16 In the first year of the contracts, the two Metronet PPPs each obtained £615 million of debt that was placed on interest bearing deposit. No further debt was drawn down until the period April to September 2006 in the case of Metronet BCV and the period October 2006 to March 2007 in the case of Metronet SSL.
15 | The taxpayer's loss associated with inefficiencies in Metronet's operations and maintenance activities ranged between £30 million and £40 million | |||||
|
| Metronet's actual expenditure to July 2007 | The Arbiter's estimate of the upper range of costs that an efficient company would have incurred | Estimate of the taxpayer's loss | The Arbiter's estimate of the lower range of costs that an efficient company would have incurred | Estimate of the taxpayer's loss |
Metronet BCV | (£m) | (£m) | (£m) | (£m) | (£m) | |
Fleet Operational Expenditure | 222 | 220 | 2 | 220 | 2 | |
Signals' Operational Expenditure | 73 | 68 | 5 | 68 | 5 | |
Stations' Operational Expenditure | 172 | 169 | 3 | 167 | 5 | |
Track Operational Expenditure | 108 | 101 | 7 | 99 | 9 | |
Metronet SSL |
|
|
|
|
| |
Fleet Operational Expenditure | 198 | 197 | 1 | 197 | 1 | |
Signals' Operational Expenditure | 94 | 90 | 4 | 90 | 4 | |
Stations' Operational Expenditure | 196 | 193 | 3 | 191 | 5 | |
Track Operational Expenditure | 192 | 186 | 6 | 182 | 10 | |
Totals |
|
| 32 |
| 41 | |
Source: National Audit Office analysis | ||||||
NOTES 1 All expenditure figures were inflated to 2007 prices using the Office of National Statistics retail prices index, CHMK. 2 All expenditure figures have been rounded to the nearest £1 million, and as a consequence some of the totals correct for rounding errors. | ||||||
16 | The taxpayer's loss associated with inefficiencies in Metronet's business overhead activities ranged between £50 million and £100 million | ||||||
|
| Metronet's actual expenditure to July 2007 | The Arbiter's estimate of the upper range of costs that an efficient company would have incurred | Estimate of the taxpayer's loss | The Arbiter's estimate of the lower range of costs that an efficient company would have incurred | Estimate of the taxpayer's loss | |
Metronet BCV | (£m) | (£m) | (£m) | (£m) | (£m) | ||
Business Administration Activities | 325 | 297 | 28 | 267 | 58 | ||
Metronet SSL |
|
|
|
|
| ||
Business Administration Activities | 266 | 247 | 19 | 224 | 42 | ||
Totals |
|
| 47 |
| 100 | ||
Source: National Audit Office analysis |
|
|
|
| |||
NOTE 1 All expenditure figures were inflated to 2007 prices using the Office of National Statistics retail prices index, CHMK. | |||||||
17 In the intervening periods between the first and second draw-downs of debt, Metronet's debt servicing costs were fixed and were not influenced by Metronet's inefficiencies. Metronet's rate of use of debt relative to a fixed schedule of work was, however, greater than it should have been because some of the work being funded was inefficiently executed capital works. As a consequence, Metronet did not earn as much interest on its deposited funds as it would have done had it been efficient.
18 Available information does not identify the extent to which Metronet brought forward and/or increased the second tranches of drawn down debt. While the taxpayer may have incurred a loss associated with servicing part of the debt used to fund Metronet's inefficiencies, the loss is likely to have been relatively low and probably less than £10 million. Given the uncertainty over the scale of this issue, we decided not to include an allowance in our calculation.