Metronet Rail was an asset-management company responsible for the maintenance, renewal and upgrade of the infrastructure, including track, trains, signals, civils work and stations, on several London Underground lines. It was one of two infrastructure companies (the other being Tube Lines Ltd) in a public-private partnership (PPP) with the Underground.
Metronet was founded in 1999 as a consortium of several private companies to bid for a PPP, the British Government having signaled its intention to transfer such activity from the public sector, although the bidding process was protracted by political disagreements. To encourage high reliability rates, financial deductions were incurred for poor performance at twice the rate of increase in revenue for improved performance. In May 2008, the company's responsibilities were transferred back into public ownership under the authority of Transport for London (TfL). The company was wound up in December 2009. After TfL opted to buy out the Tube Lines consortium in 2010, all Underground infrastructure maintenance was thereafter managed in-house.
History
Background
During the mid 1990s, the Conservative government conducted a deep exploration of various options for involving the private sector in the operations of the London Underground. The selected model called for the operation of services on the Tube to remain in the hands of the public sector while the infrastructure (including the track, trains, tunnels, signals, and stations) would be leased to private firms for a 30 year period, during which they would enact various improvements. The equal shareholders in the venture were Atkins, Balfour Beatty, Adtranz (later Bombardier Transportation), SEEBOARD (later EDF Energy), and Thames Water. The consortium awarded contracts to its own shareholders, for example rolling stock contracts were awarded to Bombardier Transportation.
Formation of the PPP
The bidding process was protracted by political factors, including public disagreements on the topic of PPPs between then-Mayor of London Ken Livingstone and Deputy Prime Minister John Prescott. Metronet emerged as the successful bidder for two 30-year contracts, covering various tube and sub-surface lines; specifically, the BCV (tube) lines contract involved the Bakerloo, Central, Victoria and Waterloo & City lines, while the SSL (sub-surface) lines contract covered Circle, District, East London, Hammersmith & City and Metropolitan lines. Contracts valued at around £17billion over the 30-year period were issued, under which these companies received around £660million each month from the Government, although this amount was subject to reductions if targets are not met.
In April 2003, Metronet began to maintain, upgrade and renew London Underground infrastructure as the PPP came into force. In August 2004, Metronet was declared at fault by an accident investigators' report into a May 2004 derailment at White City, for failing to implement sufficient safety checks despite being ordered to do so by TfL.
During March 2005, the House of Commons Transport Select Committee 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." That same month, the House of Commons 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, Bob Kiley, 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." after complaints that the company 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.
During November 2006, Metronet were heavily criticised by the arbiter of the PPP, the Office of Rail Regulation (ORR) over their performance from 2003 to 2006. The other PPP consortium, Tube Lines, noted that they were delivering projects on time and on budget.
Administration
In April 2007, Mayor Ken Livingstone 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 that was needed to cover cost over-runs. By contrast, Tube Lines, 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. 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. In 2010, the House of Commons' Public Accounts Committee reprimanded the Department for Transport 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. Commentators blamed the complex and "onerous" contracts for its failure. Combined with the takeover of Metronet, this meant that all maintenance was thereafter managed in-house, although TfL has continued to use a large number of private suppliers and contractors.