3.14 As part of the Government's 2007 Comprehensive Spending Review settlement the Government and TfL agreed to establish a Joint Steering Committee to evaluate the options for the permanent structure and make a recommendation to the Mayor and Secretary of State. The Joint Steering Committee consisted of TfL, London Underground, DfT, the Treasury and Partnerships UK. Its remit, which was set out in a Memorandum of Understanding between TfL and DfT, was to identify a permanent structure which:
■ provides a stable and safe operational framework for the Underground;
■ delivers affordable modernisation, upgrade and maintenance; and
■ delivers value for money for the public sector in accordance with relevant statutory duties of the Mayor and the Secretary of State.
3.15 The Joint Steering Committee aimed to identify a number of options for the permanent solution that reflected a range of risk transfer from the public sector to the private sector as well as a range of ownership structures. The following options have been considered. Under all of them, London Underground would retain responsibility for operations.
■ Option 1 Traditional procurement with public sector ownership - TfL and London Underground would procure a whole programme of works in line with their ten year funding settlement. This option could entail: London Underground taking full responsibility for operations, maintenance and all capital works; a separate 'delivery company' being formed by TfL to take responsibility for maintenance, strategy and major capital works while London Underground would retain responsibility for maintenance, strategy and minor capital works; or a publicly owned company that would take responsibility for maintenance and capital works.
■ Option 2 Traditional procurement with co-ownership of the delivery company - The new 'delivery company' would take responsibility for the programme management and delivery of major capital works. It would be owned 50 per cent by TfL and 50 per cent by an equity investor. London Underground would retain responsibility for operations, maintenance, strategy and the delivery of minor capital works.
■ Option 3 Long term performance based contracts - London Underground would let PFI contracts for the modernisation of asset groups or other specific pieces of work wherever practicable or value for money. The remaining works would be delivered via conventional procurement.
■ Option 4 Whole System Outsourcing for the Metronet lines - Works would be carried out by a privately owned business. There is a possibility under this option that, if appropriate, TfL could co-invest into this business, taking up to a 50 per cent equity stake.
3.16 In selecting the best long term option, the Joint Steering Committee considered the need for comparability between different bodies to determine the economic and efficient level of spending; the need for clear and effective governance of public and private sector parties to the contracts; and the need for due diligence and transparency, so that DfT can monitor any residual risks.
3.17 Work towards a permanent solution has proceeded slowly so far, for three reasons: firstly, Metronet did not come out of administration until 27 May 2008, later than originally anticipated; secondly, there was an election and a change of Mayor of London in May 2008; and thirdly, there have been difficulties in gathering the full set of evidence needed to assess the preferred option's success. The Joint Steering Committee has completed its report and made its recommendations to the Secretary of State for Transport and the Mayor of London. The Mayor and the Secretary of State are now preparing to make a joint decision on the long term arrangements for the Metronet contracts.
[Access Figure 12 Delays on Metronet BCV station modernisation and refurbishment programme - PDF]
[Access Figure 13 Showing delays on Metronet SSL station modernisation and refurbishment programme - PDF]