MPs say London Underground PPP is ‘flawed’

A new report by the UK parliament says the PPP contract to upgrade London’s underground rail is “flawed”, adding its voice to the many that have been criticising the project. Mayor Boris Johnson has called for the government to intervene to correct the “dysfunctional” PPP contract.

Mirror, mirror, on the wall, which is the most beleaguered public-private partnership (PPP) contract of all? Why, the PPP to upgrade London’s underground rail system, of course.

Adding fuel to the fire of the controversial PPP contract, the UK parliament’s transport committee has released a report today saying the PPP is “fundamentally flawed”, blaming Tube Lines for the delays in upgrading one of London’s underground rail lines. Tube Lines is the Ferrovial/Becthel-owned consortium that won the 30-year contract to refurbish the underground network.

While the parliamentary report acknowledges that Tube Lines’ performance has in some cases been exemplary, MPs consider that “20 months following the demise of Metronet, the Government is no nearer being able to demonstrate that the PPP provides value for money for the taxpayer”. It also notes with concern that the relationship between Tube Lines and the London authorities, “stoked by the Mayor [Boris Johnson]” has been steadily deteriorating.

Unsurprisingly, the report has already been seized by both parties and spun to their own needs. Mayor Boris Johnson issued a statement saying the government “must urgently review the PPP” to stop “a system that has wasted hundreds of millions of pounds of public money”.

Tube Lines, on the other hand, preferred to highlight in its statement the parts of the report that are critical of London Underground (LU), the public London authority that runs the underground network. Specifically, Tube Lines underlined that LU’s refurbishment works are a third more expensive than Tube Lines’; that MPs are calling for more transparency on LU’s part so they can better evaluate its performance; and that Tube Lines’ upgrades have reduced passenger delays by 57 percent since 2003.

The 30-year public-private partnership contract to improve the world’s oldest underground rail was shepherded by Prime Minister Gordon Brown in 2003, when he was Chancellor of the Exchequer. But the contract has had its share of problems, with one of the original PPP contractors, Metronet, going bankrupt in 2007, forcing the City of London to take it over.