Tube PPP contracts have little to show

The managerial upheavals at Metronet are symptomatic of much wider problems with the controversial Public Private Partnership to refurbish the Tube, created at the insistence of Labour ministers. Under the PPP, the largest such contract in Britain, private infrastructure companies carry out the maintenance and upgrading of the Tube while London Underground remains publicly owned and run by the Mayor’s Transport for London.

And therein lies the fundamental flaw. Metronet has repeatedly failed to complete engineering work on time, causing chaos in the morning as commuters are delayed because trains are not running. The division of responsibilities between London Underground and the infrastructure companies has proved, as critics predicted, a hopeless way to run a busy underground system which needs everyone pulling in the same direction.

Tim O’Toole, the managing director of London Underground is an excellent railwayman but he does not have control over how Metronet, and the other better performing infrastructure company, Tube Lines, organises its work and is at his wits end about how to prevent these regular bouts of morning chaos.

The fiercely complicated contracts for the PPP were supposed to ensure that Metronet and Tube Lines are ‘incentivised’ not to cause delays and, generally, to improve their performance. But clearly despite the £450m spend on drawing up the contracts, they appear to be hardly worth the paper they are printed on. Metronet continues to coin it, while London’s tube passengers fume and taxpayers stump up a staggering £1.1bn annually to fund the PPP.

Privately, many of the Labour politicians who pushed through this scheme now know it is a disaster but the contract is for 30 years, itself a crazy length for such a complex engineering project, and the guaranteed high profits for Metronet are hardly an incentive for the firm to throw the towel in willingly.

The appointment of Andrew Lezala can be seen as a last desperate throw by Metronet to protect its profits from the PPP contract. If Lezala fails to turn around Metronet’s dire performance, watch out for the vultures circling around the PPP contract, led by the very politicians who created it and supported by Ken Livingstone who always opposed it. The key question for the Treasury is: how long are they prepared to pump £1.1bn annually into this useless contract with so little to show for it.

Shares