f Gordon Brown invites you to his house,
I suggest for your own safety and peace of mind you stay
away. Imagine the scenario - if Gordon treats his house
repairs in the same way he suggests PPP is used for repairing
and renewing the Underground.
He will give his front door key to a jobbing tradesperson
with instructions that his house requires rewiring, new plumbing,
central heating installed, dry rot treated, replastering,
decorating and a new roof installed.
The tradesman will be given:
- thirty years to complete the job;
- a lease for that period of time;
- freedom to charge more than other local suppliers;
- encouraged to subcontract as much of the work as s/he
wishes (handing over the front door key to all that need
- the authority to decide in what order that the works are
- the right to borrow money for materials at a higher rate
of interest than Gordon with his reputation for "prudence"
could reasonably expect to pay;
- no overall responsibility for ensuring safety as the electrician
and the plumber compete to finish their tasks in the shortest
time at the lowest cost to themselves;
And Gordon and his family will need access to the house from
4am to 1am each day.
Despite the attitude of the Treasury who have starved London's
transport system of adequate funds to provide a modern mass
transit system, public services do matter. The controversy
surrounding fox hunting or Europe may excite argument at Westminster
and in the media, but the battleground of recent elections
has been jobs, health, education, law & order and increasingly
The Mayoral elections last May showed just how important
transport is to Londoners. Hardly surprising, since so many
rely on road or rail to get to work, school or hospital. There
were many areas of agreement between the candidates, but it
was Ken Livingstone's uncompromising stance on traffic congestion
and tube privatisation that ultimately persuaded the voters.
For many of the three million workers a day who use it, sorting
out the tube is the number one priority. Fed up with the daily
rush-hour crush, exacerbated by staff shortages, signal failures
and faulty escalators, tube passengers are becoming increasingly
vociferous in their demands for action and more and more angry
at the stubborn refusal of central government to scrap its
discredited PPP (Public Private Partnership) policy. In recent
weeks, political commentators have argued that it is not just
the future of the tube that is at stake in the looming confrontation
between Transport for London (TfL) and central government,
but the future of devolved government in this country. Even
though we are still hoping to reach a negotiated settlement,
TfL is taking the government to court to stop it imposing
its Public Private Partnership on Londoners in its current
unacceptable form. How did we get to this point?
As Ken's manifesto said, the tube should be the showcase
of public transport in London, but it is getting worse and
we are paying more and more for it. When we were last in power,
at the GLC, we slashed fares and introduced bus passes and
Travelcards. Since then, fares have risen in real terms by
46%, as central governments have refused to release the resources
needed to expand and modernise the system. Ken promised to
freeze bus fares and only put up tube fares in line with inflation.
He has been true to his word, and saved fare-payers £30m this
Ken also rejected the Central Government plan to split up
and partially privatise the tube which, he pointed out, provided
huge scope for buck-passing, red tape and error, while costing
Londoners an extra £1 billion, which would inevitably result
in higher fares for passengers. He promised to stand up for
Londoners. He has done so.
In August a leaked letter from the principal railway inspector
of the Health & Safety Executive, revealed he did not
have full confidence in the way the system was being run following
the split between operations and infrastructure brought about
in preparation for the PPP sale. He expressed concern about
who was ultimately going to be responsible for safety decisions
in the new structure.
Industrial Society report
In September, the Industrial Society published The London
Underground Public Private Partnership, An Independent Review.
It concluded that the PPP was unsafe and poor value for money,
binding London for 30 years to over-generous contracts giving
private sector monopolies intolerable power over London's
democratically elected authorities. The Mayor agreed that
if PPP is not radically altered, it should be abandoned in
favour of allowing TfL to raise finance by issuing bonds.
Then, the following month, the Hatfield rail crash appeared
to put the final nail in the coffin of the fragmented, partially-privatised
solution for the tube favoured by the government. Balfour
Beatty, part of a consortium bidding for two of the three
PPP contracts was responsible for maintaining the section
of track on which the accident happened. The Mayor called
for their removal from the bidding process.
Enter Bob Kiley
In the meantime, the Mayor pulled off a major coup by persuading
Bob Kiley, the man credited with turning round ailing metro
systems in New York and Boston, to join Transport for London
Bob Kiley quickly assembled a team of experts. In December,
he reported to the Mayor that the PPP was fatally flawed,
since the public would own the system but not control it.
The implementation of the PPP would be unsafe, inefficient
and prohibitively expensive. At the same time, and with the
Mayor's backing, he put forward an alternative plan for the
reconstruction and renewal of the tube.
Bob Kiley's report on the Feasibility of the PPP structure
as currently proposed concluded that the overriding obligation
to keep the trains running means that the entire risk can
never be transferred. And without adequate arrangements for
supervising or enforcing the contracts, the transfer of risk
is largely illusory.
Remarkably, the consortia bidding for the contracts had made
no comprehensive assessment of the work required to restore
the tube to a state of good repair. Neither had London Underground
Ltd. How, in these circumstances, could they consider making
a binding agreement to carry out the job at a specified price?
The proposed contracts do not achieve the stated purposes
of the PPP. They fail to do so because of the lack of day-to-day
supervision or regulation, ineffective penalties for poor
performance and the stifling of competition. This means they
are most unlikely to produce the performance necessary to
restore the system to a good state of repair. They are not
effective in transferring the risk of performance failure
to the private sector and they will not provide the claimed
efficiency savings. They in fact will result in higher costs.
An Outline for the Rehabilitation and Management of the
London Underground was published alongside it. The report
contained a costed plan for financing and funding the tube,
bringing it up to a state of good repair and maintaining it
in that condition. TfL requested a long-term commitment of
£250 million each year from the Government.
A few days later The National Audit Office published its
long-awaited Financial Analysis for the London Underground
Public Private Partnership. It cast doubt on the ability
of the London Underground's Financial Analysis and the Public
Sector Comparator to evaluate value for money. The case for
the PPP had not been proven.
The same month the Health and Safety Executive found serious
deficiencies in London Underground's Safety Case for the PPP.
The health and safety management systems of LUL and the infracos
were not being fully implemented; the risk control systems
for major hazards and top event risks were not easily defined;
and some of the commitments made in the safety cases were
not being achieved.
The February 'deal'
At the beginning of February, and with the trade unions already
planning strike action over safety, the Deputy Prime Minister
John Prescott, and Bob Kiley, announced they would work together
on modifications to the PPP, with Bob Kiley taking the lead.
If they could agree mutually acceptable changes then the PPP
bidders would be asked to submit revised proposals. The Evening
Standard heralded it as a 'Victory for Kiley'. The strike
on 5 February went ahead; two subsequent strikes were called
For a while, it all looked optimistic. Civil servants and
advisers worked co-operatively with Bob Kiley and his team,
making available papers which they had previously withheld.
However, within a few days it became clear that the Government
had not changed its position on the fundamental issue of control.
TfL still lacks the basic tools afforded to public owners
to influence and direct the performance of contractors.
At the end of February, Bob Kiley presented a further report
to the Mayor on the London Underground PPP, rejecting any
Government concessions made up until that point, and calling
for a system combining a clear structure, public disclosure
and stable long-term financing.
On 1 March, exasperated by the lack of progress, TfL resolved
unanimously to give the Commissioner authority to commence
legal proceedings to test whether London Underground Limited
and/or London Regional Transport can lawfully enter into contracts
that are inconsistent with TfL's statutory duty to develop
and implement policies "for the promotion and encouragement
of safe, integrated, efficient and economic transport facilities
and services to, from and within Greater London".
A few days later, it emerged that the Health and Safety Executive
had identified 69 significant issues that still needed to
be addressed. The PPP could not go ahead unless progress was
made. By the end of the week, RMT members voted for a series
of 24-hour strikes starting on 29 March; Aslef said initially
it would back the stoppages, but subsequently reached an agreement
with London Underground.
Train cancellations are now running at record levels. The
problem of how to finance and manage the tube is not going
to go away. The bottom line for Transport for London is unified
management control of the operation of the trains and the
renewal and maintenance of track, tunnels and stations. The
Mayor insists that, unless the PPP is changed, the fragmentation
of responsibility and accountability for decisions will cause
lives to be lost. After Hatfield, who can disagree?
In the run-up to a general election, it will be interesting
- both for the future of transport and for the future of devolved
power - to see whether an acceptable compromise on the tube
is offered by the Government. Londoners are holding their
breath, and preparing to cast their votes.
Dave Wetzel is Vice-Chair, Transport for London and a
former GLC councillor.