London Underground PPP

HL Deb 13 May 2003 vol 648 c30WA

Baroness Hamwee

asked Her Majesty's Government:

In view of the reported decision by W.S. Atkins plc to withdraw from a five-year private finance initiative contract with the London Borough of Southwark after only two years because the margins had failed to reach their expectations, what provisions there are in the public/private partnership contracts for the London Underground to prevent a similar withdrawal in future, given that Atkins has a 20 per cent stake in the infraco Metronet, which is contracted to maintain and upgrade 70 per cent of the Underground network. [HL2591]

Lord Macdonald of Tradeston:

As a condition of financial close of the London Underground PPP each Metronet shareholder, including W.S. Atkins, has committed £35 million of equity and raised bank guarantees to support the commitment. The PPP contracts contain no provision for the consortia to withdraw.

Each PPP contract prevents a shareholder disposing of more than 25 per cent of its equity interest in a PPP company until 2010. Thereafter, the contracts give London Underground the right to object to any new shareholder that it considers lacking in fitness and propriety to hold an equity stake in a PPP consortium.