DoT failed to heed NAO warning over Metronet finances

The Department for Transport has been reprimanded by the Commons watchdog
Public
Accounts Committee for ignoring a warning from the National Audit
Office over the management of risks involved in the doomed Metronet London
Underground contracts.

PAC chairman Edward Leigh said officials were wrong to assume Metronet would
establish strong financial management and corporate governance and lenders would
exert strong influence — when the lenders’ role was undermined by the government
underwriting 95% of their risks.

PAC chairman Edward Leigh said: “This committee finds it unacceptable that
the Department ignored the warnings by the NAO in 2004 to avoid a hands-off
approach to overseeing the contracts.”

He demanded: “These mistakes must never be repeated.”

The collapse of the PPI contract ultimately forced on LU and former London
Mayor Ken Livingstone by Prime Minister Gordon Brown, chancellor at the time,
cost taxpayers £410m.

Further reading:

E
&Y paid £33m for Metronet administration