Developments during administration

1.37  Under the terms of its guarantee, London Underground was obliged to purchase Metronet's outstanding debt obligations six months after it went into administration. In February 2008, in line with the DfT's assurance to Metronet's lenders, it provided TfL with a grant of £1.7 billion to enable London Underground to purchase Metronet's loans. DfT also agreed to make available an additional £630 million as grant over four years until 2010-11 to replace the debt that Metronet had expected to borrow over that period. As London Underground no longer has to pay for interest on Metronet's borrowing, DfT decided to reduce transport grants that relate to Metronet by 4.76 per cent from 2008-09 to 2017-18.

1.38  During administration, London Underground and the PPP Administrator took the decision to slow Metronet's capital investment programme. Seventeen station refurbishments were due to be completed between October 2007 and March 2008, of which seven were already expected to be over six months late. A further four were deferred or cancelled. The deferrals and cancellations aimed to prioritise resources on fewer projects and get costs under control. Track renewal and replacement was also slowed because Metronet was able to hit its track condition performance target with a slower rate of replacement than planned at that time. Metronet BCV completed 5,000 metres of renewal and replacement in the 11 months to 1 March 2008 compared with more than 12,000 metres in 2006-07.

1.39  Metronet's operational performance continued to be mixed during administration. Metronet's 'availability' score fell in 2007-08 compared with 2006-07 partly due to the Central Line derailment at Mile End station in July 2007 and the impact of an RMT strike in September 2007. While the number of delays related to track faults increased for the Central and District lines, it fell for the Bakerloo and Victoria lines. On 'ambience', Metronet BCV average performance fell slightly in 2007-08 compared to the year before, and was stable for Metronet SSL, although both remained better than the contractual performance benchmark.

1.40  After TfL took ownership of Metronet, London Underground's engineering division and Metronet built on London Underground's revised programme of procedures to speed up the completion of stations. The parties are now, for instance, reaching agreement on the scope of a station before detailed designs are produced.

1.41  Metronet and London Underground have agreed to reduce the number of stations to modernise. Twelve modernisations have been cancelled and a further 47 postponed into the second 7½ year period of the contract (Figure 6). These arrangements will be re-considered when decisions are taken on the permanent solution for the Metronet lines.