Metronet failure cost taxpayers £410m, MPs find

Published: 7:30AM GMT 02 March 2010

Metronet, that was obliged for progressing two-thirds of the London Underground system, went in to administration dialect dialect in 2007 Photo: PA

The dialect abandoned a transparent notice by the National Audit Office to equivocate receiving a hands-off proceed over Metronet, the inform from the House of Commons Public Accounts Committee added.

Metronet, that was obliged for progressing two-thirds of the London Underground system, went in to administration dialect dialect in 2007.

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The inform pronounced that, whilst a small of the improvements Metronet was engaged to broach were finished on time and inside of budget, others had been delayed.

The inform went on: ""The loss to the taxpayer opening from Metronet"s bad monetary carry out and unsound corporate governance is a small �170 million to �410 million.

The Public Accounts Committee"s chairman, Edward Leigh MP (Con, Gainsborough), said: ""The taxpayer has lost up to �410 million as a outcome of the DfT"s unsound government of the risks opening from the Metronet contracts for upgrading the infrastructure of the Underground.

""This cabinet finds it unsuitable that the dialect abandoned the notice by the National Audit Office in 2004 to equivocate a hands-off proceed to overseeing the upgrades.""

Mr Leigh went on: ""The department"s assumptions were injured from the outset. It was genuine in presumption that Metronet would settle clever monetary government and corporate governance. It poorly insincere that the open bodies since the charge of overseeing the devolved smoothness of the plan had the inform and change to do the job.

""And the arrogance that Metronet"s lenders would strive clever change on Metronet"s governance and monetary health in sequence to strengthen their investment was undermined since the dialect shouldered 95% of the lenders" risks.

""The dialect got itself in to a on all sides with the Metronet contracts whereby it was unprotected to big monetary risks that it had small range or equates to of mitigating.

""These mistakes contingency never be steady on destiny large contracts and Government departments contingency settle and practice the right to meddle where problems of this bulk occur.""

In the report, the cabinet pronounced it was "appalled by the arrogant perspective to safeguarding open income that the dialect displayed by claiming that the preference to make use of the Metronet contracts had been irreproachable since there would have been an even larger loss to the taxpayer had the upgrades (of the Tube) been overseen without delay by London Underground (LU)".

The inform went on: "The base causes of the loss to the taxpayer lay in the approach the devolved smoothness arrangements were set up and in the department"s injured assumptions about how they would work.

"The department"s arrogance that Metronet would put in place clever monetary government and clever corporate governance was genuine and, unsurprisingly in the circumstances, did not hold."

The inform continued: "The dialect undermined the arrogance that lenders would practice clever slip by assuring them that it would encounter 95% of the superb debt in the eventuality of failure.

"The department"s arrogance that LU, Transport for London and the Mayor of London would practice clever slip additionally fell when the open zone parties to the stipulate were incompetent to acquire the inform they indispensable to manage the stipulate effectively."