Monday, July 16, 2007

Brown's Chickens Come Home to Roost

Today is an important day. It is a day some of Gordon Brown's chickens will come home to roost. My friend Christian Wolmar tells me that Metronet are going to be knocking on Mayor Livingstone's door this morning and saying "sorry, but we can't run these undergound contracts and we will have to go into administration"

The maintenance and refurbishment of two thirds of the tube lines (9 out of 12) now lie in tatters. No doubt the poor bloody taxpayer will be called on again, but this is a huge embarrassment for Gordon Brown as the whole scheme was his idea in the first place. He was warned by experts at the time that these were unworkable and too complex (they cost £500 million to draw up) but he went ahead anyway.

It is now time for the National Audit Office to launch a full scale inquiry into these contracts and how Metronet has failed to control costs. Witness number one should be the First Lord of the Treasury.

42 comments:

Anonymous said...

I work in regulatory economics in London and asked dozens of people in positions to know about these contracts when they were being drawn up. Not a single one thought they would work.

NuLab may be dismal at running the country, however, but they are world class as dodging responsibility for their cockups, often by making things so complicated that journalists and their public lose interest, so no doubt they will pin the blame on everyone but themselves as usual.

Man in a shed said...

Tax credits deserves a mention in dispatches here also !

The underlying tendency to control and plan in excess detail, but fail to realise how the real world works should be a main line of attack on Gordon Brown.

Diablo said...

Respect! Iain, well done for writing your very pertinent post whist hosting the EOTDS on 18DS!

These are the detailed (and enormous) failures of Brown's Buggered Up UK that need to be exposed big time by the Conservatives.

Jeremy Jacobs said...

Businessmen should run businesses, not governments.

Harry Hook said...

Me ...I'm really looking forward to the London Olympics being held in an inflatable marquee!

Anonymous said...

Ha! Gordo will be lying down in darkened room after this lot!

Not content with being stuffed for £2bn by Red Ken (aka Mr Red Ink) to subsidise the transport network (£750m per year just for the buses...), now the tubes won't get fixed and oh, by the way, Crossrail will cost £15bn.

I do wonder, though. Did Lenin not spend a considerable sum trying to stop Gordo's big PPP idea in the courts? Is it too far fetched that the old newt has been digging away at the Metronet foundations?

If Gordo suspects Ken was helping derail Metronet, there could be a very, very large bang....

morrocanroll

Newmania said...

Metro net ...what misery they have cause me . Oh yes , there `s been language.

Jilted John said...

tax credits, PFI, PPP, economic migration, wealth gap, housing asset bubble, pensions, lack of funding for armed forces, Olympic fraud, Smith Institute, cash for peerages.........

why oh why do we have to put up with this incompetent, corrupt and spiteful cretin Brown??

When will the media actually do their job and expose these monumental failures?

Anonymous said...

I know someone who worked as a consultant for TfL. He says they were told specifically to purposefully make life difficult for Metronet. Ken deserves his share of the blame too.

Anonymous said...

I thought the whole idea of privatisation was to bring a bit of market rigour into public service provision. Now Metronet has made such a cock-up who pays? The shareholders, such as EDF, Balfour Beatty etc? Oh no, its the poor bloody taxpayer again. Some market rigour.

dk said...

"Brown's chickens come home to roost?"

That suggests he will be blamed.

More murk might stick to GB than teflon Tony. But none has yet, has it?

Hughes Views said...

PFI (a Tory devised scheme but none the worse for that) is, in part, about transferring risk from the public sector to the private. If Metronet goes bust its private backers will lose a lot of money. Risk transfer - QED. A similar fate befell many of the private companies that originally built the Tube lines.

The new Tory party would no doubt prefer everything to be run by stalanist public corporations and for the taxpayer to be directly liable to bale out every failed scheme but, fortunately, the Tories are not in power...

Hughes Views said...

"But I'm not [an economist], so I don't pretend I really understand it." Iain Dale 16/7/7 (well almost)...

RacerDon said...

Unfortunately yet another example of economic mismanagement that will go over the heads of the British Electorate, and in any case probably won't even be mentioned by BBC.

Needs something really earth shattering, like a racist comment on Big Brother or an Eastenders wedding that goes ahead without a hitch, for anyone to take notice.

Which is just the way the New Labour project was supposed to work, so they did do something right after all.

Ed said...

£500 million to draw up the contracts? Metronet need £500 million to stay solvent. Wouldn't the money have been better spent on tracks and signals?

Livingstone proved that the PPP would either not work or cost more than a bond or both. I agreed with him at the time and he has been proved right. Brown will no doubt blames 18 years of Tory boom and bust.

Geezer said...

".. in any case probably won't even be mentioned by BBC."

Nail on the head! NuLab have gotten away with murder because their media chums hate to blame them for any of their numerous cock-ups.

The BBC have a chice of either blaming their Golden Boy Brown or their most favoured old Trot, Livingstone. They will, of course, do neither! They'll bury the bad news for Labour again.

Chris Paul said...

Anonymous 7:58 is on the money:

Now Metronet has made such a cock-up who pays? The shareholders, such as EDF, Balfour Beatty etc?

Sadly this whole thing has been derailed by private greed, and while I oppose PFI's from station to buffers it is worth apportioning any blame that is going correctly when things go wrong.

How good is the professional cover of the consultancies and professional advisors who drew up the contracts and set the form?

Anonymous said...

Can anyone confirm that this lot also had a 17% above costs worked in and they still go bust.
I was told this by someone quite high up the food chain.
Iain Gordon Brown yesterday said in his speech outside Stormont
'The European Union constitution moving forward in the next few months'
is this the first time a British prime minister has referred to the Constitution as a dun deal? (BBC news 24 0927hrs yesterday)

Ed said...

Hughes Views - the Tory proposal was to sell the whole Underground off (including giving a share to Londoners) and then feed the cash back in for repairs. Instead Brown set up this overly complex system which people at the time said would never work. It was not a "simple" PFI which are basically outsourcing contracts, it was a hundred times more complicated because the Labour party were scared of the word "privatisation".

Personally I favoured Livingstone's proposed bond issue, but we know why that wasn't taken on - because it would have blown a hole in Prudence's balance sheet.

There is only one person to blame for this fiasco, and that is the former Chancellor.

Jimbo said...

******************************
SSSSSSSssssshhhhhhh. What ever happens dont mention Conrad Black.
******************************

Jimbo said...

New Labour chums in the media. Are you all delusional? The Telegraph, Express and Mail, have been attacking Blair, Brown and Labour for the past 10 years. ITN news coverage is equally damning. The Independent and Grundian can hardly be described as pro Labour. Then there is Londons Standard and the free national paper The Metro which are definitely not Labour rags. Add to this Sky news which isn’t news at all, its OK magazine disguised as news, so I don’t know why you are all getting so upset. The Sun is anti EU, pro death penalty, etc etc, not exactly Labours territory. So on the face of it the accusation of media bias is a little bit far fetched. Labour have the Mirror 50% of the time, and the BBC is invariably impartial.

Anonymous said...

This is Nothing!!

Just wait for all the Olympic Sh1t to hit the fan

Anonymous said...

Hey Jumbo how is life in Fantasia?

mark williams said...

Hughes views: "If Metronet goes bust its private backers will lose a lot of money."

Not so. The company was highly geared so its backers put in very little and the little that they put in has been more than repaid. They now estimate that their future free cash flow after expenses would be slightjy less their obligations to their lenders so they will put the company into administration - having taken out sizeable profits in the last few years.

Another fine mess from Labour.

Ed said...

the BBC is invariably impartial.

Post of the day!

aardvark said...

People seem to be ignoring the fact that the other PPP contract for the Underground, run by Tubelines, is working satisfactorily.

That demonstrates that the contracts were fundamentally sound.

The problems have arisen mainly as a result of Metronet's inefficiency.

eric the fish said...

I hope this Metronet is dolphin friendly?

Trumpeter Lanfried said...

It is not difficult to outwit a Labour government. Big business does it all the time.

At the same time, let's remember that very few people in this country have ever got rich running a railway. In the USA, yes. Here, no. Even in the great age of railways very few lines made a profit, except the Great Western which had the lucrative contracts to carry the coal from South Wales.

St Gordon, patron saint of snake oil merchants said...

BBC is carrying a story on problems at the Inland Revenue.

http://news.bbc.co.uk/1/hi/business/6901299.stm

Whose big idea was it to merge the IR with Dept of Customs and Excise? Step forward McStalin Broon.

Compter problems? Tax credits? Self Assessment complexity? Guess who will be to blame?

Ian Westbrook said...

"Witness number one should be the First Lord of the Treasury"

why, what would Alistair Darling know about it? he's only been in the job a few weeks...

Adam Smith said...

Another failure of the private sector in trying to deliver public services. Proves again that it is cheaper and more efficient for public services to be delivered by the public sector. And, incidentally, another example of Ken Livingstone being correct in his analysis.

Anonymous said...

and Dave's!
Will dave be out of the country when the Southall comes in?

Ed said...

Ian Westbrook, perhaps before jumping in you might be interested to know that the First Lord of the Treasury is the former Chancellor, Gordon Brown MP.

He's only been there a couple of weeks admittedly, but there has been quite a lot of coverage about it. Apparently he's leader of the Labour party too! Who'd have thought?

http://en.wikipedia.org/wiki/First_lord_of_the_treasury

http://tinyurl.com/2xgu73

Freeborn Englishman said...

Perhaps one Conservative MP would like to ask the First Lord of the Treasury why certain Civil Service Departments seem to have a penchant for paying Logica CMG large sums of money for expensive bespoke IT systems.

Also, why the Civil Service still somehow expects the lowest levels of management in the Civil Service to participate in and advise Senior Management on IT projects, when they are all too often Arts or Humanities graduates with zero grasp of microeconomics, project management, database design or IT procurement.

JJ Lehrle said...

I know that Gordon Brown is slowly sinking deeper into the brown stuff over this debacle but can somebody please tell me when we will have the public flogging of Stephen Byers...

RacerDon said...

"Witness number one should be the First Lord of the Treasury"

why, what would Alistair Darling know about it? he's only been in the job a few weeks...


Obvious mistake aside since when did any Government Minister admit to knowing anything about anything ? The age of ministerial repsonsibility died long ago, in direct proportion to public apathy about anything you can't vote on via premium rate phone lines.

mark williams said...

Racerdon:

May I be the first to point out that Mr Darling is the Second Lord of the Treasury.

The First Lord of the Treasury is Gordon Brown. That is the title of the ministerial office that he holds.

mark williams said...

the BBC is invariably impartial

If that were so, they would have reported that all of the peers receiving cash from lobbyists to whom they provided passes were Labour peers.

RacerDon said...

Mark Williams

Exactly ; hence my use of "obvious mistake aside" - the top part of message was a pasted quote from a previous poster.

tapestry said...

People don't attach blame to individuals very easily. They just know when they feel fed up with things and want a change.

Of course Brown is financially incompetent as has been glaringly obvious for a long time to anyone who actually bothered to look. Most don't. Amazingly people still buy the media narrative that he's a genius.

I can see the next media narrative now - 'shame things are in such a poor state. cannot be anything to do with that genius Gordon Brown. must be someone else's fault - probably Mrs Thatcher.'

The Pedant's Apprentice said...

9 out of 12 is two thirds? Treasury arithmetic, that.

Not a sheep said...

Jimbo - "and the BBC is invariably impartial" in which case you are clearly delusional...