METRONET FAILURE PUTS TRAM SCHEME AT RISK

7.00.00am BST (GMT +0100) Thu 19th Jul 2007

Liberal Democrat Assembly Transport spokesperson Geoff Pope says that major transport schemes like the popular Cross River Tram scheme may now be at risk following the collapse of Tube infraco Metronet yesterday, today.

"TfL's legal advisers say in terms that if Gordon Brown does not come up with the necessary funding to keep the Tube work going, the funding will have to be provided by TfL. They make it clear that a number of TfL's planned projects would have to be postponed or cancelled as a result.

"TfL have had to make available to the PPP administrators loan facilities for £450 million for each of the two Metronet rail companies (BCV and SSL). They have been advised to work on the assumption that it is unlikely that any amount lent will be repaid or recovered in full.

"It looks all too likely that the result of Metronet's failure is that schemes like the Cross River Tram which have all-party support and are especially popular in south London may have to be shelved. That would be a disaster for regeneration in socially disadvantaged areas of London."

ENDS

Notes to Editors:

1. Papers containing factual background and non-confidential advice to the Mayor of London were handed to Assembly Members on Wednesday July 18th by the Mayor.

2. Para 2.9 [page 7] of that advice says;"To ensure the safe running of London Underground it is proposed that TfL will …make available to the Metronet Companies in administration loan facilities of an amount up to £450 million for Metronet Rail BCV Limited (in administration) and £450 million for Metronet Rail SSL Limited (in administration)."

3. Para 2.10 (page 8) "It is estimated at this time that loan facilities of £900 million would be required for 6 months."

4. In the section Legal Implications (pp12-15) TfL, London Underground Limited and the Greater London Authority are being advised by Herbert Smith LLP on the legal implications of the insolvency of the Metronet Companies.

Para 8.7 (page 13) "TfL has been advised to proceed on the assumption that it is unlikely that any amount lent under the loan facilities…will be repaid or recovered in full. TfL will take all possible steps to recover the funding in full."

5. Para 8.17 (page 14) "To the extent HM Government does not provide the necessary funding and/or borrowing capacity and/or no funds are recovered

on the discharge of the PPP administration order or the transfer of assets to a new company, the funding will have to be provided by TfL from its existing resources. TfL has reserves of £1.4 billion, but a number of TfL's planned projects would have to be postponed or cancelled as a result of TfL making available any funding from its reserves."

6. The Cross River Tram scheme (Camden and St Pancras to Peckham and Brixton)

has been costed by TfL at £650 million. The scheme is backed in principle by all the councils along the line of route, involving Labour, Lib Dem and Conservative politicians.