Metronet Rail was one of two infrastructure companies (the other being
Tube Lines Ltd) in a
public-private partnership (PPP) with
London Underground
The London Underground (also known simply as the Underground or by its nickname the Tube) is a rapid transit system serving Greater London and some parts of the adjacent ceremonial counties of England, counties of Buckinghamshire, Essex and He ...
. A consortium of private companies, Metronet was responsible for the maintenance, renewal, and upgrade of the infrastructure (track, trains, tunnels, signals, and stations) on nine London Underground lines from 2003 to 2008.
Following financial difficulties, the company was placed in
administration
Administration may refer to:
Management of organizations
* Management, the act of directing people towards accomplishing a goal
** Administrative assistant, Administrative Assistant, traditionally known as a Secretary, or also known as an admini ...
in July 2007.
In May 2008, the company's responsibilities were transferred back into public ownership under the authority of
Transport for London (TfL).
In June 2009 the
National Audit Office estimated that the failure of the Metronet
PPP contract cost the taxpayer up to £410million, adding that "most of the blame for Metronet's collapse lay with the consortium itself." The administration complete, the company was wound up in December 2009.
[The London Gazette, 11 November 2009, pp. 19523]
History
In the late 1990s, the Labour government proposed a
public-private partnership (PPP) to reverse years of underinvestment in
London Underground
The London Underground (also known simply as the Underground or by its nickname the Tube) is a rapid transit system serving Greater London and some parts of the adjacent ceremonial counties of England, counties of Buckinghamshire, Essex and He ...
.
The underground trains themselves would be operated by the public sector, however the infrastructure (track, trains, tunnels, signals, and stations) would be leased to private firms for 30years to allow for improvements to be made.
Metronet was founded in 1999 as a consortium of companies to bid for PPP contracts.
The equal shareholders were
Atkins Atkins may refer to:
Places in the United States
* Atkins, Arkansas, a city
* Atkins, Iowa, a city
* Atkins, Louisiana, an unincorporated community
* Atkins, Nebraska, an unincorporated community
* Atkins, Virginia, a census-designated place
* ...
,
Balfour Beatty
Balfour Beatty plc () is an international infrastructure group based in the United Kingdom with capabilities in construction services, support services and infrastructure investments. A constituent of the FTSE 250 Index, Balfour Beatty works ac ...
,
Adtranz (later
Bombardier Transportation
Bombardier Transportation was a Canadian-German rolling stock and rail transport manufacturer, headquartered in Berlin, Germany.
It was one of the world's largest companies in the rail vehicle and equipment manufacturing and servicing industry ...
),
SEEBOARD (later
EDF Energy
EDF Energy is a British integrated energy company, wholly owned by the French state-owned EDF (Électricité de France), with operations spanning electricity generation and the sale of natural gas and electricity to homes and businesses through ...
), and
Thames Water
Thames Water Utilities Ltd, known as Thames Water, is a large private utility company responsible for the public water supply and waste water treatment in most of Greater London, Luton, the Thames Valley, Surrey, Gloucestershire, north Wiltshir ...
.
To pay for the works, each company provided £70million of equity. A further £2billion was raised using bank loans, and £600million from the European Investment Bank.
The consortium awarded contracts to its own shareholders, for example rolling stock contracts were awarded to
Bombardier Transportation
Bombardier Transportation was a Canadian-German rolling stock and rail transport manufacturer, headquartered in Berlin, Germany.
It was one of the world's largest companies in the rail vehicle and equipment manufacturing and servicing industry ...
.
This
closed shop
A pre-entry closed shop (or simply closed shop) is a form of union security agreement under which the employer agrees to hire union members only, and employees must remain members of the union at all times to remain employed. This is different fro ...
supply chain approach was later criticised for causing high costs for the consortium.
[ ]
Formation of the PPP
Following a two-year bidding process, Metronet and
Tube Lines
Tube Lines Limited, initially known as 'Infraco JNP' (an amalgamation of infrastructure and company), is an asset-management company responsible for the maintenance, renewal and upgrade of the infrastructure, including track, trains, signals, ci ...
were selected as the preferred consortiums in May 2001.
In April 2003, Metronet began to maintain, upgrade and renewal London Underground infrastructure as part of the PPP.
Metronet Rail had been the successful bidder for the two 30-year contracts for the following tube and sub-surface lines:
*BCV (tube) lines contract:
Bakerloo
The Bakerloo line () is a London Underground line that goes from in suburban north-west London to in south London, via the West End of London, West End. Printed in brown on the Tube map, it serves 25 stations, 15 of which are underground, ove ...
,
Central
Central is an adjective usually referring to being in the center of some place or (mathematical) object.
Central may also refer to:
Directions and generalised locations
* Central Africa, a region in the centre of Africa continent, also known as ...
,
Victoria
Victoria most commonly refers to:
* Victoria (Australia), a state of the Commonwealth of Australia
* Victoria, British Columbia, provincial capital of British Columbia, Canada
* Victoria (mythology), Roman goddess of Victory
* Victoria, Seychelle ...
and
Waterloo & City lines.
*SSL (sub-surface) lines contract:
Circle
A circle is a shape consisting of all points in a plane that are at a given distance from a given point, the centre. Equivalently, it is the curve traced out by a point that moves in a plane so that its distance from a given point is const ...
,
District
A district is a type of administrative division that, in some countries, is managed by the local government. Across the world, areas known as "districts" vary greatly in size, spanning regions or counties, several municipalities, subdivisions o ...
,
East London
East or Orient is one of the four cardinal directions or points of the compass. It is the opposite direction from west and is the direction from which the Sun rises on the Earth.
Etymology
As in other languages, the word is formed from the f ...
,
Hammersmith & City and
Metropolitan
Metropolitan may refer to:
* Metropolitan area, a region consisting of a densely populated urban core and its less-populated surrounding territories
* Metropolitan borough, a form of local government district in England
* Metropolitan county, a typ ...
lines.
Tube Lines, held the contract for the other London Underground lines
Jubilee
A jubilee is a particular anniversary of an event, usually denoting the 25th, 40th, 50th, 60th, and the 70th anniversary. The term is often now used to denote the celebrations associated with the reign of a monarch after a milestone number of y ...
,
Northern
Northern may refer to the following:
Geography
* North, a point in direction
* Northern Europe, the northern part or region of Europe
* Northern Highland, a region of Wisconsin, United States
* Northern Province, Sri Lanka
* Northern Range, a ra ...
and
Piccadilly
Piccadilly () is a road in the City of Westminster, London, to the south of Mayfair, between Hyde Park Corner in the west and Piccadilly Circus in the east. It is part of the A4 road that connects central London to Hammersmith, Earl's Court, ...
. Both Metronet and Tube Lines were colloquially referred to as "infracos".
Contracts were worth around £17billion over the 30-year period, with each contract receiving around £660million each month from the Government, albeit with reductions if targets are not met.
Commitments under the PPP
Under the terms of the PPP contracts, Metronet agreed to maintain London Underground infrastructure (track, trains, tunnels, signals, and stations) to the standards and performance levels set in the contract. Furthermore, Metronet committed to delivering substantial improvements to the network, by refurbishing, upgrading and renewing track, trains, tunnels, signals, and stations. To encourage high reliability, deductions suffered for poor performance were set at twice the rate of increase in revenue for improved performance.
At a cost of £7billion, Metronet promised substantial investment during the first 7.5years of the contract (2003 to 2010):
* 147 stations (including lifts and escalators) modernised or refurbished by 2012
* of track renewed and 166 points/crossings replaced
* Upgrade and refurbishment of tunnels, bridges, embankments, track drainage and other civil structures
* Refurbishment of existing rolling stock, as well as making them more reliable
* 47 new trains with upgraded signalling on the
Victoria line
The Victoria line is a London Underground line that runs between in south London and in the north-east, via the West End. It is printed in light blue on the Tube map and is one of the only two lines on the network to run completely undergr ...
by 2012 (delivered as
2009 Stock)
* 190 new air conditioned trains for the
District
A district is a type of administrative division that, in some countries, is managed by the local government. Across the world, areas known as "districts" vary greatly in size, spanning regions or counties, several municipalities, subdivisions o ...
,
Circle
A circle is a shape consisting of all points in a plane that are at a given distance from a given point, the centre. Equivalently, it is the curve traced out by a point that moves in a plane so that its distance from a given point is const ...
,
Hammersmith & City and
Metropolitan
Metropolitan may refer to:
* Metropolitan area, a region consisting of a densely populated urban core and its less-populated surrounding territories
* Metropolitan borough, a form of local government district in England
* Metropolitan county, a typ ...
lines by 2015 (delivered as
S Stock)
* 24 new
Bakerloo line
The Bakerloo line () is a London Underground line that goes from in suburban north-west London to in south London, via the West End. Printed in brown on the Tube map, it serves 25 stations, 15 of which are underground, over . It runs partly ...
trains by 2019 (cancelled following the collapse of the PPP)
Performance and criticism
![66712 Metronet Ipswich (cropped)](https://upload.wikimedia.org/wikipedia/commons/3/36/66712_Metronet_Ipswich_%28cropped%29.JPG)
In June 2004, the
National Audit Office criticised the complexity of the PPP deals, noting they offered "the prospect, but not the certainty" of improvements. In August 2004, Metronet was declared at fault by an accident investigators' report into a May 2004 derailment at
White City White City may refer to:
Places Australia
* White City, Perth, an amusement park on the Perth foreshore
* White City railway station, a former railway station
* White City Stadium (Sydney), a tennis centre in Sydney
* White City FC, a football clu ...
, for failing to implement sufficient safety checks despite being ordered to do so by TfL.
In March 2005, the House of Commons
Transport Select Committee
The Transport Select Committee is a select committee of the House of Commons in the Parliament of the United Kingdom. The remit of the Committee is to examine the expenditure, administration and policy of the Department for Transport and its associ ...
noted that "Availability is the most important factor for Tube travellers. All the infracos needed to do to meet their availability benchmarks was to perform only a little worse than in the past. On most lines, they did not even manage that." In March 2005, the
House of Commons
The House of Commons is the name for the elected lower house of the bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of parliament. ...
Public Accounts Committee, charged with ensuring value for money in public spending, published a report concluding that it was "impossible to determine" whether the PPP was better value than a publicly run investment programme.
In April 2005, the
Commissioner of Transport for London
The Commissioner of Transport for London has management responsibility for Transport for London (TfL) and hence for the transport system throughout the City of London and Greater London in the United Kingdom. TfL is controlled by a board whose ...
,
Bob Kiley
Robert R. Kiley (September 16, 1935 – August 9, 2016) was an American public transit planner and supervisor, with a reputation of being able to save transit systems experiencing serious problems. From 2001 to 2006 he was the initial Commissio ...
, pressed for an urgent review of the PPP, describing its performance as "bordering on disaster". TfL also said that new technology promised by Metronet had yet to be seen — "We were supposed to be getting private sector expertise and technology with the PPP (Public Private Partnership) but instead they are just using the same old kit."
A week later the chief executive of Metronet was sacked, after complaints that it had made £50million profit despite being behind on all its major works. By April 2005, it had started work on only 13 station refurbishments, instead of 32 as scheduled, and was more than a year behind on the refurbishment of 78
District line trains. It was also behind on its track replacement programme, having completed 28 km of the anticipated 48 km.
In November 2006, Metronet were heavily criticised by the arbiter of the PPP, the
Office of Rail Regulation
The Office of Rail and Road (ORR) is a non-ministerial government department responsible for the economic and safety regulation of Britain's railways, and the economic monitoring of National Highways.
ORR regulates Network Rail by setting its ...
(ORR) over their performance from 2003 to 2006.
Analysis included criticism that Metronet had not performed in an economic or efficient manner, and had failed to follow good industry practice. The ORR also stated that Metronet would be held responsible for £750million in cost overruns.
The other PPP consortium,
Tube Lines
Tube Lines Limited, initially known as 'Infraco JNP' (an amalgamation of infrastructure and company), is an asset-management company responsible for the maintenance, renewal and upgrade of the infrastructure, including track, trains, signals, ci ...
, noted that they were delivering projects on time and on budget.
In July 2007, Metronet admitted that it may have caused a Central Line train derailment near
Mile End
Mile End is a district of the London Borough of Tower Hamlets in the East End of London, England, east-northeast of Charing Cross. Situated on the London-to-Colchester road, it was one of the earliest suburbs of London. It became part of the m ...
, in which a train hit a fire blanket left by maintenance workers.
Administration
In April 2007, Mayor
Ken Livingstone
Kenneth Robert Livingstone (born 17 June 1945) is an English politician who served as the Leader of the Greater London Council (GLC) from 1981 until the council was abolished in 1986, and as Mayor of London from the creation of the office i ...
stated that Metronet could collapse due to a £750million overspend. In July 2007 it was reported that Metronet was "teetering on the brink of administration". The situation arose because it had received only £121million out of the £551million it needed to cover cost over-runs. By contrast,
Tube Lines
Tube Lines Limited, initially known as 'Infraco JNP' (an amalgamation of infrastructure and company), is an asset-management company responsible for the maintenance, renewal and upgrade of the infrastructure, including track, trains, signals, ci ...
, the other PPP consortium, had brought in almost all of its works on time and on budget. On 18 July 2007, the company was placed into
administration
Administration may refer to:
Management of organizations
* Management, the act of directing people towards accomplishing a goal
** Administrative assistant, Administrative Assistant, traditionally known as a Secretary, or also known as an admini ...
.
To enable its business activities to be kept going while the winding-up of the company was in progress, the
UK Government
ga, Rialtas a Shoilse gd, Riaghaltas a Mhòrachd
, image = HM Government logo.svg
, image_size = 220px
, image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg
, image_size2 = 180px
, caption = Royal Arms
, date_es ...
provided Metronet with £2billion in 2008. Following negotiations with Bombardier, Metronet modified contracts to allow for continued delivery of
2009 Stock and
S Stock trains, while releasing Bombardier from its obligation to resignal the sub-surface lines.
Aftermath
On 27 May 2008, Metronet came out of administration, and its contracts and employees were transferred to TfL under two new temporary companies, LUL Nominee BCV Ltd and LUL Nominee SSL Ltd. On 3 December 2009, the PPP business of Metronet Rail became an integral part of London Underground.
Some of the improvements promised by Metronet were delivered (such as new
2009 Stock and
S Stock trains), however other improvements were cancelled or delayed.
In 2008, the
Department for Transport
The Department for Transport (DfT) is a department of His Majesty's Government responsible for the English transport network and a limited number of transport matters in Scotland, Wales and Northern Ireland that have not been devolved. The d ...
refuted claims that the PPP was to blame for the collapse of Metronet, and that it was "predominantly a corporate failure", with "structural weaknesses
hat
A hat is a head covering which is worn for various reasons, including protection against weather conditions, ceremonial reasons such as university graduation, religious reasons, safety, or as a fashion accessory. Hats which incorporate mecha ...
led to its own downfall." In 2010 the House of Commons'
Public Accounts Committee reprimanded the
Department for Transport
The Department for Transport (DfT) is a department of His Majesty's Government responsible for the English transport network and a limited number of transport matters in Scotland, Wales and Northern Ireland that have not been devolved. The d ...
for its failure to heed
National Audit Office warnings about the company's management. According to the report from the Public Accounts Committee, around £170million to £410m of taxpayer money was lost due to the failure of Metronet.
The companies involved in the consortium collectively lost around £350million in the collapse.
In May 2010, it was announced that TfL would buy out the
Tube Lines
Tube Lines Limited, initially known as 'Infraco JNP' (an amalgamation of infrastructure and company), is an asset-management company responsible for the maintenance, renewal and upgrade of the infrastructure, including track, trains, signals, ci ...
consortium, formally ending the PPP.
By the beginning of 2011, with the formal liquidation process having been completed, the Metronet brand and group of companies had ceased to exist.
See also
*
History of the London Underground
References
External links
CityMayors articleBloomberg.com
{{Authority control
London Underground infrastructure
Public–private partnership projects in the United Kingdom