chaos because Metronet did not carry out maintenance to prevent tracks expanding in the summer heat.
Metronet was also forced to admit responsibility for the Central line derailment near Mile End because one of its shareholder partners, Balfour Beatty, left a huge roll of fire blanket too close to the track.
However, Metronet's selfinflicted troubles will be a boost for the Mayor as he continues to "save" the Tube during his campaign for re-election next year.
The legal moves for administration guarantee that Metronet's 5,000 staff, and its many suppliers, will continue to be paid. Up to 2,000 work on the tracks and in the tunnels every night maintaining the system.
Metronet initially applied for an interim payment of £551 million, but Mr Bolt, awarded just £121 million and judged that Metronet was itself mainly responsible for the overspend.
Reader views (17)
Ken has been short with the truth! He must have known this "bankruptcy" was going to cost.
- Jonathan, Islington, London, 24/09/2007 08:50
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The whole thing is so predictable and depressing. Ken Livingstone was right all along, but I kept hoping he would be proven wrong for the sake of London commuters. Please, governments of the future, do not EVER try this stupid experiment again. Privatisation or partial-privitisation of public transport services just does not work.
- David, Muswell Hill, UK, 24/09/2007 06:17
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The PPP was always a bad idea but Brown decided to ignore the fact that the already existing PPP named Railtrack was going down the tubes and plough ahead regardless and guess where it led us?
- Terry Roll, London, 23/09/2007 12:51
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Maybe the £1 billion bill can come from the bonuses of the TfL fat-cats instead?
- Marianne, SW France, 23/09/2007 12:34
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Behind Ken's public spin of condemning the PPP scheme it looks like he simply used his influence as head of TfL to burden Metronet with extra work and then either refuse to pay for it or claim the extra costs were because of Metronet's inefficiencies.
Whilst Metronet may well have had issues with their structure and partners Ken has simply played a political game to ruin the project for his own political preferences.
As the arbiter has declared that there are costs over and above the original contract, Ken's bluff has been called.
But of course he gambles with money that is yours and mine, i.e. our taxes and TfL fares so ultimately he continues to play (political) games.
He really is an unsavoury character who has no morals where his own personal political agenda is concerned.
I despise this man.
- Paul, London, 22/09/2007 10:38
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Mr BOLT caused this fiasco with his original report, and now he has the front to award Metronet over 1 billion, if he had done that in the first place then the company would not have collapsed, he is an idiot.
- Brian, Wiltshire, 22/09/2007 00:16
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The Right Wing comments so far remind me of how the shares of this group of discredited contractors rose substantially once they had abandoned their responsibility by sending Metronet into liquidation.
Having either milked the system or mismanaged the contract, whichever political version you believe, the shareholders win and the public lose.
Ken appears to have been proved right - will Gordon soon get us all pasted on the Hospital PPPs as well?
- Johny, Oxford, 21/09/2007 23:25
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Add to this the fact that Ken wants to guarantee the salaries, working conditions and pensions of Metronet's employees! How much is that worth? More than the extra work I'd guess.
- Mark, London, UK, 21/09/2007 19:41
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So TfL and a spokesperson of their's states "We are at a loss to understand..". Why is it Government / local authorities go for contracts that look good, safe and sound and then "let's add this and that" before the ink dries to find eventually everything goes pear-shaped. It certainly seems common place in the IT sector. One must wonder whether there was any contingency account funds allowed for?
One can't but somehow feel some sympathy for Metronet taking on more than they calculated for in the first place. Maybe they should have "scratched more than the surface" of what they intended to take on.
Oh well, as for paying it off the Mayor of London could start by cutting his advertising/marketing and promotional bill to pay for it. It would be nice to see less of his status being branded about. It just adds fuel to the fire of discontent.
- Tony, London, 21/09/2007 18:54
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Red Ken was celebrating last week now us rates payers get presented the £ 1billion pound bill for them to stop working. Ken should admit failure and step down. He "forgot" the billion and the arbiter did not forget. The arbiter just did the numbers. Ken clearly messed up.
- Jacqueline, Hampstead, London, 21/09/2007 18:15
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Although Ken fought against the PPP, this mess is in fact down to him.
He chairs Transport for London, who run London Underground. It was London Underground who told Metronet to do this extra work, above and beyond what was in the orginal contract.
Now we (people who use the Tube) are going to have fork out extra. I bet Gordon Brown won't fund this.
Thanks Ken. Looks like no improvements to any part of the transport system for a few years now.
- Geoff, London, 21/09/2007 16:41
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"Time for Red Ken to go to Cuba or Argentina again?! He should stay there!"
Ken Livingstone opposed the Public Private Partnership from the start. The man has many faults, but he was absolutely right on this issue, and pretty much everything he predicted would happen has duly come to pass.
Gordon Brown is the true architect of this fiasco, and the fact that he wouldn't even discuss the issue with Livingstone or his transport commissioners shows how arrogantly obdurate he was. He should carry the entire can.
- Michael, London, 21/09/2007 15:15
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Well said Jonathan of London, NW1, 'Red Ken' should be shipped off to Moscow and banned from coming back to good old Blighty.
- Henry Walligton, Wallinton, Surrey., 21/09/2007 15:13
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This isn't 'Red Ken's' fault! He was totally opposed to all this PPP/PFI rubbish and has been vindicated in the collapse of Metronet which failed even to do a decent job whilst it was in business! Nu Lab is firmly to blame for failing to take responsibility for building a decent transport network - be it Network Rail or the continuing Tube farce! Why do they have to continually palm public transport off onto the private sector? It never appears to work!
- Headhunter, London, 21/09/2007 15:11
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The wheels have come off the gravy train and the taxpayers have to pay up again.
Does it never stop.
- Patricia, London, 21/09/2007 14:14
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The Public Private Partnership for the Underground was Gordon Brown's idea. The taxpayers wouldn't be paying for the Underground upgrade, the private side would pay. What a farce. None of the recent financial disasters is yet sticking to Brown. He is even more of a Teflon Man than Blair.
- Phil Jones, London, UK, 21/09/2007 13:51
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Time for red ken to go to Cuba or Argentina again?! He should stay there!
- Jonathan, London, NW1, 21/09/2007 13:41
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