London Underground contractor bids for extra payment

A private consortium in charge of upgrading London Underground stations and tracks today launched a formal bid to recover an estimated £1bn (€1.48bn) it believes it is owed for extra work carried out under its deal.

Metronet, which is working for London Underground (LU) under a 30-year public-private partnership deal, has called on the contract's arbiter to carry out an extraordinary review of the work on the Bakerloo, Central and Victoria lines.

The move follows the recent breakdown of talks with LU over a potential commercial settlement on the work.

London mayor Ken Livingstone has been vocal in his opposition to giving extra cash to Metronet, which is behind schedule with its modernisation programme.

But Metronet is understood to be claiming around £1.2bn (€1.78bn), although it has yet to set out a formal statement of its claim.

A spokesman for the consortium said the review, which is expected to last up to a year, would not affect the day-to-day work on the Tube.

But he said the move would cost both sides up to £10m (€14.87) each and would distract management from work on improving the network.

The Metronet consortium features construction giant Balfour Beatty, engineering firm WS Atkins, Thames Water, energy company EDF and transport firm Bombardier.

Metronet is also responsible for improvement works on the Circle, District, Metropolitan, Hammersmith & City and East London lines.

The firm added that it also expected to launch official proceedings over extra work on these lines later in the year.

The contract arbiter Chris Bolt attacked the consortium last November as "significantly behind schedule" on its work on Tube stations, with "poor delivery of maintenance and renewals".

Metronet, which has more than 5,000 staff, has completed just 43 of 143 station upgrades across the two deals so far.

Balfour Beatty, which has a 20% stake in the consortium, said Metronet's finances were "under increasing pressure" in April.

WS Atkins has said that it expects exceptional losses of £36m (€53.5m) in the year to March 31, 2007 through its involvement in the venture.

Another private consortium, Tube Lines, looks after the Jubilee, Northern and Piccadilly routes.

A Transport for London spokesman said it expected Metronet to "honour its commitments".

He said: "The extraordinary review process must not divert Metronet and their shareholders from the need to radically improve the companies' performance.

"The promised improvements to Tube track, trains, signals and stations must be delivered, on time and on budget."

Bob Crow, general secretary of the Rail, Maritime and Transport union, said: "The PPP is a complex scheme designed to transfer public funds into private pockets.

"There is no way Metronet should be handed another penny of taxpayers' and passengers' money.

"Metronet should be allowed to go bust and Tube infrastructure work brought back into the public sector where it belongs."

Transport for London and Mr Livingstone have been calling for an extraordinary review since February.

Following Mr Bolt's criticisms of Metronet for not acting in an "economic and efficient manner" last November, the TfL spokesman added: "Should the PPP Arbiter reach similar conclusions following the extraordinary review proceedings, the projected cost overruns would be largely or entirely borne by Metronet and its shareholders."