The Failure of Metronet: Report by the Comptroller and Auditor General, Session 2008-2009 - HC Session 2008-20 (Paperback)National Audit Office (NAO) (author)
Paperback 55 Pages / Published: 05/06/2009
- Not available
Metronet - a private infrastructure company responsible for the maintenance and upgrade of sections of the London Underground - went into administration in July 2007. Transport for London (TfL) guaranteed 95 per cent of Metronet's borrowing, with the Secretary of State for Transport assuring Metronet's lenders that the Department for Transport (DfT) would not just stand by should London Underground or TfL be unable to honour this guarantee. When Metronet failed, the DfT made a GBP 1.7 billion payment to meet the guarantee so that the running of the Underground would not be compromised. London Underground managed the Metronet contract but DfT had a responsibility to protect the taxpayer from any financial liability. The Public Private Partnership (PPP) contracts gave the DfT few formal levers to protect the taxpayer, leaving the DfT to rely upon other parties, including London Underground, TfL and Metronet's shareholders and lenders. When these parties did not resolve Metronet's problems and Metronet failed, the taxpayer was left exposed. This exposure crystallized in the early repayment of GBP 1.7 billion to Metronet's lenders and a loss to the taxpayer equivalent to between 4 per cent and 10 per cent of the work delivered (GBP 170 - GBP 410 million). DfT needs to consider how to reduce future risks to the taxpayer and, with the Mayor of London, how best to ensure effective and efficient delivery of improvements and maintenance of the Underground. The DfT sees TfL's ownership of Metronet as an interim solution and a joint decision from the Secretary of State for Transport and the Mayor of London on a long-term solution is awaited.
Number of pages: 55
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