Metronet

Metronet Rail Ltd
Private / consortium
Industry Railway infrastructure
Fate Administration
Founded 2003
Defunct 2009
Headquarters Templar House, 81-87 High Holborn, London, WC1V 6NU
Key people
 Andrew Cooper (BCV MD), David Crawley (SSL MD), Andrew Lezala (group CEO)
Number of employees
 approx. 6000
Website www.metronetrail.com

Metronet Rail was one of two infrastructure companies (the other being Tube Lines Ltd) in a public-private partnership with London Underground.

Metronet was responsible for the maintenance, renewal, and upgrade of the infrastructure on nine London Underground lines from 2003 to 2008. This included track, trains, signals, civil work and stations. From 18 July 2007 to 26 May 2008, the company was in administration and on 27 May 2008, the company responsibilities were transferred back into public ownership under the authority of Transport for London.[1] In June 2009 the National Audit Office estimated that the failure of the Metronet PPP contract cost the taxpayer up to £410m adding that "most of the blame for Metronet's collapse lay with the consortium itself."[2] The administration complete, the joint administrators petitioned the High Court of Justice for the winding-up of the company on 3 November 2009, the petition to be heard on 10 December 2009.[3]

The remaining London Underground lines, (Jubilee, Northern and Piccadilly) remained under a PPP arrangement with Tube Lines until May 2010 when it was announced that Transport for London would buy out the Tube Lines consortium.[4]

Ownership

Before Metronet Rail entered administration, it had five shareholders: Atkins, Balfour Beatty, Bombardier, EDF Energy, and Thames Water.

The Metronet Rail brand consisted of separate trading companies, Metronet Rail BCV Ltd and Metronet Rail SSL Ltd : 'BCV' standing for Bakerloo, Central & Victoria lines and 'SSL' for Sub-surface Lines (Circle, District, East London, Hammersmith & City & Metropolitan). Following administration these were transferred temporarily to new companies named LUL Nominee BCV Ltd and LUL Nominee SSL Ltd.

Contracts

From April 2003 to May 2008, London Underground was operated as a Public-Private Partnership (PPP), where the infrastructure and support services were maintained by private companies but the London Underground was still publicly owned and operated by Transport for London (TfL). Metronet Rail had been the successful bidder for the two 30-year contracts for the following tube and sub-surface lines:

Under the terms of the contracts, Metronet Rail agreed to provide London Underground (LU) with trains, stations, and related infrastructure to the standards and performance levels required to give the travelling public a reliable service in a safe, efficient, and economic manner. LU paid the Metronet Rail consortium an infrastructure service charge (ISC) - a monthly payment increased or abated to reflect the network's performance. Revenue to the consortium was reduced if service fell below benchmark levels and deductions suffered for poor performance were at twice the rate of the increase in revenue for improved performance.

Metronet Rail had contracted to modernise and refurbish 150 stations by 2012, with £17 billion invested over the course of the 30-year contract. Within their maintenance and capital-project management remit they had 347 trains, over 471 miles (758 km) of track, 155 stations, 77 miles (124 km) of deep tubes, and over 2000 points, crossings, and bridges.

Performance

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.[5][6]

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". A week later the chief executive of Metronet was sacked, after complaints that it had made £50m profit despite being behind on all its major works.[7] 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 instead of the anticipated 48 km.[8]

In 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."[9]

In November 2006, Metronet were heavily criticised by the PPP arbiter, Chris Bolt, over their performance from 2003 to 2006. His analysis included criticism that Metronet had not performed in an economic or efficient manner, and had failed to follow good industry practice.[10]

Administration

On 17 July 2007 it was reported[11] that Metronet was "teetering on the brink of administration". The situation arose because it had received only £121m out of the £551m it needed to cover cost over-runs. By contrast, Tube Lines, the other PPP company, had brought in almost all of its works on time and on budget.[12]

On 18 July 2007, an administration order was made.[13] The Court appointed Ernst & Young LLP in the persons of Alan Robert Bloom, Roy Bailey, Margaret Elizabeth Mills and Stephen John Harris as special PPP administrators.[3] To enable the business activities to be kept going it was subsequently bailed out by the UK Government at a cost of £2 billion.[14] On 27 May 2008, Metronet came out of administration and the contracts and employees transferred to Transport for London under two new temporary companies, LUL Nominee BCV Ltd and LUL Nominee SSL Ltd.

On 3 December 2009, the PPP business of former Metronet Rail became an integral part of London Underground.

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.[15]

By the beginning of 2011 with the formal liquidation process having been completed, the Metronet brand and group of companies had ceased to exist.

References

  1. ↑ "Metronet Rail transfers to TfL control". TfL. 27 May 2008.
  2. ↑ "Metronet failure cost taxpayer upto £410m". Contract Journal. Archived from the original on 15 June 2009.
  3. 1 2 The London Gazette, 11 November 2009, pp. 19523
  4. ↑ "Tube maintenance back 'in house' as new deal is signed". BBC. 8 May 2010. Retrieved 9 May 2010.
  5. ↑ "Formal Investigation into the derailment of a Central line train at White City on 11th May 2004" (PDF). London Underground. August 2004. Archived from the original (PDF) on 2004-09-22.
  6. ↑ Clark, Andrew (20 August 2004). "Private firm blamed for tube derailment". The Guardian. London.
  7. ↑ Vulliamy, Ed; Clark, Andrew (21 February 2005). "Down the tube: how PPP deal is costing London". The Guardian. London.
  8. ↑ Webster, Ben (14 April 2005). "Metronet behind schedule on all of its main Tube projects". The Times. London.
  9. ↑ "The Performance of the London Underground" (PDF). House of Commons Transport Committee. 9 March 2005. p. 9.
  10. ↑ "Tube and train services disrupted". BBC News. 20 November 2006. Retrieved 12 January 2007.
  11. ↑ Hawkes, Steve (17 July 2007). "Metronet on brink of collapse after plea on costs is rejected". The Times. London.
  12. ↑ Partnership that turned sour, The Times, 27 June 2007
  13. ↑ "Metronet calls in administrators". BBC. 18 July 2007. Retrieved 21 August 2007.
  14. ↑ "Govt in £2bn Metronet bail-out".
  15. ↑ DoT failed to heed NAO warning over Metronet finances, Accountancy Age, 2 March 2010
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