This week's feature article from a Member of the London Assembly is by Roger Evans AM, who comments on developments with Metronet.
On Wednesday afternoon I was invited to give evidence to the Transport Select Committee. The MPs are conducting an investigation into the collapse of Tube maintenance firm Metronet and the lessons to be learned.
Of course PPP is very much Gordon Brown’s baby. It was Gordon who devised the scheme and imposed it upon London in 2003, against the wishes of Livingstone and his transport commissioner, Bob Kiley. There was no easy or cheap way to renovate the creaking network, but having made political capital from the shortcomings of rail privatisation, Gordon should have been alert to the pitfalls.
Earlier this year, Metronet the larger of the two companies set up under PPP, went into administration with massive debts. The poor quality of information about London Underground track and signalling equipment played a significant role. The companies just didn’t realise how bad – and expensive – things would be, until they took over. However the same problem was faced by Tubelines, the smaller company, and so far they have performed well.
The task facing Metronet was possibly too large – they took responsibility for two thirds of the network. Their contracting model retained work amongst the six engineering companies that made up the consortium, restricting choice, and the board members were also drawn from these companies. On the other hand, Tubelines tendered work more openly, giving them a wider choice and the opportunity to use market forces to drive bargains on cost and quality – an essential component of a sound privatisation. This may be the single most important lesson for Gordon to take away – private sector involvement should be about more than cheap borrowing.
What happens now? Transport for London are keen to take the work back in house and if no other bidders can be found this may be the only option. The government could lose the benefits of private sector discipline and saddle Londoners with the costs of their mistakes. Delays to essential projects and rising fares herald the flutter of wings as another of Gordon’s chickens comes home to roost.
