Examination of Witnesses (Questions 200-219)
MR JOHN
WEIGHT AND
MR TERRY
MORGAN
8 DECEMBER 2004
Q200 Clive Efford: Given the performance
of your company over the last year, is your bonus justified?
Mr Morgan: That obviously is fixed
by my remuneration committee. If you wanted to consider the things
that we did I understand why in part there is a heavy concentration
on availability but my business is not just about availability;
it is about project investment, it is about ambience, it is about
service points. Yes, we still have a challenge to face on availability
but the other targets were achieved. My board decided on that
basis that the bonus that I received was commensurate with the
achievement of the business.
Q201 Clive Efford: Did your board consider
the implications for industrial relations when they made that
decision?
Mr Morgan: In the context of?
Q202 Clive Efford: To put it bluntly,
resentment amongst the staff who worked extremely hard to deliver
the performance that presumably you were paid a bonus for.
Mr Morgan: I am quite proud of
the fact that we had a two-year deal in place at the time that
we filed our performance. It included my remuneration. I am also
very proud of the fact that we inherited a business where there
were only six people under some form of incentive. Today there
are 500 people under some form of incentive. This is not just
about one individual. This is all about creating a culture that
tries to value performance.
Q203 Clive Efford: This is about one
individual. It is about one individual gaining a pretty huge bonus.
Mr Morgan: As I said, there were
500 people under bonus arrangements going forward.
Q204 Miss McIntosh: Can you clarify one
point which you mentioned about controls in place? In the Railtrack
situation, if there was any question of the company going into
administration the government acted as a backstop. Are you now
saying that that responsibility has passed to TfL?
Mr Morgan: If Jarvis were placed
in some form of administration the administrator would try to
find a buyer for the Jarvis interest but would in fact try to
find a buyer for the Jarvis business that would include the Tube
Lines interest. If a potential buyer was found for that interest,
if that ever occurred then, whatever we came back to London Underground
with in terms of that recommendation, they would have to approve
that transaction. It is not possible suddenly to find buyers for
Tube Lines' equity that are unacceptable to London Underground.
Q205 Miss McIntosh: Mr Weight?
Mr Weight: It is similar. As far
as Metronet is concerned my understanding of that circumstance,
if we look first of all at a voluntary sale, is that none of the
shareholders can sell now more than 25% of their stake in the
first seven and a half years. Even then there will obviously be
a dialogue with London Underground and there is also a profit
share element to that. There is, of course, a circumstance where
the whole company could be taken over, as indeed was the case
with Amey. The company owning the shareholding stays in place;
it just has another prime owner so that can happen. I think they
are similar. I think it is well controlled. It was anticipated
during the bidding of the contract because in 30 years it would
be quite surprising if it were exactly the same people sitting
round the table at the end of the day.
Q206 Miss McIntosh: Could I ask each
of you why did the number of signals passed at danger relating
to equipment performance go up from 161 to 208 last year?
Mr Weight: As far as Metronet
is concerned there were two particular problems. One was to do
with a batch fault on some signalling lamps that were bought as
part of a normal purchase contract, and you would not think that
this was a terribly difficult thing to do. They are of special
design but they are not complicated as such, but there was a batch
fault and those lamps had to be taken out as quickly as we could
do that and in the hours available to us we did it. There is also
a particular problem with signalling in three distinct areas within
the sub-surface lines—one at Farringdon, one at Finchley
Road and one down at Southfields on the Wimbledon Line. I draw
particular attention to that to demonstrate another point if I
may because earlier on this year we had what started off as a
rainfall issue, quite frankly. The beds become saturated, the
signalling currents are carried by the running rails and so you
have a whole issue there about conductivity and the like. With
London Underground's co-operation we introduced a new programme.
Rather crassly, it is called "Sponge"; you can see why.
There were some emergency civil engineering works taken out in
each of those three locations. That has improved the signalling
performance at Finchley Road and at Farringdon. It has not solved
the problem at Southfields. That requires a more technical solution
and again we are working very closely with our partners, London
Underground, to find a solution that we can introduce to improve
the reliability of that section of line. It is further complicated
by the fact that the line is owned by Network Rail.
Q207 Miss McIntosh: Thank you. Mr Morgan?
Mr Morgan: There has been an improvement.
I have one particular problem area right now, which is on the
Northern Line in the tunnel. Tim made reference to bobbing, which
is the track moving as the train moves over it and therefore the
position of the rail can sometimes not be where we would wish
it to be and therefore we lose the signal or we get a signal when
we should not and that is when we would get a technical spad.
I think it is an example of the flexibility of PPP in that we
have identified that we have a particular problem on the Northern
Line in that area and we have re-prioritised our work programme
for the early part of 2005 and we will be re-railing that area
much earlier than we had anticipated given what we had previously
understood to be the asset condition.
Q208 Miss McIntosh: Mr Weight, in Metronet's
annual review you say, "The long term replacement of key
drainage systems will, however, take a number of years to complete",
and you refer specifically to the example you gave of Southfields.
Why should we consider these signals as safe in the interim?
Mr Weight: They do fail/safe.
I think that was a point that Mr O'Toole made. That is different
from the overground railway in that if there is any element of
failure within the signalling system then generally it is understood
that it fails safe and a mechanical device will stop the train.
I think the solution to Southfields is more technical than simply
drainage. It is an element of it. We have got the same bobbing
problem that Terry has just talked about and we there is also
an issue, if you will forgive me, without going into the technicalities,
of using third-rail systems versus fourth-rail systems, this whole
interface system with Network Rail. There is possibly a solution
using a piece of equipment called an isolating transformer and
we are prepared at our risk to go ahead with installing a number
of these to see whether it helps solve the problem. Ultimately,
the signalling will have to be replaced wholesale across that
whole section of line; there is no doubt about that.
Q209 Miss McIntosh: Could I ask each
of you to give us an indication of whether assaults on staff have
gone down and what the scale of that is, and also what problem
graffiti is on your trains?
Mr Weight: Assaults on staff are
something which I fully understand the criticality of as far as
those people working for Mr O'Toole are concerned. It is not a
particular issue for me running the infrastructure side of things,
and the reason is, of course, that the very clear divide between
the PPP and London Underground is that they look after the customer-facing
operations. I provide all of the infrastructure that goes in support
of that. Graffiti is an issue and I do not think I can say much
more than Mr O'Toole reported. We are still getting around 800-1,000
hits a day on the trains on the sub-surface fleet. We are just
about on top of it but at no small cost. I do believe that we
have to show commitment. I believe we have to see this thing out
over the next few years and I wholeheartedly support the initiatives
that Mr O'Toole is taking in this respect.
Q210 Mr Donohoe: What is it that you
companies have that was not able to be done beforehand? What is
it that you achieve that they could not?
Mr Morgan: Can I use a few examples?
In an organisation like London Underground there is enormous bureaucracy,
some of which is well founded, which is intended to maintain a
safe regime, but some of which it is very difficult sometimes
to comprehend the value-added of. By bringing someone like Metronet
or Tube Lines in it is very easy for us to come in new and start
to challenge what has become the status quo. I have commented
many times that we did a relatively small job on a part of the
railway. I needed 60 signatures to hand it back as being assured
for use. The only individual that did not sign that piece of paper
was the project manager but that was what the system drove you
to do. We have been able to say, "That has just got to stop".
We are now down to one signature. We have worked with London Underground,
and that is the sort of change we are trying to make. At Green
Park we are doing an escalator refurbishment. I have heard the
complaint so many times that the hoardings go up and it is silence
behind the hoardings. There cannot be anything happening behind
there. On average it took between 26 and 35 weeks to do escalator
refurbishments on that scale. Today we are trying to do it in
10 weeks. We have gone to the guys and said, "What do you
need to do this job much quicker than you ever have before?".
Some of it was better planning, some of it was the tools to do
the job. Those are the sorts of things that we have been trying
to change in terms of what I think we bring fresh to the deal.
Q211 Mr Donohoe: I find it very difficult
to get my head round this in terms of why it is that it could
not be undertaken by the existing regime. All of what you have
said with good management could have been undertaken, not to bring
about, as has been said before by others, the whole question of
introducing profit and bonuses. What difference have you made,
because I am looking at your targets and whatever else and nothing
seems to have been achieved?
Mr Weight: I hope, Mr Donohoe,
that we might convince you that we are on the way to changing
things and our reports indicate that there is progress. There
is still much to do. I guess what I am going to say may strike
at the heart of this. I have worked in both sectors, the public
sector and the private sector, and I have seen transition through
public and private. I believe the private sector brings a particular
culture and yes, profit is an element. It brings a drive, it brings
a focus, it brings an enthusiasm and a commitment. Above most
things it brings the right spirit of accountability for delivery.
I have to say that in my experience those elements are often missing
in the public sector.
Q212 Chairman: Mr Weight, I think we
would be a bit more impressed by this if you had not had problems
with performance, derailments, lost customer hours and similar
rates of rolling stock failures as before the PPP.
Mr Weight: Madam Chair, I refer
back to the report that we have submitted to you and what you
have asked for now, which is more detail on performance. I believe
I can address each of those issues and give a good account of
how we have improved.
Q213 Mr Donohoe: Can I ask Mr Morgan
something specific? Why is it that the number of rolling stock
failure on lines operated by you has increased since the transfer?
Mr Morgan: I really would need
to check that because my statistics suggest that it has gone down
by about 40%.
Q214 Chairman: So you dispute the Transport
for London figures?
Mr Morgan: I can only give you
the numbers that we reported. On fleet there has been a reduction—and
these are incidents per month—of 38%.
Q215 Mr Donohoe: I am looking specifically
at TfL's submission to us and it is indicating something quite
different from that. Is it acceptable for you to say what you
have just said when we are looking at the reverse of that? In
the most recent quarter, for instance, there are only two days
where zero delays have occurred on the Northern Line. Why is that
the situation if you are saying something different?
Mr Morgan: We are not saying something
different. I have to say with regard to the expression that you
have just used about zero delay days that we did not have one
single zero delay day in the first six months of inheriting the
assets that we took from London Underground. It is one of our
metrics when we do have a zero delay date that we celebrate it.
Compared to where we were historically we are now getting at least
one or two. That may not sound impressive but at the moment our
figures are significantly higher than 12 months ago. If you are
interested I can provide that information to you. We measure that
every single day.
Q216 Mr Donohoe: You seem to be confident
in things that I cannot see on a daily basis by using the service.
This is a problem that I am facing as far as your companies are
concerned. You have targets that you are suggesting you are going
to achieve. Thirty trains an hour is a target on lines that have
got the worst results with the worst delay factors within them.
I just cannot see you being able to undertake what you are promising.
Mr Morgan: Can I quote to you
from the TfL report that was issued last month, that the last
quarter was the best quarter in performance terms in seven years?
Can I also refer you to the TfL report which said last month that
the Jubilee Line had its best performance since the JLE was commissioned?
I am not suggesting in any shape or form that we have got the
system where we wish it to be, but this was a very unreliable
poorly-maintained set of assets that we inherited and it will
take time to deliver.
Q217 Chairman: Which is why you got more
elastic targets.
Mr Morgan: We have targets to
improve and that is why they exist, quite right.
Mr Weight: The important thing
is what you say: it is the experience of the customers. We can
quote the statistics, we are looking at trends. We do gather information
and put it in a particular form. I think it is still there for
us to do so that we can convince the travelling public that the
system has improved. I think we have all indicated that that through
investment is going to take some time. We are dealing with ageing
assets. We are putting a lot of money in resource behind maintaining
and, where we can, improving those assets. The statistics are
one thing; the personal experience is another. I will grant that.
Q218 Mr Donohoe: It says in your annual
report that London Underground claim not to have received any
information about the progress with the Victoria Phase One upgrade
or, for that matter, for the Central Line upgrade. Can you explain
this lack of reporting?
Mr Weight: It is not my experience.
In fact, each of these projects is discussed each month at a performance
meeting which I attend. Only the other week we took the second
visit down to the signal supplier for the Victoria Line at Chippenham
and we had a full day down there to examine progress. We have
made a lot of advances since the first 12 months report and that
is a good thing.
Q219 Mr Donohoe: When you look at the
specifics, and you mentioned the specifics, or when you look at
the Bond Street escalator overrun which caused, we are told, an
estimated 570,000 customers lost by the delay on that, that is
more than was caused by the Chancery Lane derailment. That was
only 550,000. These are figures that are specific, that are seen
by the public, and as a matter of fact have been presented to
us in a way that is negative and demonstrating that you are not
worth being put in to manage the system.
Mr Weight: I understand your point.
Both of those incidents are related because they happened well
over a year ago. The Chancery Lane incident itself happened just
before our watch but we took on the consequences of it. Bond Street
was an inherited project and there were undoubtedly resources
that were diverted onto the challenge of getting the Central Line
trains back rather than repairing the escalator. The two things
are related and both events were around 18 months ago.
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