Thursday, July 19, 2007

Picking up the bill for Tube firm collapse

When Gordon Brown set out to part-privatise London’s Underground system in 2001, he was implementing a New Labour strategy designed to transfer capital from the state to the corporations. With the collapse of the Metronet consortium charged with upgrading most of the network, the state (i.e. the taxpayers) will now step in to pick up the pieces. Much of the work will go to the same companies that have just gone into administration! Such is the mad logic of a system where business interests are protected at all costs and the public – in this case, the long-suffering users of the Tube – are on the “any other business” part of the agenda. After Metronet collapsed, Brown told MPs that another private company would take its place, saying: “This is a £17 billion investment that would always be done by private construction and engineering firms.” Yet MPs pointed out that the former chancellor now prime minister had wasted £500m setting up the Metronet deal and that Londoners had been left with £3.5 billion in bank loans as a result of its collapse.

Brown’s “Public Private Partnership” (PPP) is a complex web of contracts, with ownership of the track and stations out of the hands of Transport for London (Tfl), which is at least a semi-public body under the wings of the Greater London Authority and mayor Ken Livingstone. Now Tfl will have to find £50m a week to maintain the vital maintenance work that Metronet has walked away from. The money will come out of Tfl’s reserves while Livingstone said a programme to refit 153 stations might have to be scaled back and that a drive to upgrade signalling systems on the busiest lines will be given priority. The mayor declined to criticise Brown, presumably in exchange for a promise of financial help from the government.

The fact is that New Labour’s love-affair with business is having dire consequences right across the board. Whether it is called PPP or PFI (Private Finance Initiative), the victims include NHS staff axed by trusts who can’t balance their books. Only yesterday, Scarborough Hospital announced it was sacking 600 staff and patients face a 40-mile journey to York for alternative facilities. The scale of the transfer of resources is phenomenal. By the end of last year, PFI contracts worth almost £100 billion had been signed or were in the pipeline. Yet, as Metronet’s collapse demonstrates, the idea that the private sector knows best is rubbish. Companies know what’s best alright – what’s best for them in terms of returns and profits. And if they can’t get what they want, they will walk away and leave the taxpayers to pick up the bill. One final note on the PPP-Metronet saga. When Brown forced the deal through, he was advised by former investment banker Shriti Vadera. After Brown took over as prime minister last month, he made her a peer and a minister in his government.

Paul Feldman, communications editor

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