In April 2003 the Government finally let the last two contracts under the controversial tube PPP scheme. The scheme was opposed by tube unions and a majority of Mayoral candidates at the 2000 GLA election including victor Ken Livingstone.
At a time when New Labour Ministers were desperate to show they were no longer in thrall to the unions it was hard not to suspect that the refusal to listen to their objections was largely a political exercise.
Their reasons for ignoring Livingstone were less opaque, having been the target of an intense campaign to prevent him standing for the Mayoralty Livingstone left the Labour Party, stood as an Independent and so badly trounced the official Labour candidate that Frank Dobson found himself competing with the Liberal Democrat’s Susan Kramer for fourth place.
Clear that Londoners didn’t want the PPP scheme Livingstone launched a High Court challenge to the scheme which was ultimately unsuccessful. At the time Livingstone said the PPP programme was “inherently unworkable” and predicted it would offer poor value to Londoners.
Ministers repeatedly denied this and claimed the scheme would save Londoners millions of pounds however in March 2005 a report by the House of Commons Public Accounts Committee report concluded that the part-privatisation of the Tube had cost taxpayers almost Â£1bn.
The Committee also found that maintaining and upgrading the tube will cost Â£450m more under the scheme than if the work was finance by the government.
It’s hard to see how today’s reports that Metronet faces administration can be anything other than vindication for the scheme’s critics – a contract which sees shareholders writing off their investment just four years into a 30 year contract and the independent arbiter concluding that “the appropriate level for an efficient and economic company performing in line with Good Industry Practice” was just a fifth of the sum claimed can only be described as seriously flawed.
If Metronet survives this crisis its contracts must be revisited and Londoners protected against any further failings. Should the company collapse central Government should honour the principle of devolution and allow London’s Mayor and TfL’s board to decide the future of the Underground’s maintenance arrangements.
As for reports that the Treasury could bail out Metronet this would be dishonest in the extreme. Gordon Brown forced tube PPP on Londoners because he refused to directly fund the work needed to upgrade and improve the network, for their part Metronet’s shareholders were happy to enter into the contract when they thought large profits could be made from it – the work has been parceled off the private sector and the private sector must be allowed to fail without recourse to the taxpayer.