High stakes

Today\’s news that Metronet, the consortium contracted to maintain and operate the London Underground\’s Bakerloo, Central and Victoria lines, is likely to enter administration can actually be seen as a curious type of success for the PPP. These contracts are not a one-way bet.

Public private partnerships for major public infrastructure projects have tended to look like one-way bets for the private sector. They charge the public sector for taking on \’risk\’, but everybody knows that the state will have to step in if problems threaten to destroy public goods: hospitals, schools, railway and road networks cannot be allowed to go to the wall as private businesses would if they became insolvent.

The fact that the PPP arbitrator has called their bluff, and refused to grant Metronet the mind-boggling £551 million that they were seeking to cover their overspend, shows that this bet is not the sure thing it must have once looked like. But whatever the short-term pain to Metronet\’s shareholders, it will ultimately be taxpayers who meet the cost of keeping these Underground lines afloat, and of the bizarrely money-gobbling, lawyer-ridden farce that the PPP has turned out to be.