Memorandum submitted by London Transport
(LU 1)
LONDON UNDERGROUND: AN UPDATE ON PROGRESS
INTRODUCTION
London Underground last appeared before the
Transport Sub-Committee in April 1998. At that time it outlined
issues relating to its finances and investment programme.
Since then London Underground has been able
to do much to improve its provision of transport for London and
to meet record levels of passenger demand.
In this memorandum London Underground is seeking
to update the Sub-Committee on:
2. Funding and investment issues
3. Public-Private Partnership (PPP)
4. Extended Jubilee line.
1. PERFORMANCE
TRENDS
In recent years London Underground performance
in terms of passengers carried, customer satisfaction and the
volume of train services operated has steadily improved. Financial
performance has also improved substantially enabling an increasing
element of the investment programme to be self funded. Performance
trends since 1990-91 are detailed in the charts in Annex 1.
Forcasts for 1999-2000 demonstrate significant
improvements since 1990-91, particularly in the following:
| Passenger journeys |
Up 18 per cent from 775 million to 912 million |
| Train kilometres operated | Up 23 per cent from 52.4 million to 64.5 million
|
| Customer satisfaction | Up 15 per cent and being maintained
|
| Gross operating margin | From breakeven to +£288 million
|
More recent trends between 1997-98 and the forecasts for
1999-2000 show a 9.5 per cent increase in passenger journeys,
a 4 per cent improvement in train kilometres operated, customer
satisfaction being maintained and a 8.5 per cent increase in gross
operating margin. Customer service improvements have been delivered
despite a large investment backlog, which adversely impacts on
the reliability and availability of assets.
2. FUNDING AND
INVESTMENT
2.1 Investment backlog—current position
There has been a long history of under-investment in London
Underground, as illustrated in Annex 2.
Despite a higher level of core investment in recent years,
a substantial investment backlog remains. The investment backlog
is currently assessed at £1.2 billion, which represents no
change on the position reported to the Sub-Committee in February
1997 and April 1998. The additional funding announced by Government
in July 1999 will allow core investment of £377 million in
1999-2000 and £398 million in 2000-01. This is broadly in
line with "steady state" investment needs of some £400
million per annum. Therefore, there should be no further increase
in the investment backlog prior to the start of the Public-Private
Partnership (see Section 3). From 2001-02 onwards investment to
recover the backlog and modernise the network will take place
through the PPP.
2.2 Investment backlog—when will it be recovered
A Long Term Investment Programme has been prepared to assist
in the development and specification of the PPP. The programme
anticipates that most of the backlog will be eliminated by the
first periodic review at 7.5 years from the start of the PPP.
How long it will actually take depends on the phasing of the investment
programme agreed in due course with the incoming infrastructure
contractors. The PPP structure is inviting the successful InfraCos
to optimise the investment-maintenance expenditure mix and to
commit to a whole life approach to asset management. This may
result in different combinations and phasing of backlog recovery,
steady state and improvement related expenditure. Initially InfraCos
will be expected to focus on improving asset availability.
Overall, the majority (in expenditure and volume terms) of
backlog recovery is expected to take 7 to 8 years. However, for
certain asset areas (for example civil infrastracture and track)
recovery is anticipated to take up to 15 years, mainly due to
the practicality of carrying out the required volume of work,
given resource availability and the need to minimise disruption
to customers.
2.3 Investment programme-recent progress
Much of the core investment in London Underground during
the last 18 months concentrated on upgrading and renewing basic
infrastructure. In 1998-99, for example, some £95 million
was spent on track, £28 million on signalling and communications,
and £26 million on lifts and escalators. There was also significant
investment in stations and in new and refurbished trains. Main
investment-related examples include:
— introduction into service of the new fleet of
Jubilee line trains
— opening of the Jubilee Line Extension
— Circle line tunnel strengthening between High
St Kensington and Gloucester Road
— removal of speed restrictions on the Northern
line between Moorgate and Kennington
— reopening of Mornington Crescent station after
a £10 million refurbishment
— modernisation of Oval and Clapham Common stations
at a cost of £16 million
— continuation of the refurbishment of Piccadilly
line stock.
In addition to expenditure under the core investment programme,
customers wil benefit from private sector investment under the
Private Finance Initiative:
Northern line Train Service—the contract involves
the provision and maintenance of 106 new trains. All the new trains
have now been delivered, with acceptance of the final train into
passenger service planned by early 2000.
Prestige—the contract gives London Underground
and bus services in London a new integrated ticketing and revenue
collection system. This includes gating nearly every station by
mid-2000 and the introduction of Smartcard ticket products by
2002.
Power Services—under this contract, a private
sector consortium has taken responsibility for operation and modernisation
of the Underground's power distribution system. This will include
a transfer to the use of supplies directly from the National Grid,
enabling closure of the Underground's Lots Road generating station.
Connect—this contract will result in the introduction
of a modern communications network on the Underground, including
provision of a new integrated train and station radio system.
Ageing and unreliable systems that did not allow direct communication
between train and station staff will be replaced. The new communications
network will also provide the basis for allowing mobile telephone
use on the Underground.
British Transport Police Facilities—the contract
has delivered a new police station at West Ham and will provide
a new police station at Tottenham Court Road. It will also involve
the upgrade of existing police station facilities to modern standards.
2.4 Improvements programme—plans to December 2001
The additional funds provided by Government in July 1999
will allow continued investment in essential infrastructure works
and service enhancement. As well as investment in track, bridges,
embankments, lifts and escalators and other basic infrastructure,
the improvements programme includes:
Train Services
— Train service levels to improve further to a planned
68.6m kms by March 2001—6 per cent above 1999-2000 levels
— A 10 per cent increase in peak train service capacity
on the Central line by Autumn 2000
— A 10 per cent increase in peak train service capacity
on the southern section of the Northern line by Autumn 2000
Station services
— Station capacity increases (with a total cost
of some £29 million) at: Vauxhall, Brixton, Russell Square
and Knightsbridge
— Station modernisation works (with total cost of
some £60 million) at: Hyde Park Corner, Euston Square, Warren
Street, Great Portland Street, East Ham, Earl's Court, Colliers
Wood, South Wimbledon, Marble Arch and Upton Park
Security and information improvements
— CCTV improvements at nine Northern line stations
and three District line stations.
— Installation of Train Arrival Indicators on the
Hammersmith branch of the Metropolitan line
— Completion of the programme to introduce Customer
Care Assistants at key stations
— LT website upgrade to include an on-line journey
planner
— Public transport guides to be delivered to every
home in London
3. PUBLIC PRIVATE
PARTNERSHIP PROGRESS
3.1 Background
In March 1998 the Deputy Prime Minister announced the intention
to create a Public-Private Partnership (PPP) to maintain, renew
and upgrade the Underground infrastructure under long-term contracts
with private companies. Since then London Underground has done
a great deal towards making such partnerships a reality.
3.2 Deep-tube PPPs
The consortia selected to bid for the two deep-tube PPPs
were announced on 15 June 1999. Invitations to Tender (ITTs) were
ssent to the bidders on 19 October 1999. The ITT gives an overview
of the main terms of the PPP contracts, sets out the information
to be submitted by bidders, and outlines the way in which bids
will be evaluated. A full draft of the PPP Contract was sent to
bidders with the ITT, together with certain supporting information.
At the same time, London Underground opened the Data Rooms, which
contain the financial, engineering and other information which
bidders will need. Bids are due to be returned on 31 March 2000.
3.3 Sub-surface Railway PPP
Since June 1999 London Underground and Railtrack have been
exploring whether there would be a way of linking the national
rail network to the sub-surface lines in a Public-Private Partnership
that would create better integration of overground and Underground
services. The main opportunities were seen to be:
— a link between the national rail network in South
London and the East London line (the North-South scheme);
— a link between Railtrack's Great Western main
line and the north side of the Circle line, to create opportunities
for through trips from west of London and Heathrow and to the
City (the East-West scheme).
On 30 November 1999 the Government, London Transport and
Railtrack together agreed not to proceed with further discussions
about the possibility of Railtrack acquiring the Sub-surface Infraco
under the PPP and building new links between the sub-surface lines
and the national rail network. London Underground is now due to
commence the formal process of inviting bidders for the Sub-surface
PPP in early December.
Discussions between London Underground and Railtrack were
detailed and constructive. Good progress was made on the North-South
scheme, but evaluation of possible East-West schemes highlighted
a range of capacity issues relating to the national network west
of Paddington which require further detailed study. This study
will be undertaken by the shadow Strategic Rail Authority—and
will include a review of various proposals for improved access
from Heathrow to Central London, CrossRail and other similar schemes.
3.4 Alternative funding methods
The question about whether London Underground should be retained
in the public sector and raise its own finance was considered
at length during the initial evaluation of options for the PPP
(see DETR's paper "Public Private Partnership for London
Underground: Facts and Analysis", dated 20 March 1998). Government
opted for the current structure of the PPP for the reasons set
out in the paper—and since then London Underground has focused
its efforts on developing the PPP.
4. EXTENDED JUBILEE
LINE
4.1 Progress update
The extended Jubilee line is open—with a through service
operating from Stanmore to Stratford via central London, Docklands
and North Greenwich. A peak 20 train per hour service now operates
each weekday. The extended line represents the largest extension
to the network in more than 30 years. It provides links to every
other Underground line, connects to the national rail network
at six stations and provides access to International Eurostar
services at Waterloo.
The extended Jubilee line provides significant journey time
savings. Platform to platform journey time from Waterloo to Canary
Wharf is 12 minutes, compared to 30 minutes by Docklands Light
Railway and the Waterloo and City line. From London Bridge to
Canary Wharf, a journey that took 27 minutes now takes eight minutes.
Westminster is the one remaining station to open for Jubilee
line services. Its construction has presented huge technical difficulties
and involved a number of industrial relations issues. These are
now being resolved, system testing is proceeding and the Westminster
Jubilee line link is expected to enter passenger service in the
first quarter of 2000.
To provide the most frequent service over the whole route,
as agreed when Parliamentary approval to build the new line was
given, the Jubilee line has ceased to serve Charing Cross. Customers
who previously changed from mainline services onto the Jubilee
Line at Charing Cross now find it easier to get off at London
Bridge or Waterloo East and join the Jubilee Line from there.
An extensive advance publicity campaign was undertaken to ensure
Charing Cross customers were aware of the available alternative
routes.
Since through running started it is estimated that more than
90 per cent of the schedule has operated. Usage of the extended
line has already exceeded expectations—with some 225,000
journeys being made on the extension each day.
4.2 Cost update
The current estimated final outturn cost for the extension
is around £3.5 billion. The principal cost risks remaining
on the project are associated with completion of Westminster station
and settling of contractors claims on work done and to be completed.
The project has involved the integration of different technologies
and skills with many contract interfaces. Project costs were affected
by its complexity, and its construction around interchanges and
an operating railway. The work has been substantially executed
below ground in a city and urban environment with exposure to
unforeseen ground conditions and ageing assets. Additional design,
architectural and construction costs were incurred to overecome
the delays, disruptions and difficulties posed by these risks—and
to address some original design problems.
4.3 Post-project work
Apart from works at Westminster station, some additional
completion work is required at other stations. Settlement of the
major contracts will continue well into 2000 and the Project team
will need to be demobilised in a structured way. Consideration
is being given to the business case for system improvements which
will lead to operating cost reductions during 2000 and onwards.
London Underground's immediate priority is to support a reliable
24 train per hour service, moving to 27 trains per hour by 2004.
Introduction of higher train frequencies and the technology to
support them will be dependent on the results of updated 10 year
passenger forecasts and the suitability of signalling technology.
Given the need to minimise any disruption to the Jubilee line
during the millennium year, London Underground does not expect
to be in a position to make modifications to the existing signalling
system before 2001.
December 1999
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