17 DfT's role in securing value for money was: (i) to protect the taxpayer from potential financial liabilities; and (ii) to ensure that those responsible for the delivery of the improvements, which it was funding, were operating effectively. Metronet's poor corporate governance and tied supply chain created financial and delivery problems. DfT had few formal levers to influence outcomes as it was constrained by devolved oversight arrangements and was not itself a party to the contracts. Instead, it relied on other parties whose ability to identify risks was hampered by the poor quality of information available from Metronet. The fact that these other parties did not mitigate the risks effectively exposed DfT to major residual risks which it had few levers to manage. As a result, the taxpayer was not effectively protected.
18 The taxpayer has borne some of the direct costs of Metronet's failure, including the unexpected upfront payment of £1.7 billion. We estimate there has been a direct loss to the taxpayer of between £170 million and £410 million. This is a direct loss of between four and ten per cent of the costs which the PPP Arbiter judged to have been incurred efficiently and economically by Metronet. Metronet's shareholders have also lost their equity investment. In terms of delivery of improvements, passengers have had to endure late delivery of scheduled work and the cancellation of promised upgrades to stations.
19 Underlying all these issues has been a more fundamental problem. The public sector bodies involved in the oversight, monitoring and management of the Metronet PPP contracts did not all share a common agenda. Our recommendations are aimed at securing a greater alignment of interest between these various public sector bodies.