Mike Brown: New London Underground boss gets his hands on the controls at last

The Business Interview: He is now master of the Tube's upgrade plans after the demise of the public-private partnership

"I'm paid to be a diplomat," says Mike Brown. But all the diplomacy in the world cannot hide the London Underground (LU) managing director's relief at the demise of the public private partnership (PPP) which weighed "like a complicated lump of concrete" on efforts to upgrade the capital's ageing network.

The fast-talking Irishman started in the top job just three months ago, and almost immediately oversaw a massive expansion of his empire. With the completion of the £310m purchase of Tube Lines last weekend, LU takes full responsibility for upgrading all 11 Underground lines for the first time. And the tortuous PPP under which the upgrade plans have laboured for the past seven years is finally brought to a close. "There will no longer be an impenetrable contractual mechanism that prevents communication between us and the people doing the real work," Mr Brown says with feeling.

He refuses to be drawn into outspoken criticisms of Tube Lines and even praises some of its efforts – the "fantastic" Green Park station refurbishment, for example. Even his ire against the PPP is muted. "It is critical to have a good, direct conversation between the contractor and the end user, and that wasn't proving possible in the complexities of the PPP structure," he says evenly.

The demise of the PPP was a long time coming. And Mr Brown's carefully chosen words gloss over the increasingly vitriolic relationship between LU and Tube Lines, larded with legal claims and accusations of lying. Under the structure put in place under the then Chancellor, Gordon Brown, in 2003, two private-sector bidders won contracts from LU to upgrade the Underground. Within two years the cracks were appearing, and within five years one of the consortiums – Metronet – spectacularly collapsed, to be absorbed into LU at a cost to the taxpayer of £2bn.

The problems with Tube Lines were of a different kind. Not only are there nine-month delays to the Jubilee line upgrade that should have been completed at the start of this year. There were also ructions over the amount of closures needed for the upgrade of the Northern line. And negotiations over the cost of the second seven-and-a-half-year contract period, which begins this month, rapidly descended into acrimony. Tube Lines valued the work at £6.8bn; LU at £4bn; in early March, the PPP Arbiter, Chris Bolt, made a final ruling of £4.46bn. So when Mr Brown arrived at 55 Broadway – LU's Grade II-listed, Art Deco headquarters above St James's Park Tube station – the top priority was to find a way to plug the gap without reducing the scope of the work.

Mr Brown may be new to the managing director's chair, but he was no stranger to the organisation. Although the last two years were spent as managing director of Heathrow airport, the two previous decades of his career were at LU, culminating in a five-year stretch as chief operating officer. "It was a bit like a homecoming," he agrees. "But the reason I decided to come back from what was a fantastically exciting job at Heathrow is the scale of the change since I was last here."

The intervening 24 months had seen a new political regime under the Mayor of London, Boris Johnson, planned infrastructure upgrades start to become a reality, and the worst recession since the 1930s. What had not changed was the byzantine PPP structure. "I came back into the thick of the thinking around how LU could afford to go into the second upgrade period," Mr Brown says. "I also came back knowing that it is always better to have a conventional contractual relationship with a provider of services."

Once the idea of LU buying out Tube Lines was floated, the deal with the owners Amey and Bechtel moved ahead in a matter of weeks. "The reality was that there had to be a better arrangement for all parties," Mr Brown says, sticking to his diplomacy. "This is the best possible outcome given what we were facing for another seven and a half years. And the numbers more than add up."

Now that the deal is formally concluded, the hard work starts. The first priority is getting to grips with the delayed upgrade to the Jubilee line. Second is to look at the controversial plans for the Northern line and work out how to do it with fewer closures. There will be few immediately visible changes and, structurally, Tube Lines will remain a distinct business within Transport for London, LU's parent organisation. With regards to the longer term, Mr Brown says he has "genuinely not ruled out any option" and it remains a very real alternative to keep Tube Lines separate. "This is not like Metronet," he says. "Metronet was not a viable business and it collapsed. Tube Lines was a fully functional and operating business, so we have to look at it in a more open-minded way."

Any decision will be made while ever-darkening thunderclouds are threatening the transport sector. The Department for Transport is expected to be hit hard by a spending review set to carve anything up to a third out of unprotected budgets this autumn. Mr Brown loses some of his restraint when faced with the possibility that the Underground upgrade could be squeezed, listing a litany of anachronisms, from the signal cabin at Edgware Road dating back to 1926 – "It actually still has people in it pulling levers" – to the Northern line control room at Euston – "It's like walking into a 1960s Dr Who set, it looks like it would fall over if you pushed it."

He has a tricky balance to strike: torn between stressing the safety and reliability of the network he is responsible for running today, and making a compelling case for massive capital investment. "For me there is an overwhelming business case for upgrading the London Underground in favour of transport schemes elsewhere that may be politically appealing but will never give the same benefit to the economy," he says. "London is the powerhouse of the UK economy, and the Tube is the artery that ensures it can operate. Without effective investment in the network and this capital programme, this system will wither and die."

Ultimately, after more than 20 years at what he describes as "the oldest and most exciting metro in the world", Mr Brown's passion wins out over his diplomacy. "We already manage every peak on a knife edge to ensure the system doesn't fail," he says. "People might think it is kind of OK at the moment but we are unable to keep it in that situation. It will fall apart and London will become a laughing stock."

A compelling case indeed.

CV

March 2010 Returns to London Underground as managing director

2008–2010 Managing director of Heathrow for airports group BAA

2003–2008 COO at London Underground

1989–2003 Works his way up the London Underground ranks

1989 Joins London Underground as manager of Neasden cleaning depot

Mr Brown started his career as a graduate trainee at food giant Rank Hovis McDougall

He is married, with one son, and lives in south-west London