3.11 Metronet BCV and SSL entered administration on 18 July 2007. On 27 May 2008, the assets, liabilities and employees of both Metronet companies were transferred to two new subsidiaries of TfL. The PPP Administrator, Ernst & Young, ran the business with Metronet's existing management while trying to find a buyer and changed the majority of the senior management team in October 2007. Ernst & Young was paid £33 million in administration fees by TfL, which DfT provided through its transport grant to TfL. TfL also incurred significant internal costs.
3.12 There were no private sector bidders for Metronet. TfL was the only prospective buyer, and so the Administrator allowed London Underground and TfL significant influence over the major decisions taken, including the renegotiation of contracts. During the period two important decisions were made.
i In April 2008, the London Mayor and TfL agreed to align Metronet's employees' pension and travel subsidies with those of TfL. Metronet employees were allowed to join TfL's final salary pension scheme, after transfer. Metronet estimates the alignment of pension schemes will cost an extra £4.1 million per year, and free tube travel between £0.4 million and £3 million per year depending on take-up by staff. DfT was not consulted on this decision as TfL considered that its consent was not required.
ii The Administrator, in consultation with London Underground, decided to renegotiate some of the supply chain contracts in a process that had begun in January 2007. London Underground believes that it achieved efficiency savings from the renegotiated contracts as well as greater flexibility in determining engineering solutions.
3.13 When Metronet entered into PPP Administration it had only completed 33 of the 64 station projects originally agreed due under the PPP contracts (Figures 12 and 13). During administration, Metronet agreed with London Underground to reduce significantly the number of stations in its station refurbishment and modernisation programme. Twelve planned modernisations were cancelled, and a further 45 postponed into the second 7½ year period (see Figure 6 on page 18).