The London Underground and the public-private partnership agreements

The London Underground and the public-private partnership agreements

This report from the Transport Committee, examines London Underground and the Public-Private Partnership Agreements. The Government originally announced proposals for modernising the London Underground network system via Public-Private Partnership (PPP) agreements in 1998. Three contracts were drawn up with: (i) Tube Lines for the maintenance and renewal of the Jubilee, Piccadilly and Northern Lines; (ii) with Metronet Rail BVC for the maintenance and renewal of the Bakerloo, Central, Victoria & Waterloo & City Lines; (iii) with Metronet Rail SSL, responsible for the maintenance and renewal of the "sub-surface lines": the Circle, District, Hammersmith & City, Metropolitan & East London Lines. These PPP Agreements, 30 years in duration, were arrangements to maintain, renew and upgrade parts of London Underground by private sector infrastructure companies (Infracos), whilst London Underground is responsible for services to customers. The PPP Agreements also set out a performance-related incentive and penalty scheme to remunerate the Infracos for the improvements they make to the network. In May 2007, Metronet admitted an overspend of £1 billion and was refused access to loan facilities by the banks. It then made a reference to the PPP Arbiter, which in turn triggered an Extraordinary Review (which occurs when extra costs are incurred above the level allowed for the bid). Metronet put in a bid for £551m but the PPP Arbiter provisionally concluded that a sum of £121m was appropriate. Metronet subsequently went into administration on 18 July 2007. The report sets out a number of conclusions and recommendations, including: contracts that were supposed to deliver 35 station upgrades, in fact delivered only 14, 40% of the requirement; stations that were supposed to cost Metronet SSL £2m, cost £7.5m, with only 65% of schedule track renewal accomplished; the Committee criticises the consequences of the imposition of PPP on Transport for London, as a "lamentable state of affairs", with the future of most of London Underground's upgrade and maintenance work in doubt; the Committee states, that the Government should remember the failure of Metronet before it considers entering similar arrangements; that the Government should publish a candid analysis of the events preceding Metronet's collapse and its consequences; the Committee believe that the PPP model was flawed and probably inferior to traditional public-sector management; that the Government needs to prioritise transparency and clarity to taxpayers and ensure that any future contracts result in clear accountability.

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Publisher The Stationery Office
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ISBN 9780215038319
Pages 128 pages
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