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UK Politics

Managers of London's fire engines face financial meltdown

The company that runs London's fleet of fire engines faces a financial crisis over unpaid taxes after the Inland Revenue applied for a winding-up petition from the court.

The Fire Brigades Union last night claimed that the problems at AssetCo Fire and Rescue could result in the 113 appliances based in 169 fire stations in the capital being sold off to raise funds. AssetCo, which has launched a drive to raise £8m to pay off its debts, has won permission to delay its court hearing until mid-April.

The company has a £30m-a-year contract under the Public Finance Initiative to maintain and manage the brigade's front-line vehicles and equipment. It also provides emergency cover if regular firefighters are not available, as happened during last year's fire dispute. It was the first deal of its kind in the UK, replacing previous plans for soldiers to be on standby in Green Goddesses to fight fires. The firm also operates Lincolnshire's fire engines.

AssetCo, which was originally a subsidiary of British Gas, recently announced a share sale to tackle its cash-flow problems. It insists its difficulties are only short-term and it is in no danger. But Matt Wrack, the FBU's general secretary, last night demanded that the Government intervene to remove the fire engine fleet from AssetCo's control. "The safety of Londoners, and of London's firefighters, is in the hands of a company which could be wound up in six weeks' time because of tax debts," he said in a letter to the Fire minister, Bob Neill.

"At the least, this will mean that there is no one to maintain London's fire engines. At the worst, it could mean that London forfeits its fire engines to pay AssetCo's debts."

Last night a spokesman for AssetCo said it was confident that the firm could sort out its financial problems. He pointed to a £120m contract secured by a joint venture involving the company from the United Arab Emirates armed forces.

The spokesman said the London contract operated through a special-purpose vehicle, which isolated it from wider financial risk. A spokesman for Mr Neill said the contract was a matter for the company and the London fire brigade. A spokesman for the brigade said: "We plan for all events that could affect the fire and rescue service we provide and do not anticipate an impact on London's fire engines."