London Underground group set to step into breach after consortium goes into administration

Tube Lines is likely to take over at least some of Metronet’s work after it went into administration on Wednesday.

Industry sources said Tube Lines was the logical contender, especially as Ferrovial, the Spanish contractor and stakeholder in Tube Lines is understood to have expressed interest in doing the work.

“Tube Lines would be the obvious new owner,” a source close to Metronet said.

A spokesperson for Tube Lines, which is responsible for the Northern, Piccadilly and Jubilee lines, said that it was too early to say what action it would take. It said it would “review the various opportunities” when the situation became clearer.

Tim O Toole, managing director of London Underground, said: “Tube Lines have been very careful not to intervene, but I would expect them to engage with us shortly.”

He added that the station delivery plan would be delayed as the model for Metronet’s contract, would need to be “taken apart and renegotiated”.

Metronet asked Ken Livingstone, the mayor of London, to call in administrators on Tuesday because it had run out of funds to carry out its obligations.

Ernst & Young has been appointed as administrator, which means that the Metronet stakeholders, including Balfour Beatty and Atkins, are no longer the owners of the PPP company.

Metronet was forced into administration when Chris Bolt, the PPP arbiter, ruled that it should receive only £120m, of emergency funding, rather than the £550m that it had sought.

Atkins announced a £121m loss on Metronet last month. Balfour Beatty said this week said that in the worst case scenario it would make a £125m provision. Neither firm will incur further costs but the Bolt review into the £2bn of cost overruns will continue, administrator Alan Bloom said.

The two companies have said that they will continue to work on Metronet projects but the administrator will be in charge of selling the company. Some work is likely to go to Tube Lines and some to Transport for London. It is unlikely that the Metronet PPP model will be retained.

Atkins and Balfour Beatty each released the same statement to the stock exchange.

It said: “The company remains committed to the creation of a world-class underground system for London and will continue to provide such services to London Underground as required and requested under the new ownership structure which succeeds Metronet.”
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