London Underground

It is clear to me that at the heart of the problem is an ill judged—on both sides—lack of understanding of what the contract meant. Metronet believed that it was providing a contract that was output based, while Transport for London believed that it was inheriting a fixed-price contract allowing it to respecify continually. The contract failed because Metronet spent too much money and did not deliver. Part of that was undoubtedly due to the tied supply chain, but another factor was the conflict between Transport for London and Metronet. Metronet went into administration on 18 July last year, which has been described by the Secretary of State as ““a terrible failure””. A number of people may think that it is a rather spectacular failure. On 6 February the Secretary of State was forced to admit that the cost of the failure to the taxpayer was £1.7 billion, which was paid to Transport for London to cover the 95 per cent. debt guarantee, and £300 million to cover the costs of administration. Those costs are ongoing. I believe that the PPP principle is sound, although it is not always a universal panacea; but it is not the principle that is being debated tonight, and it is not the principle that is under threat from the report. It is a failure of the network and of Metronet's shareholders and management, but it is at heart a failure of the PPP contract that was set up and those who were responsible for that—and the person responsible for that contract was the Prime Minister.