Metronet Rail, the troubled consortium that is attempting to renew two thirds of London's Underground network, is cutting up to 290 middle management and back-office jobs and a further 200 contract workers in an attempt to save its 30-year contract.

The cuts, representing some 10 per cent of Metronet's 5,000 workforce, come as the company is widely expected to ask the Public Private Partnership Arbiter Chris Bolt to intervene in a dispute with London Underground over who should bear the brunt of a massive £1.2 billion cost overrun. Metronet hopes Mr Bolt will force taxpayers, via London Underground, to bear half the costs.

Andrew Lezala, Metronet's chief executive, said the job cuts "address issues raised by the PPP Arbiter in his annual review last November".

In his report, Mr Bolt hit out at inefficiencies and delays in the upgrade work Metronet was doing, saying there were too many layers of management, which slowed down decision-making and communication with the shop floor.

A Metronet spokesman said: "We want to show to people that we are listening to criticism, particular the Arbiter."

Metronet said the cuts would fall on layers of middle management and support staff at the head office, not on frontline workers, where it has just recruited 550 engineers.

It said it hopes only half of the 290 permanent jobs going this summer will be by compulsory redundancy with the rest being redeployed or leaving of their own accord.

Metronet, owned by WS Atkins, Balfour Beatty, Bombardier, EDF and Thames Water, is responsible for maintaining and upgrading track, trains and stations on all the Underground’s lines apart from the Piccadilly, Northern and Jubilee.

Mr Lezala, who joined in 2005, said: "Whilst I have already introduced significant change within Metronet, it's been necessary for us to conduct a further review to ensure that we have the right number of people in place – doing the right jobs in our business.”

The RMT union condemned the move. Bob Crow, the general secretary, said: "It is Metronet that needs to be sacked, not our members."

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Metronet 'Almost Certain' to Ask for U.K. Tube Probe

Bloomberg: May 22
By Brian Lysaght

Metronet Rail, the contractor upgrading two-thirds of the London Underground, said it's "almost certain'' to ask a regulator to resolve a dispute over extra costs in the project.

Metronet and London Underground disagree about who should pay at least 750 million pounds ($1.48 billion) in extra costs for rebuilding the railroad. London Mayor Ken Livingstone said the obligation lies with joint-venture Metronet and its five owners. Metronet says its customer, London Underground, should pay.

"It looks almost certain we will call for the extraordinary review'' by the regulator, said Paul Emberley, a Metronet spokesman, in a telephone interview today.

The amount in dispute has risen since a U.K. rail regulator made an estimate of 750 million pounds in November, Emberley said. He declined to give a current figure.

Livingstone, whose Transport for London agency operates the railway known locally as the Tube, says that Metronet's inefficient operations such as, for instance, failing to meet deadlines for renovating stations, have caused the extra costs. The company says the costs reflect work it has undertaken on behalf of the railway that wasn't in the contract.

Metronet will make a final decision in the next few weeks on whether to ask the regulator to intervene, after approaching London Underground one more time about resolving the issue in negotiations, Emberley said. Livingstone has said he will refuse to negotiate.

London Underground Call

London Underground yesterday repeated its call for Metronet to seek the review.

Metronet's work is part of a five-year, 10 billion-pound plan to improve and expand the 144-year-old London Underground. The company has a 30-year contract to upgrade the railway.

Metronet's owners are WS Atkins Plc, Balfour Beatty Plc, Electricite de France SA, utility Thames Water and Bombardier Inc., the world's biggest train maker.

Shares of Atkins, the U.K.'s biggest engineering-design company, fell as much as 62.5 pence, or 5.4 percent, to 1,094.5 pence, the most since Nov. 23, and traded at 1,111.5 pence as of 1:14 p.m. in London. Balfour Beatty, the country's biggest construction company, slipped 4.5 pence to 474.25 pence.