The Government yesterday performed a humiliating u-turn when it announced a £1.7bn “grant” to pay creditors of Metronet, the failed PPP operator responsible for maintenance of 9 London Underground lines.
The Tube PPP scheme was promoted by then Chancellor Gordon Brown in the face of massive opposition from London politicians and transport experts.
Mayor of London Ken Livingstone fought his first election campaign in part on a policy of opposition to the scheme and later took the Government to court in an unsuccessful attempt to block it.
At the time opponents accused the Mayor of “wasting public money” by mounting the unsuccessful court case which was estimated to cost taxpayers £4 million – a figure dwarfed by yesterday’s Government grant.
Speaking at the time the then Transport Secretary Alistair Darling said: “I would have thought the Mayor would have done far better working to make sure the money goes into the Tube rather than indulging in further legal squabbles which, after all, people of London have to pay for.”
The Government proceeded with its policy claiming risk would be transferred to the private sector, a claim now revealed to be as hollow as critics predicted at the time.
In February 2003 Mr Darling called the forced PPP deal “good news for Londoners”.
Control of the Tube network was withheld from the Mayor until the PPP contracts had been signed.
Metronet collapsed last July when shareholders wrote off their holdings in the company and refused to provide additional funding.
The firm’s cash crises worsened when Chris Bolt, Arbiter for the London Underground Public Private Partnership, ruled it was not entitled to an increase in the money paid to it by London Underground.
The company finally called in administrators on 18th July last year.
In October last year Transport for London was announced as the only bidder to take over Metronet’s contracts.
Darling, Brown and Byers – May We Have Our Apology? – 7th February 2008
TfL Submit Formal Metronet Bid – 25th October 2007
Metronet ‘to Enter Administration on Wednesday’ – 17th July 2007
Time To Revisit Tube PPP – July 16th, 2007
Bombardier Writes-Off Metronet Holding – 16th July 2007
Troubled Metronet ‘Faces Administration’ – 16th July 2007
Metronet Apologise for Tube Derailment – 6th July 2007
Metronet Request Extraordinary Review – 30th June 2007
Metronet Shareholders Write Off GBP221m – 27th June 2007
Tube PPP Arbiter Publishes Metronet Guidance – 13th March 2007