Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
TRANSPORT, PRICEWATERHOUSECOOPERS
AND LONDON
UNDERGROUND LIMITED
23 JUNE 2004
Q40 Jon Trickett: It is not because I
have not had a chance to look at it.
Mr Rowlands: I think that is where
it is, page 20.
Jon Trickett: It refers to A3.4, if you
go to page 21 you will find A3.3 but there is no A3.4.
Q41 Mr Williams: NAO?
Ms Leahy: Sorry, it is actually
A3.2 on page 20 and there is a paragraph at the end of that page
which does give some of the evidence.
Q42 Jon Trickett: I went to A3.4 and
could not find it.
Ms Leahy: I am very sorry.
Q43 Jon Trickett: I did not get this
until Monday. I think it does demonstrate the problems we are
being faced with by being given late information.
Ms Leahy: Sorry. It is the last
paragraph on page 20.
Q44 Jon Trickett: It is not A3.4, that
does not exist.
Ms Leahy: I am sorry, it is page
20, A3.2.
Q45 Jon Trickett: I do not want to say
it is shoddy but it is not helpful when we get Reports at the
last minute and it mentions paragraphs which are not there. This
is a key part of the text. I want finally, if I have time left,
to go to the first Report, paragraph 2.36 on page 25. Mr Williams
has already referred to this discussion. I understand you, Mr
Rowlands, to say that the risk is £190 million on the private
sector?
Mr Rowlands: On the debt, yes.
Q46 Jon Trickett: Yes, on the debt. Yet
the public sector appears to have been penalised by £450
million because of the risk which the private sector is taking.
Am I understanding that correctly?
Mr Rowlands: No, this is not the
totality of the risks taken by the private sector because the
equity is at risk put up by the infrastructure companies as well.
There is a table elsewhere in the Report that sets out the detail
of that.
Q47 Jon Trickett: This sentence which
you have agreed to, which we have only had 48 hours to look at,
says: "although they ultimately carry risk reduced to 5%
or less . . ." and you have told us that is £190 million,
". . . lenders are charging about £450 million more
than they would charge on some £3,800 million of direct Government
loans . . ." I can only draw the £190 million comparison
of risk to the private sector to the additional £450 million
cost which you have agreed to on behalf of the taxpayers and draw
the conclusion that is one of the worst deals ever in front of
the Committee of Public Accounts.
Mr Rowlands: This says that if
the Government had paid this money directly it would have saved
£450 million over it being supplied by the private debt markets.
If we had been supplying the money directly we would have been
taking on, I think, the risk inherent in a set of assets whose
state is unknown to everybody.
Mr Williams: You see, Mr Rowlands, of
the £3,800 million £3,610 million is guaranteed by the
Government.
Jon Trickett: Exactly. It is more than
that. Elsewhere in the Report we find the Government has written
letters of comfort to the private sector, presumably giving them
some further certainty as well. This must be one of the worst
deals ever put in front of the Committee of Public Accounts, quite
frankly. How you can say this is demonstrably value for money
I do not know frankly. Anyway, my time is more or less up.
Q48 Mr Bacon: May I say to start with
that I too am glad there will be another opportunity to look at
this. I do not feel I have had enough time to prepare. There has
to be a reasonable gap between publication of the Report and our
meeting, so I welcome that agreement from you earlier. Mr O'Toole,
you work at the headquarters of London Underground at St James's
Park tube station?
Mr O'Toole: Yes.
Q49 Mr Bacon: Do you take the Tube to
work?
Mr O'Toole: Yes, I take the Tube
everywhere I go.
Q50 Mr Bacon: You do. So you are aware
that there are delays and you experience them yourself?
Mr O'Toole: Yes.
Q51 Mr Bacon: May I ask where do you
commute from in the morning, which tube station?
Mr O'Toole: I commute from High
Street Kensington or from Notting Hill, I live in between the
two of them.
Q52 Mr Bacon: Mostly you go round on
the Circle Line?
Mr O'Toole: I do. I arranged my
life so I could take on the line that has caused the most on-time
problems.
Q53 Mr Bacon: If you are requiring to
come round from High Street Kensington, you cannot take the District
Line, you have to take the Circle Line. The Circle Line only seems
to run every 20 minutes or so.
Mr O'Toole: Actually it runs on
eight minute headways.
Q54 Mr Bacon: What does that mean?
Mr O'Toole: It means that it is
scheduled to have eight minutes between trains. The Circle Line's
problem, of course, is that the Circle Line does not actually
exist. It runs on the District Line and it runs on the Metropolitan
Line and it is sacrificed whenever there is a problem on either
of those lines. Often you feel you have a poor Circle Line service
inflicted on you but it is a problem that is on one of those other
lines.
Q55 Mr Bacon: It is said because the
Piccadilly goes out to Heathrow a special effort is made to keep
the Piccadilly running more than most other lines. Is that broadly
correct?
Mr O'Toole: No, I would not say
that is broadly correct.
Q56 Mr Bacon: Given you are the boss,
have you not made an effort to make sure the Circle Line runs
a bit better?
Mr O'Toole: Actually I have in
the sense I do not believe you should sell something you cannot
make. I have said to the operating department we have to find
a way to make the Circle Line run better. We have run one experiment
which gave preference to the Circle Line at the corners, both
when it ran into the Met and when it ran into the District Line.
It may have gone unnoticed so far but in the last two periods
the Circle Line has been turning in performance it has not turned
in in about seven years in terms of the number of trains run in
the peak periods. We are running now in the mid 90s, it typically
has been in the low 80s.
Q57 Mr Bacon: Mr Rowlands, can I ask
you about the extra costs of the private debt compared with public
debt?
Mr Rowlands: Yes.
Q58 Mr Bacon: The Report says that the
extra cost is £450 million, what is the total cost of the
debt?
Mr Rowlands: The total size of
the debt is £3.8 billion.
Q59 Mr Bacon: The extra cost is £450
million?
Mr Rowlands: Over triple A.
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