Behind the spin: Metronet

THE DILEMMA

by
Last Updated: 09 Oct 2013

The sorry tale of Metronet is one of managerial incompetence and overspend. It began in 2003 when Chancellor Gordon Brown foisted the public-private partnership (PPP) concept for the upgrading of London Underground's infrastructure on an apoplectic Ken Livingstone, mayor of London. There were two successful bidders: Metronet and Tube Lines. Metronet was awarded two of the three 30-year contracts, and planned to spend £17bn on upgrading stations, replacing track and signalling and introducing new rolling stock. Its consortium members (Balfour Beatty, EDF, Thames Water, Bombardier and WS Atkins) funded the deal with £2bn of debt, 95% of it guaranteed by Transport for London (TfL). A 2,800-page contract spelled out in microscopic detail what had to be done. Four years down the line, Metronet is in administration after a crisis precipitated by the refusal of one of its main lenders to release extra funds to help it meet a £2bn overspend. When Rail Regulator Chris Bolt further refused to bail Metronet out, its management had no way forward.

THE SPIN

There isn't much: Metronet is keeping schtum. 'Our staff remain committed to the important role Metronet has of renewing London's Tube' is the best we could find.

THE STRAIGHT TALK

An anonymous Metronet sub-contractor told the Sunday Times: 'One of the big issues all suppliers had was underground access. You couldn't get it. Priority always seemed to be given to the wrong people.' Every piece of equipment to be used in the Tube had to be approved by a Metronet asset engineer. 'The problem was that these people had absolutely no responsibility for the delivery of the programme... There was no downside for them in asking for endless engineering changes.' Metronet ran a tied supply chain, which meant that its shareholder companies received most of its work. Said a nameless senior government adviser: 'It's not a failure of the PPP, it's a failure of structure and management. There is a conflict of interest.'

THE VERDICT

It's too early to say how long Metronet will be in administration, or who might buy it. Already, rival Tube Lines has picked up one of its contracts, and it's likely that the rest of the work will be broken down into more manageable chunks to attract other bidders. TfL has already stumped up £750m in emergency funding to keep the PPP project on track. Livingstone must be muttering: 'I told you so.'

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