A PROMISED upgrade of the London Underground faces lengthy delays after the company responsible for overhauling nine of the 12 lines said that it was due to overspend by £750 million by 2010.

Metronet said that either London Underground paid it hundreds of millions of pounds more or accepted that the upgrade would fall behind or be cancelled. The company also demanded longer line closures so it can cut the cost of replacing tracks and signals.

London TravelWatch, the passenger watchdog, said that Metronet should be forced to pay for the cost overruns and should not be allowed to scale back its programme to modernise the network.

Chris Bolt, the independent arbiter of the Tube part-privatisation, said yesterday that Metronet had failed to meet the required standards for economic efficiency in the three years to last March.

Metronet completed 14 of the 35 station upgrades it promised to deliver in its first three years, and replaced less than half the tracks on the sub- surface lines. Its failures have cast doubt over its ability to deliver much more complex projects to increase capacity and reduce journey times on the busiest lines.

Mr Bolt said that some of Metronet’s cost overruns were its own fault and would have to be paid for by its five corporate shareholders, Atkins, Balfour Beatty, Bombardier, EDF Energy and RWE Thames Water.

But he said that it was possible some of the overspending was the result of unforeseen circumstances.

Under the terms of the contract, Metronet can seek extra payments if it can show that it could not have anticipated any cost increases.

Mr Bolt is expected to decide next summer how much of the cost overrun should be paid by Metronet and how much by London Underground, the public sector body that oversees the Tube.

Andrew Lezala, Metronet’s chief executive, said: “The contract allows London Underground the choice of paying more in cash or descoping the project.”

He said that Metronet had overspent by about £200 million so far and that the remainder of the projected total overspend of £750 million could be reduced by changes to the way work was done.

The Victoria Line could be closed on Sunday afternoons for engineering work, which is normally squeezed into four hours between 1am and 5am when the system is closed. Station upgrades could also be cut back or delayed.

Mr Lezla said: “We might be able to save money by not doing quite so many tiles on a station, Descoping could mean [we] don’t do a station or that station is done for £2 million instead of £10 million.”

Mr Lezala accepted Mr Bolt’s criticism of the way the company was governed and said it was considering replacing its chairman, Keith Clarke.

Mr Bolt expressed concern that Mr Clarke’s main job as chief executive of Atkins meant he lacked the independence to ensure Metronet fulfilled its commitments. Atkins is a shareholder in Metronet and one of its major suppliers on the station upgrade programme.

Tim O’Toole, managing director of London Underground, said: “If something has to be descoped and the Underground doesn’t get rebuilt, that would be a very serious indictment. If you allow the sub-surface lines to start to fall apart the way we have had to wrestle with on the Northern Line, I don’t think London could tolerate that.”

Mr O’Toole said that any increase in payments to Metronet should be paid by the Government, rather than Tube passengers. Ken Livingstone, the Mayor of London, said: “The arbiter’s report confirms that, despite the massive investment in renewing the Underground, Metronet is failing to deliver the quality and efficiency for which it is being very generously paid.”

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