Transport for London is poised to take charge of the failed rail maintenance consortium Metronet after Ernst & Young, acting as administrator for the company, admitted that it could not find a rival bidder.
Metronet, which is jointly owned by WS Atkins, Balfour Beatty, Bombardier, Thames Water and EDF Energy, entered administration in July after running out of cash and failing to convince arbiters that Transport for London should foot the bill for £2bn in cost overruns. It was only five years ago that the consortium won two 30-year contracts, valued at £17bn, to upgrade and maintain two thirds of the London Underground rail network, but it has consistently been criticised for falling behind schedule and exceeding its budget.
TfL, the government body chaired by the Mayor of London, Ken Livingstone, which employs train drivers and other Tube staff, has proposed that it takes over Metronet's responsibilities, assets and staff, which will be managed on a standalone basis until a new long-term structure is agreed with the Mayor and the Government. TfL and Ernst & Young, which will stop actively seeking a rival bidder for the privately owned consortium, expect Metronet to come out of administration early next year.
The collapse of Metronet is an indictment on the public-private partnership, or PPP, model whereby the Government farms out the funding risk of large infrastructure projects by handing long-term contracts to privately held companies. Mr Livingstone opposed the PPP model from the outset, as did TfL, and consumer groups fear that the Metronet debacle could result in higher fares for consumers.
Tube Lines, a PPP consortium which won the contract to upgrade and maintain three Underground lines, has met its obligations.