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Failed Tube firm 'allowed to print cash'
Ross Lydall21.10.09
The Government has been accused by MPs of "handing the keys of the Royal Mint" to failed Tube contractor Metronet and allowing it to waste huge sums of public money.
A parliamentary hearing into Metronet's collapse heard that the taxpayer had to step in to repay debts of £1.7billion after the privately owned consortium went into administration two years ago.
Labour MP Don Touhig accused the Department for Transport of an "appalling" failure to keep tabs on the deal. "It would have been simpler to give these people the keys to the Royal Mint and they could have gone in and printed their own money," he said.
DfT permanent secretary Robert Devereux was called before the Commons public accounts committee to explain how Metronet was allowed to collapse. It was responsible for upgrading nine of the 12 Tube lines.
Tory committee chairman Edward Leigh said: "This is obviously a very serious matter. The taxpayer was left with a liability of £1.7billion."
Metronet had to be rescued by Transport for London, using Government finance, after it ran out of cash.
An announcement is due shortly from Mayor Boris Johnson and Transport Secretary Lord Adonis on what will happen to its work planed over the remaining 23 years of the £30billion PPP (Public Private Partnership) upgrade of the Tube.
A National Audit Office report this year found that Metronet's collapse in July 2007 cost the taxpayer between £170million and £410million.
However the company did manage to refurbish 39 stations, upgrade the Waterloo and City line and enable quicker journeys on the Central and Victoria lines.
Mr Devereux said the PPP deal - imposed on London by Gordon Brown as Chancellor - meant it was up to TfL and not his department to deal directly with Metronet.
He insisted that Metronet managed to spend £4.5billion "economically and efficiently" in its three-and-a-half years.
He said the cost to the taxpayer of the firm's collapse was closer to £110million, and refused to say whether any civil servants had been sacked as a result of the fiasco.
Mr Devereux said: "I don't think the PPP structure, per se, is the thing that is at fault."
Reader views (5)
Just goes to show how former Mayor Ken was in his opposition to PPP and how much better it would have been to issue government bonds in the same way as was done pre-war (thats 39/45) when London Transport was created.
Anyway lets just get on with investing the money available now without cuts and leave it to a future government to set up a new plan in 20 years time.
The biigest danger is a Cameron government robbing London of this money to fund their pet projects like tax cuts for old etonians!!
- Melvyn Windebank, Canvey Island, Essex
A freind of mine in publishing used to managed the account for Tube-Lines (for a internal monthly magazine). With most of his clients, around 1-2 people would turn up for monthly meetings. 12 would turn up for Tube-lines. Yes, 12 people would come to do 1 persons job.
PPP's are just another bureucratic medal that Labour can add to their wasteful and nonsensical legacy.
- James Mcilwraith, London
The PPP is licence for the the shareholder to make money. LU couldnt hold MR to account as the shareholders were the Board members and they were happy to milk the cash cow they had been handed. Whene decent people were put in to run Metronet the were impotent to make change. LU could not manage the situation as they didn't have access to to all the information. There should be a public enquiry into this and the rest of the Tube PPP. TLL are making a balls up of the Jubilee line - at what cost to the tax payer.
- Gez, Stonecot Hill
PPP is a scam devised by politicians and business to ensure that businesses get easy money for putting up public buildings & projects quickly & manage them leasing them back for a small fortune. The Govt look good by creating loads of new schools, hospitals etc at the snap of the fingers whose cost isn't put in the Govt balance sheet.
Instead the costs are held off balance and these assets are run and managed by the same businesses with money lent from the open market rather than at the cheaper rate Govt has access to. This makes life nice and easy for both politicians and businessmen.
And when things go belly up or they bleat that they got their sums wrong with these business ventures the tax-payer has to bail private business out.
The businessmen must be laughing all the way to the bank 'heads we win, tails the public loses'
Welcome to Dear Prudence Gordons legacy folks.
- Neilhead, Cross of Clay
Thanks to Gordon Brown the wreckage of the PPP deal foisted on London continues to rumble on at great cost. Another New Labour victory!
- Mcw, London
