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Metronet collapse 'to cost taxpayer £500m'
Dick Murray, Transport Editor24 Jan 2008
The collapse of Tube maintenance firm Metronet, which went bust last year, will cost taxpayers £500million, it was claimed today.
A report by Tube union RMT calculates the cost of the consortium will breach the half-a-billion-pound mark if it remains in administration until April.
Ministers were today urged to end the "shocking waste of public money" - the equivalent of £2million a day.
The report comes 24 hours before the Common's transport committee publishes what is expected to be a critical report of Metronet and the part-privatisationof the Tube network. Metronet, which controlled two thirds of the network, went into administration last July with debts of £2 billion. Transport for London took control of the lines as "caretaker".
The Government estimated the first six months of Metronet's administration cost £345.5million - that is over and above the consortium's share of about £1billion a year in charges it received for maintaining the network. The firm was supposed to be brought out of administration last Friday, but a host of problems including alleged "wrangling over contracts awarded by Metronet to its own shareholders" delayed this.
Fears are rising that the firm, which controlled all the sub-surface lines including the Circle and District along with the Bakerloo, Central and Victoria deep-level routes, could now remain in administration until at least April.
Costs are mounting at £14.4 million a week according to the special report by RMT, largest of the Tube unions.
Theresa Villiers, shadow transport secretary, said TfL had been forced to borrow twice as much to help pay the extra costs of Metronet with the bill having to be met by taxpayers.
Bob Crow, the RMT leader, said: "It is scandalous that the same shareholders who walked away from Metronet when they couldn't squeeze even more money out of the public purse are still raking in handsome profits out of contracts they effectively awarded themselves."
He warned: " The longer the Metronet contracts stay in administration the bigger the threat to the Tube upgrades that are essential if London is to have the world-class metro system it needs in time for the 2012 Olympic and Paralympic Games."
Metronet crashed when it failed in its demands for an extra £1 billion for extra work the company claimed to have done on the deep-level routes.
A Transport for London (TfL) spokesman did not deny the RMT's claims but said overall costs would not exceed more than forecast.
He said: "The RMT is wrong to claim that Metronet's administration costs will cost taxpayers or farepayers any more than originally planned. At the start of the administration process, we allocated funding to cover Metronet's costs and sufficient funding remains. There is no need for us to call on additional public funds."
He added: "We remain on track to transfer the two Metronet companies [one governing the sub-surface lines and the other the deep-level routes] to TfL later this year."
Reader views (1)
Another failure of privatization. The sooner Ken Livingstone is given full control of all of London's transport networks the better.
- Mick, London, England, 25/01/2008 11:14
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