Ken Livingstone, the London mayor, said this week that Metronet, the London Underground infrastructure company, could collapse because of its financial troubles.

Livingstone said: “It is quite possible that the shareholders will opt for insolvency.” If that happened, he said, London Underground management would take over maintenance and renewal work.

His message came two weeks after Atkins, a stakeholder in Metronet, announced that it would take a £36m hit because of cost overruns. Balfour Beatty, also a stakeholder, said Metronet’s finances were under increasing pressure. Last week the two companies said they remained “committed” to Metronet. However, the relationship with client London Underground is worsening. It is likely that a lengthy extraordinary review by the independent arbiter will be necessary because neither party can agree on who should pay what for the cost overruns.

Livingstone also announced yesterday that engineer Mott MacDonald had been appointed lead consultant on the £509m upgrade of Victoria underground station in central London.