Metronet Rail, the troubled consortium that is attempting to renew two thirds of London's Underground network, is cutting up to 290 middle management and back-office jobs and a further 200 contract workers in an attempt to save its 30-year contract.

The cuts, representing some 10 per cent of Metronet's 5,000 workforce, come as the company is widely expected to ask the Public Private Partnership Arbiter Chris Bolt to intervene in a dispute with London Underground over who should bear the brunt of a massive £1.2 billion cost overrun. Metronet hopes Mr Bolt will force taxpayers, via London Underground, to bear half the costs.

Andrew Lezala, Metronet's chief executive, said the job cuts "address issues raised by the PPP Arbiter in his annual review last November".

In his report, Mr Bolt hit out at inefficiencies and delays in the upgrade work Metronet was doing, saying there were too many layers of management, which slowed down decision-making and communication with the shop floor.

A Metronet spokesman said: "We want to show to people that we are listening to criticism, particular the Arbiter."

Metronet said the cuts would fall on layers of middle management and support staff at the head office, not on frontline workers, where it has just recruited 550 engineers.

It said it hopes only half of the 290 permanent jobs going this summer will be by compulsory redundancy with the rest being redeployed or leaving of their own accord.

Metronet, owned by WS Atkins, Balfour Beatty, Bombardier, EDF and Thames Water, is responsible for maintaining and upgrading track, trains and stations on all the Underground’s lines apart from the Piccadilly, Northern and Jubilee.

Mr Lezala, who joined in 2005, said: "Whilst I have already introduced significant change within Metronet, it's been necessary for us to conduct a further review to ensure that we have the right number of people in place – doing the right jobs in our business.”

The RMT union condemned the move. Bob Crow, the general secretary, said: "It is Metronet that needs to be sacked, not our members."

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