UK transport firm Metronet facing administration

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Monday, July 16, 2007

A London Underground station with train.
Image: DoorFrame.

Transport company Metronet, the firm responsible for upgrading three-quarters of London tube system, is facing administration following a preliminary decision from rail arbiter Chris Bolt which limits the amount that London Underground (TfL) is obliged to pay for cost overruns to £121 million. The company had asked for £551m.

The arbitrations follows a row over who should pay for the overspend, estimated at between £1.2bn and £2bn in total. Metronet have claimed that the costs are due to changing requirements from TfL. This was disputed however by TfL and the Mayor of London, who has said previously that the costs were due to "management incompetence".

The Mayor of London, Ken Livingstone, has previously stated that he will not give Metronet one penny more than he is legally obliged to, and that if they go into administration TfL will step in and take control.

The company was awarded the tube contract under a Public-private partnership arrangement, which was a central policy of the Labour government, but fiercely (and legally) contested by the London Mayor.

The Metronet board have said they are considering their position and will make a statement later today or tomorrow.