5 London Underground's powers
27. Transport for London and the current chief executive
of London Underground Ltd were not involved in negotiating the
PPP contracts. In his introduction to the TfL report on London
Underground and PPP Mr O'Toole said "I have…been disappointed
by the overly convoluted processes that the contracts require,
the limitations on London Underground's rights and inadequacies
of real-world technical planning analysis that went into the PPP."[37]
Not only does LUL have to work with the infracos; it has also
to deal with three separate PFIs for important services which
were entered into before the PPP, and which were not taken into
account when the PPP was negotiated. The Prestige PFI covers ticketing;
the Power PFI with Seeboard Powerlink was entered into in connection
with the decommissioning of the Underground's Lots Road power
plant; the Connect PFI is for maintaining and the current radio
system and delivering a new system. The PFIs and the PPPs are
interdependent - the Connect PFI will, for example, only meet
the deadline for introducing a new system if it shares engineering
hours with the infracos and draws on their engineering trains,
protection personnel and other assets.[38]
28. Unlike most PFI deals, the PPP does not contain
a provision allowing for voluntary termination on a no fault basis.
The NAO reported that :
4.10 One of Transport for London's major concerns
was over the absence of arrangements for voluntary termination
on a no fault basis, which is usually found in PFI contracts.
Ernst & Young in their report echoed this concern because
the provision enforces a duty on the PFI contractor to mitigate
costs in such an event. We find that the PPP's pervasive requirement
for "economic & efficient" behaviour captures the
duty to mitigate costs, but the absence of pre-agreed contract
provisions leaves considerable room for argument.[39]
In 2002, London Underground said that it was decided
not to include such a right, because the PPP bidders would have
found it unacceptable, and the Department later told the National
Audit Office that a decision was taken not to include such a provision
since the bidders would have added a premium to their prices to
reflect the greater political uncertainty.[40]
29. If the only ground for termination is that the
companies are in default of their obligations, then it is clearly
essential that those responsible for the assessing performance
get the information they need. Yet LUL complained that the infracos
were not providing satisfactory information about the planning
and delivery of projects. By the time he gave evidence, Mr O'Toole
told us that London Underground had reached agreement with the
infracos about the information they would provide, although it
was still not available "Because it has taken us the better
part of the year to argue over what it is and what it should look
like".[41] Tube
Lines told us that they were not aware of the information that
London Underground required until three months after the contract
was signed. As the result of the PPP, London Underground is left
with a plethora of different arrangements with private partners
all responsible for different bits of the infrastructure. It has
no public interest right to terminate the PPP contracts. It is
responsible for the overall running of the Underground and for
managing the performance of the infracos. It vital that it has
the information it needs to do its job. It is astonishing that
it took a year to negotiate access to the information London Underground
needed.
37 TfL Report, p5 Back
38
TFL Report, p6 Back
39
HC(2003-04)645, p 37 Back
40
HC(2003-04)645, p 37 Back
41
Q 135 Back
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