Tube's £17bn upgrade at risk as Metronet collapses

Transport for London applied to the courts on the consortium's behalf for the appointment of an administrator.

Metronet has given up two 30-year contracts to carry out a £17 billion upgrade of the Bakerloo, Central, Victoria, Circle, District, Hammersmith and City, Waterloo and City, Metropolitan and East London lines. A spokesman said it had run out of cash.

TfL will take over as "caretaker" governor of the lines. It emphasised its "over-riding priority" was to maintain a safe and reliable network.

Tim O'Toole, London Underground's managing director, said passengers should not see any disruption.

Mayor Ken Livingstone told the London Assembly today that Metronet was now "akin to Monty Python's parrot. It is dead ... it has ceased to exist".

The new organisation would cost up to £50million a week to run, TfL said today - £20 million-£30 million for administration plus at least £70 million, the sum it paid Metronet every four weeks to maintain and improve the network.

Mr Livingstone said he had talked to the Prime Minister and was confident of financial help from the Government.

TfL finance director Steve Allen said funds would come from "existing Tfl reserves" for now and there were "ongoing discussions" on how those reserves "might be replenished".

The Mayor said that whereas Metronet had concentrated on "slapping paint" on stations the new holding company would concentrate on new track, signals and trains.

Roger Evans, chairman of the Assembly's transport committee, said questions remained unanswered over "who is going to pick up Metronet's debts which run into many billions of pounds".

The Mayor said many of Metronet's directors and senior staff were "dead meat" and would lose their jobs, although those in operations and the "front line" would stay on.

He appealed to other employees to keep turning up for work. He said: "The disappearance of Metronet will not mean your job goes. You will just be working directly for us."

The legal moves for administration guarantee Metronet's 5,000 staff, and its suppliers, will continue to be paid.

Mr Livingstone described Metronet's five shareholder partners - Bombardier, Atkins, Balfour Beatty, EDF and Thames Water - as an "unholy alliance who awarded themselves all the work".

He will nevertheless be forced to use several of them, including train makers Bombardier.

Gordon Brown, who forced through the unpopular partial privatisation which put Metronet in charge of the