Tube maintenance company Metronet is facing the threat of administration unless there is a last-minute rescue.
Metronet is part of a public-private partnership (PPP), which uses private sector money to fund public projects.
It had asked London Underground for £551m to cover extra costs to upgrade parts of the Tube system but instead was awarded £121m by the PPP regulator.
Needless to say, this is a bit of a bugger all round. Especially after the Mayor of London, our own dear Red Ken, has just cut the price of bus tickets with the following announcement. [Emphasis mine.]
"I am pleased that the strength of London's economy, and efficiencies achieved by TfL, mean that fares can now be reduced with no cutback in the investment programme or financial risk to the transport budget. This economic strength and operating efficiency creates benefits that should be returned to Londoners."
"From 30 September the price of Pay as You Go on buses on Oyster will be reduced from £1 to 90p at anytime of the day. The price of a weekly bus pass will be cut from £14 to £13."
"This will allow the investment programme in London's transport system to be fully maintained while allowing Londoners to benefit from Transport for London's successes in lower fares."
Needless to say, if Metronet goes bust then "the investment programme in London's transport system" will not "be fully maintained".
If, however, Metronet are bailed out, some of the extra money (even if it is only £221 million awarded by the PPP watchdog) will have to come from TfL, presumably overshadowing the other "efficiencies achieved by TfL".
In either case, there is obviously a severe "financial risk to the transport budget".
Of course, the person who will really get it in the neck—and he'll find it damn difficult to dodge the responsibility for this one—is the Gobblin' King.
Metronet has only been going since 2003, when Gordon Brown forced the London Mayor to accept a PPP structure for running the LU. As always, Brown's motivation was to remove debt financing from the public balance sheet. Everyone agreed the decrepit tube network needed a packet spending on it, but Livingstone's plan to fund it via US-style municipal debt issuance would have blown Brown's tricksy Golden Rule fiscal targets (see many previous blogs, eg here).
Hence Metronet, a special purpose company (an "infraco") set up specifically to do this job, but jointly owned by the five major contractors who are doing the actual work—Atkins, Balfour Beatty, Bombardier, EDF Energy, and Thames Water (Thames Water? you ask: that's down to their tunnelling business and London's rising groundwater level—see here for shareholder rationales).
Wat Tyler reckons that Metronet's parent companies will simply walk away and let the firm go bust. So what happens then?
Mayor Ken has said he will step in—a great comfort to us all. To prevent that, Brown may order Darling to mount a rescue from No 11.
Either way, I'm afraid we taxpayers are once again on the skewer. Remembering of course that improvements to the tube network formed a key element of that wretched deal to secure the 2012 Olympics. Britain has to do the work by 2012, whatever it costs.
So, the work still needs to be done; who on earth can do it?
What's more, in the real world, there aren't that many people who can actually do the work. They inevitably include Atkins, Balfour Beatty, etc. So while their special purpose infraco may go under, they will then be free to renegotiate the terms on which their work actually gets done. We schmucks will just have to write the cheque.
Whoops—the Simple Shopper strikes again!
The trouble is, you see, that much as the Left may dislike this fact, those who rule us aren't terribly bright—this is the primary basis for my libertarianism: the state does things badly, so it should do as little as possible.
As a salutory reminder of this, I would like to ask you: which team obtained the lowest ever score on University Challenge?
Yes, you guessed it: the Members of Parliament team (alas, the identity of the massive intellects who comprised the team are not recorded).
UPDATE: given all of this, you can imagine my joy when the following email arrived in my Inbox, courtesy of the TfL travel update centre.
The Victoria line will shortly undergo a number of closures to enable new trains to be tested to increase capacity.
In order to complete this work the line will close from 2200 Monday to Thursday evenings from 23 July until 22 November, along with some additional weekend closures, details of which will be available nearer the time.
For further information, last train times and travel advice, please click here.
Victoria Line General Manager
Living out in the wilds of Brixton, as I do, the Victoria Line is by far the quickest and easiest way to get home. And so they are going to close it at ten o'clock every fucking Monday to Thursday for the next four months to test new trains?
For fuck's sake...
UPDATE: Metronet has called in the administrators.
Metronet, the firm which maintains the bulk of the London Underground network, has called in the administrators amid serious financial problems.
Responsible for the upkeep of nine Tube lines, including the Bakerloo, Victoria and Central, Metronet was hired under a private-public financing initiative.
Following a cost over-run, Metronet said it was no longer able to meet its obligations without additional money.
London Mayor Ken Livingstone said the crisis "would not undermine services".
"All trains will continue to run and all stations will remain open," he stressed.
But... but... according to the email above, if the Tube continues refurbishment then some trains won't be running. So, if Metronet is going into administration, will the Victoria Line still be closing early? Or if the trains are continuing to run... No, no, it's all getting too complicated. I will place my faith in Kenneth.