Link to this page: https://secure.socialistparty.org.uk/issue/496/2659
The Socialist 19 July 2007 |
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Metronet - bankrupt firm, bankrupt PPP
METRONET, THE private company responsible for maintaining and upgrading two-thirds of London's underground network under the notorious public-private partnership PPP scheme (part-privatisation), is heading for administration. This followed the rail regulator's decision to turn down its request for an emergency cash transfusion of £551 million.
Seemingly, this firm (a 'supergroup' comprising five allegedly 'world class' companies, Atkins, Balfour Beatty, Bombardier, EDF and Thames Water as shareholders) underestimated the cost of refurbishing the tube.
Metronet fought fiercely for this PPP project, which was vociferously supported by Gordon Brown when he was chancellor. Metronet bosses claimed they would perform the job more efficiently. But they failed.
They gave priority to making big profits - they made £50 million in 2004-5 for example - but had got significantly behind on their station improvement programme, overspent massively and soon started begging the public sector to bale their company out.
Transport for London (TfL - London's public transport authority) has already been paying a monthly fee totalling around £860 million in the last year to Metronet to do the job it was contracted to do.
Taxpayers could now be hit by a bill of nearly £2 billion to pay off Metronet's debts. Supporters of privatisation claim that PPP transfers financial risk from the public sector to the private sector. But in reality when things go wrong, it's the other way round. Transport for London could be forced to pay back 95% of the bankrupt company's £2 billion debt.
Gordon Brown argued for PPP in discussions with Greater London Assembly chief Ken Livingstone. Now he has to explain why the Metronet 'rescuers', on packing their bags, are transferring all financial responsibility to the government and leaving the debts on our shoulders.
The Metronet fiasco may also bring into even sharper doubt Brown's support for privatisation and New Labour's belief that private profit can solve all problems.
Workers 'kept in the dark'
THOUSANDS OF workers will get new employers after the bankruptcy. Metronet workers told the socialist that they had been "kept in the dark about what was happening. We only found out later that Metronet had to borrow money to pay us our most recent wages.
"We think the work Metronet has been doing should be brought back in house."
Rail union RMT general secretary Bob Crow says he is seeking "urgent confirmation" that Metronet workers' jobs would be secure.
He said: "Very few people will shed any tears if Metronet goes to the wall, but in its death throes it should not be allowed to decimate the skilled workforce that will be needed long after the company is forgotten.
"London Underground can take over Metronet's functions, and it would be far more economic and efficient for Tube infrastructure work to be in-house, under the direct control of London Underground Ltd."
Bob Crow continued: "If a failing privateer goes into administration it should not be passengers who pay through increased fares or the scaling back of upgrades the tube desperately needs, nor should the workforce have to pay the price through attacks on jobs and conditions."