The collapse of Metronet , the consortium entrusted with
upgrading the tube, spells the collapse of the whole notion of ‘Public Private
Partnership’, otherwise known as the Private Finance Initiative.
Metronet (corporate motto ‘Hallelujah, I’m a bum’) is a
consortium with a £17 billion contract to upgrade most of the system. They have
come back with the begging bowl claiming costs have overrun. They wanted £551
million more (for the time being), they were ‘only’ offered £121 million. So
they’ve gone belly up, leaving the underground in a pickle. They are also leaving
us a little present of £2 billion debt.
How did they get the job in the first place?
New Labour insisted the private sector get involved. They
have an ideological belief that private is better than public. Their misguided
ideology is in danger of costing us all £2 billion.
The government case for PPP is as follows:
haven’t got the money. The private sector will be able to raise it on the
private sector is more efficient than public provision. They will deliver
at the price and on time.
are they efficient? Because they compete with one another. Because their
managers are skilled entrepreneurs.
private sector will take all the risks. We can just sit back and let them
get on with it.
The Metronet collapse shows:
- It’s always
our money that pays for infrastructure in the end. Does Gordon Brown think they
just wave a magic wand at the money markets? We will have to pay the borrowing
back – with interest.
- Metronet are
greedy parasites, forever begging for government handouts. In the consortium
are the usual suspects including Balfour Beatty – the firm in charge of rail
maintenance whose negligence led to a train derailment at Hatfield in which
four people died. Do they sound like the right people for the job?
firm involved in the consortium is Thames Water. What do they know about
running a railway? Come to that, what do they know about running a water
supply? At Thames Water one gallon in three still leaks out of the system. They
don’t care about the waste – they just charge us more.
- They don’t
compete with each other. They are given a monopoly over the renovation of
certain lines. How could it be done any other way? Competition could not
possibly work. The whole point about the tube is that it needs to be an
- So Metronet
got the maintenance contract. Who did they dish the work out to? They
subcontracted it to Balfour Beatty, to Thames Water…to themselves. Competition
In the end
we take all the risk. A couple of weeks ago some tarpaulin fell down on the
Central Line and trapped a train in the tunnel for a couple of hours, a nasty
experience for the passengers, and risky. What was the tarpaulin doing there in
the first place? Then the District Line had to be closed because a tree fell on
the track near Earls Court. Metronet had been warned about it. Laurel and Hardy
show more entrepreneurial skill than this shower!
- Now we’re
facing the risk of stumping up to pay for Metronet’s incompetence. Even Gordon
Brown knows we have to have a functioning public transport system in London.
Metronet can walk away from the train crash, but we’ll have to sort out the
We’ve already coughed up plenty for this government’s mad
addiction to bringing in the private sector. The contracts for the deal are
believed to have cost £500 million! We paid for this, of course. What idiot set
this up? Step forward, John Prescott, and make a bow to the grateful citizenry.
These contracts are not simple statements sealed by a
handshake. They run to thousands of pages and are supposed to cover every
eventuality. And guess what? The rumour is they’re not water tight. Metronet
are trying to dump their losses on us. They may not be able to run a railway,
but they know how to pass the buck.
London Underground is a mess, no doubt about that. The
question arose a few years ago how to modernise the network. Socialist Appeal has
always argued for a publicly funded, publicly owned transport system.
Gordon Brown and the Treasury made it quite clear they would
not let London Mayor Ken Livingstone borrow the money. Livingstone wanted to
issue bonds. This is not our solution, but he was and is the elected mayor, and
he had been elected by Londoners on a programme of opposition to PFI. If
regional airports can issues bonds, then the elected London authority should be
able to do the same. Livingstone didn’t trust Metronet and wanted control of
the operation. He was right.
When the scheme was launched, participants in the consortium
were salivating at a 19% payback, far more than usual for running a public
service which, as we now know, is entirely risk free for capitalism. Never the
less Amey had to pull out of the deal later on. The writing was already on the
Not surprisingly, Livingstone is spitting blood at the
‘breathtaking’ incompetence of Metronet’s ‘disastrous’ management. He wants the
shareholders to stump up the £2 billion. "As far as I am concerned," he says,
"(the directors) are dead meat." In a just world they would be and, more to the
point, so would PFI/PPP.