Transport for London (TfL) is bidding for Metronet, the stricken London Underground contractor, in a move that could lead to maintenance work on three quarters of the Tube being returned to the public sector.

The Mayor of London’s transport authority revealed yesterday that it had lodged an expression of interest with Metronet’s administrator and would make a formal offer by the end of next month. In a short statement, TfL said that it “was in the best interests of all parties for an exit from administration as quickly as possible”.

The move follows the collapse last month of Metronet, which ran more than £2 billion over budget on repairs and refurbishments to nine London Undeground lines, including the Victoria, District and Circle lines.

TfL would state only that it wanted to take control of the contractor on a “temporary basis”. However, sources said that TfL executives were preparing to operate the business for two years, given the scale of inefficiency in the Metronet business and the time they believe that it would take to restore it to full health.

The decision threatens to spark a new political dispute between Ken Livingstone, the Mayor, and Gordon Brown. Mr Livingstone has been a fierce critic of the Public Private Partership (PPP) – championed by Mr Brown when he was Chancellor – as a way of funding the biggest Underground investment programme since the Second World War.

When Metronet called in the administrators last month Mr Brown insisted that the PPP was working. He noted: “If Metronet pulls out, then another private company will be found to take its place.”

Metronet was four years into a 30-year, £17 billion work programme, split into two contracts. It was attacked for vast cost overruns and a system under which work was handed out among its five shareholders rather than awarded by competitive tender. The latter approach is used by Tube Lines, the other London Underground contractor.

TfL set aside £750 million last month to ensure that maintenance and repair work on the Metronet lines did not grind to a halt, putting a further strain on the public purse.

Tim O’Toole, the London Underground managing director, said yesterday that TfL wanted to put in place a “stable, economic and efficient structure” at Metronet as quickly as possible. He added: “We strongly believe that the best and most effective way to achieve our ultimate goal is for an early exit from the administration process.”

Alan Bloom, the Ernst & Young partner in charge of the administration process, declined to comment. Union leaders, who have declared a series of three-day strikes by 1,400 Metronet staff over a planned redundancy programme, welcomed TfL’s move.

Ken rolls the dice

"To impose the PPP on the capital is to show contempt for the overwhelming views of London"
Ken Livingstone, April 2001

"Mr Livingstone has made clear that he would like to see a way forward which involves maintenance being carried out by London Underground"
TFL spokesman, 23 August 2007

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