Page last updated at 09:18 GMT, Friday, 5 June 2009 10:18 UK

Metronet's collapse 'cost 410m'

Advertisement

London Underground station upgrades are behind schedule

The collapse of London Underground maintenance firm Metronet cost taxpayers up to £410m, a report says.

The company went into administration in July 2007 mainly due to poor corporate governance and leadership, the National Audit Office (NAO) report revealed.

The NAO said the firm's failure meant LU passengers had not seen all the promised improvements.

The report added it saw Transport for London's ( TfL) takeover of Metronet as an interim solution.

An NAO spokesman said: "The Metronet public-private partnership (PPP) contracts to upgrade the Tube left the Department for Transport (DfT) without effective means of protecting the taxpayer.

"Metronet's failure led to a direct loss to the taxpayer of between £170m and £410m."

Edward Leigh MP, chairman of the House of Commons Public Accounts Committee, said: "It is baffling - given how much taxpayer money was at stake - that the DfT sat back and decided not to get involved in trying to sort the Metronet mess out.

"Instead, the DfT passed the buck to LU, and LU reciprocated by passing back the bill."

A DfT spokeswoman said: "The contracts were designed in accordance with HM Treasury guidance and Ernst and Young independently judged LU's approach to be robust.

Overruns and delays

"However, the DfT had to respect the devolution of powers to the Mayor of London, TfL and LU and was therefore not party to the contracts signed with Metronet.

"It should be noted that Metronet did deliver over £4bn worth of improvements which are benefitting passengers every day, including 39 refurbished stations, 25% increase of peak capacity on the Waterloo and City Line, and quicker journey times on the Central and Victoria lines.

"This should also be set against LU's pre-PPP delivery record, characterised by significant cost overruns and delays."

Richard Parry, interim managing director of LU, said: "We repeatedly called on Metronet to improve its performance, and were the first to call on Metronet to seek an extraordinary review of its costs, which revealed the full extent of its failure.

"Since Metronet's collapse we have overseen the renegotiation of key contracts and taken measures that together will save Londoners and taxpayers an estimated £2.5bn, now and in future."



Print Sponsor


SEE ALSO
TfL takes back Metronet workers
23 Oct 08 |  London
Metronet's takeover is complete
27 May 08 |  London
Tube workers back strike action
10 Apr 08 |  London
Metronet 'to blame' for collapse
31 Mar 08 |  London
Metronet costs taxpayers 1.7bn
06 Feb 08 |  London
Metronet collapse 'may cost 1bn'
21 Sep 07 |  London
Q&A: Metronet collapse
17 Sep 07 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific