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Amey loses LU maintenance contract after cost concerns

Maintenance work on key London Underground lines will be moved back in-house after concerns about the cost of its contract with Amey.

Transport for London (TfL) announced today that it will move maintenance on the Jubilee, Northern and Piccadilly lines in-house at the end of 2017, the earliest date possible.

Mark Wild, London Underground’s managing director, said: “There will be no impact on our extremely high standards of maintenance and we will be working closely with Amey over the next 18 months to ensure a smooth transition.”

The Independent Investment Programme Advisory Group (IIPAG), which conducts annual assessments of TfL’s finances, first raised concerns about the Amey contract, which has been in place since 2003, in its 2014-15 report.

It said that TfL should “carefully consider” the value for money of the contract, saying it was “likely” that internal provision would deliver “long-term improvements in efficiency”. IIPAG reiterated these concerns in its 2015-16 report, whilst TfL was considering an offer from Amey to extend the contract past its break point.

By ending the contract, it is estimated that TfL will save £80m over the next 10 years, and all savings and revenue from the changes will be reinvested in London’s transport network.

In response to the 2015-16 IIPAG report, TfL also carried out a comparison between the maintenance approach on the Jubilee Line and that provided on the Victoria and subsurface lines.

It found that contracts with Bombardier for technical support and spares make up more than a quarter of costs for these lines, which it attributed to the cost of maintaining sensitive door edges on the new fleets and higher staff costs compared to the Jubilee Line.

Night Tube services opened on the Victoria and Central lines at the weekend and are due to open on the Jubilee, Northern and Piccadilly lines over the autumn.

The latest IIPAG report also warned that the Northern Line Extension project is at a high risk of delay.

Both the 2014-15 and 2015-16 IIPAG reports also urged TfL to clearly set out its approach to reducing “admin and other overheads” costs.

Sadiq Khan, the new London mayor, has ordered a root and branch review of how to manage TfL’s finances more efficiently. Areas under scrutiny include obtaining greater value for money from procurement, reducing reliance on agency staff, and eliminating unnecessary duplication of operations.

Khan said he was “really proud” of the changes to bring the underground maintenance work back in-house. “I want TfL to be the best in the world while staying in public control,” he added.

However, Khan was accused by the Conservatives of ‘bankrupting’ TfL yesterday after he announced that he will order the transport body to ensure that 50% of housing on the land near Kidbrooke station is affordable. This could lead to a smaller revenue from the planned sale of the land.

UPDATE 25 August

An Amey spokesperson said: “We’ve had an extremely successful partnership with London Underground over the past 13 years, looking after 50 stations, 90 miles of track, 45 miles of tunnel and over 600 Trains to support the 2 million plus passengers who use the Jubilee, Northern and Piccadilly lines daily.

 “We’re extremely proud to have delivered more than £500m in savings for TfL during this time, in addition to a number of significant improvements, such as reducing passenger delays by 70%, improving signals reliability by 56%, train reliability by 441% and improving track quality to the highest levels seen on the Underground.

 “We understand LU’s strategic business decision to bring all maintenance work in-house and we will be working closely with the team to ensure a smooth transition.”

(Image c. Tim Ireland from PA Images)

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