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

Metronet's collapse 'cost 410m'


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."

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