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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 94 - i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE TRANSPORT COMMITTEE
The Performance of London Underground
Wednesday 8 December 2004 MR BOB CROW, MR TONY DONAGHEY, MR GERRY DOHERTY and MR MIKE KATZ
MR JOHN WEIGHT and MR TERRY MORGAN Evidence heard in Public Questions 1 - 256
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Transport Committee on Wednesday 8 December 2004 Members present Mrs Gwyneth Dunwoody, in the Chair Mr Brian H Donohoe Clive Efford Mrs Louise Ellman Miss Anne McIntosh Mr John Randall Mr Graham Stringer ________________ Examination of Witnesses Witnesses: Mr Bob Crow, General Secretary, and Mr Tony Donaghey, President, Rail, Maritime and Transport Union; Mr Gerry Doherty, General Secretary, and Mr Mike Katz, Head of Communications and Marketing, TSSA, examined.
Chairman: Members having an interest to declare. Mr Efford. Clive Efford: Member of the Transport and General Workers Union. Chairman: Mr Stringer. Mr Stringer: Member of Amicus and Director of Centre for Local Economic Strategies. Chairman: Member of Amicus. Mrs Dunwoody, ASLEF. Mr Donohoe: Transport and General Workers Union. Chairman: Mrs Ellman. Mrs Ellman: Member of the Transport and General Workers Union. Q1 Chairman: Thank you very much. Good afternoon, gentlemen, you are most warmly welcome. May I ask you to identify yourselves, starting with my left and your right? Mr Donaghey: Tony Donaghey, President of the Rail, Maritime and Transport Union. Mr Crow: Bob Crow, General Secretary of the National Union of Rail, Maritime and Transport Workers. Mr Doherty: Gerry Doherty, General Secretary, Transport Salaried Staffs' Association. Mr Katz: Mike Katz, Head of Communications, Transport Salaried Staff's Association. Q2 Chairman: I should tell the Committee that unfortunately colleagues from ASLEF are unable to be with us, and also from the Mayor of London's Office because of illness. They have not only signified their apologies but also given us very clear indications that this is genuinely the case. Did any of you gentlemen have anything you wanted to say before we begin? Gentlemen, if you would bear in mind that the microphones of you do not project your voices, they are to record your voices. So if you could remember that this is a room that absorbs sound and if we could have a lot of voice projection, that would be helpful. Mr Crow, I should not have to tell you that! Mr Crow: Thanks for studying me so well. The Public Private Partnership was one of the most unpopular and widely condemned policies introduced in London in recent memory. Before sell-off in early 2003 the scheme was opposed by your Committee, the Railway Unions, the Mayor of London, Transport for London and the vast majority of Tube users. Regrettably, the government pressed ahead and we are now locked into process where the private sector has a licence to print money. Combined operating profits in the first full year of the Public Private Partnership were 13 per cent. In the past 18 months some good decisions have been taken on the main line in relation to maintenance contracts and Network Rail successfully brought them in house. In the areas where contracts were stripped from companies like Balfour Beatty and Amey, delays caused by infrastructure problems have tumbled in some areas as much as 50 per cent. I believe that following Network Rail's welcome decision it is now untenable to have fragmented, privatised maintenance on the Underground, while to allow the same companies that have been removed from maintenance contracts on the national railways to continue to make profits from London's Tube. The government should now reconsider the old rationale of the Public Private Partnership with a view to bringing forward legislation which will allow the Mayor the flexibility to create a unified, streamlined Underground network, bringing benefits to both Tube passengers and the Underground workforce. Q3 Chairman: Thank you, Mr Crow. Mr Doherty, since we have heard Mr Crow's views, would you like to tell us whether your members are confident that levels of safety on the Tube are being satisfactorily maintained? Mr Doherty: As far as the TSSA is concerned, Madam Chair, there has always been a dichotomy between profit motive and the implications of that for safety. There have not been any major accidents but we have had some train failures, we have had some derailments. Actually pinning privatisation failure either on the Mainline Rail or whether it is on the Underground is very, very difficult. There is always in the back of the mind this question of if the profit motive is there is it impinging on safety standards? Q4 Chairman: The Health and Safety Executive has said that although the number of incidents with potential for an adverse effect on safety has increased, there is no evidence that the Underground's safety record has suffered as a direct result of the PPP regime. Is that right? Mr Doherty: The more potential there is - and it is always the case in risk aversion - eventually one of those potentials becomes an accident. The question is how do you manage the potentials and getting the numbers of potentials down? Because if the potentials keep arising eventually one of these will end in an accident. Q5 Chairman: You have said that temperature and ventilation have caused health scares. Are those conditions changing? Have they changed recently? Mr Doherty: There has not been anything that we are aware of to actually start addressing these issues. Q6 Chairman: Mr Crow, are you satisfied that the level of safety is being satisfactorily maintained? Mr Crow: No, I am not satisfied at all. There was the incident that took place on the Northern Line last year, a derailment took place, and also the broken rail down on the west end of the Piccadilly/District Line took place. We are concerned about not just the company's safety record but also the interfaces that took place. Where before London Underground Managing Director was responsible for the safety from top to tail, he or she, whoever holds that position, now has to ask the infrastructure company, and the infrastructure company then has to decide whether its their own direct workforce that is getting it or the sub-contracted workforce that gets it, and what you end up with is two or three interfaces before the actual work is done, and what that leads to, in our opinion, is that there is not a commonality of safety measures that are applied across the board. Q7 Chairman: And you have a specific instance that you would quote, which would give us evidence about it? That is a general comment, and whether one agrees with it or does not agree with it, it is a general comment. But what evidence do you have that that dichotomy is producing a problem? Mr Crow: I would not say that there is a direct result that the infrastructure companies have gone out of their way to lower safety standards, what I would say is that the application of their systems are different to the ones that London Underground have, and what that leads to is a situation where on the actual crossing, or the stop and switch that was involved in the derailment that took place at Camden, it was found out afterwards that there were a number of these crossings, or stop and switches, throughout the combine which were similar to the ones at Camden, but because different infrastructure companies own those different sets of stops and switches there was want the same application applied. Q8 Chairman: And that was different from the way it was when it was a unified organisation, is that what you say? Mr Crow: It was a unified organisation and at the end of the day the Managing Director had sole control for safety, he had one Chief Civil Engineer --- Q9 Chairman: No, on the specific point of the switches and the points. Are you saying that that would be different now? Mr Crow: Yes, because there would be one standard set about and that is the standard that would be applied. Q10 Chairman: You have said, Mr Doherty, that Infraco staff and London Underground staff do not receive the same safety training. Mr Doherty: Yes. Q11 Chairman: Are you suggesting that the Infraco staff are not trained to the same left? Mr Doherty: We are, yes. Whether they are adequately trained is a different question, Madam Chairman. Q12 Chairman: What are the differences in training? Mr Doherty: I am not sure; I would have to get back to you on that. But it is not standardised training, that is the problem. People are singing from different hymn sheets, and we see that as a difficulty. Q13 Chairman: Standardised in the sense that it is not the old London Underground training which was an agreed standard throughout the industry? Mr Doherty: Yes. Q14 Chairman: Is there an agreed standard for training for the Underground that is always adhered to? Mr Doherty: For example, there is no forum for safety representatives from different parts of the now fragmented Underground to meet together to share common concerns. There is no forum for that and we have been pressing for that for some time. Chairman: Mr Donohue. Q15 Mr Donohoe: Going back to the ventilation question, what representations have you made to management in connection with ventilation? Mr Doherty: Our representatives have regular discussions with management and we have raised the issue of what can be done. It is a very difficult problem, particularly in deep lines; it is a very expensive issue. Recently, for example, we were in Thailand - and Mr Crow was with us - and when you go on the Sky Train there - and I know it is not the same comparison - but if a country like Thailand can afford air conditioned services in Bangkok, it really begs the question if the fourth largest economy in the world cannot find the money to take care of carrying citizens of this great city from A to B in comfort. Q16 Mr Donohoe: What specific pressure have you brought to bear on employers to introduce the option of air ventilation, particularly air conditioning on the whole track? Mr Doherty: It is the same pressure that we bring to bear on all of the issues that we have. Our pressure is limited. We can raise the issues with the companies, the companies will undoubtedly tell us the costs that are involved in this and, like everything else, Mr Donohoe, there are priorities; it depends whether or not one sees this as a priority. Q17 Mr Donohoe: So you do not think the management see it as a priority, is that what you are saying? Mr Doherty: I think they have other priorities before that. Q18 Mr Donohoe: Can I take you on to the next question? In terms of Tube Lines, there has been introduced a 0800 incident line for reporting problems, for the employees to use for reporting problems. Have your members found this initiative useful? Mr Doherty: I could not answer that, Mr Donohoe. Q19 Mr Donohoe: What about Mr Crow? Mr Crow: I have never heard of it; no one has told me from the companies that there is an 0800 number. Q20 Mr Donohoe: Kings Cross Thames Link is undergoing major engineering work, I think you are aware of that, and it is going to be going on until March 2005. That is putting a lot more pressure on to Kings Cross Underground. What specifically is being done to control that crowd control that has come about? Who is undertaking that crowd control? Mr Crow: CTR, Mr Donohue. They are called road marshals, they are actually on the road, and what the problem is in the morning time - because obviously you can stop people coming into Kings Cross Station from Kings Cross Thames Link, Kings Cross Mainline, but what you cannot stop is people coming from the tube out of the station, and what is happening, because it is like a warren's den down there, at the moment in time, with different tunnels, there are problems now with people leaving Kings Cross Station to get up the temporary outlet, and there are queues now must be 200 yards long at 8 o'clock to 9 o'clock in the morning for people to get down. Q21 Mr Donohoe: Have you made representations about that because that is a fairly significant safety problem, and in a station that had a major fire a number of years ago and one would have presumed that would be something that would be taken into account? Mr Crow: The Health and Safety reps of both RMT and TSSA have raised these under risk assessments, which are done. But at the end of the day I would point out, Mr Donohoe, that management tell us that when it comes to the bottom line management are responsible for safety, and as soon as we threaten to take any kind of industrial action we are condemned for taking action. But by the same token, what are we expected to do? All we can is to make representations. At the end of the day management are responsible for safety, not the Trade Unions. Our job at the end of the day is to make management have a safe system at work and it is up to the management to implement it. Q22 Chairman: Is it true, Mr Doherty, that the Infraco safety cases are contractual but not statutory? Mr Doherty: It is, yes. One of the difficulties we have, Madam, is that any changes to the safety case seem to be made without any reference whatsoever to staff representatives. It is after the case that we are informed. So the consultation, as far as we are concerned, is a sham; it is information rather than consultation. Q23 Chairman: Can you point to a particular change that has posed some kind of danger? Mr Doherty: I could not, but I will find out and write to you on that. Q24 Chairman: Do you think that if I were to ask you to give me a supplementary note you could find examples? Mr Doherty: Yes. Q25 Chairman: You would do that for me? Mr Doherty: Yes, I will. Chairman: Mr Stringer. Q26 Mr Stringer: Is enough being done to protect people working on the Underground from attacks by the public and customers? Mr Crow: No, I do not think so at all. What normally happens, Mr Stringer, take for instance today, for the third day there has been a fault on the radios on the Northern Line and we have just got off the train now and the Circle Line eastbound has been completely shut down, and there are problems on the Bakerloo Line, and the first thing that people normally get is that they see a member of staff and they take out their frustrations on that member of staff. What we find is that staff are left in isolated areas, especially in the outlying stations; and secondly, the British Transport Police fail in their response rate to get to these incidents and to prosecute. Q27 Mr Stringer: Mr Doherty? Mr Doherty: The incidences of assaults on staff, whether they are verbal or physical assaults is increasing on both the Underground and on the Mainline Rail. You may well say that there are more people using the services and therefore everything would increase, but our view is that the duty of care that London Underground has is something which we question what priority they give to it. As Bob has said, the frontline staff are the ones who face the frustrations whenever anything goes wrong. I am a commuter myself and I see the abuse that staff have to take. One of the issues that we have raised constantly with both Mainline Rail and with London Underground is that it is the poor person at the frontline who takes all of this - you never see any managers who are willing to stand in front of the passengers and take the brunt of those frustrations. We would want to see much more management interface with passengers when things go wrong. Q28 Mr Stringer: You say that assaults are increasing; do you have hard figures on that? Mr Doherty: Yes. Q29 Mr Stringer: And you can supply them? Mr Doherty: Yes. Q30 Mr Stringer: London Underground took an initiative in East London with the British Transport Police nor to cut crime and they claim that assaults were reduced by a third and that vandalism was reduced. Are you aware of that operation? Mr Crow: What we are aware of, they set up a new police station at West Ham and also they have these helicopters going into the sky to see about people getting on to the railway banks and one thing and another. They may well have decreased staff assaults in East London but the problem is that they have a brand new police control centre at West Ham, and on top of that all the rest of London Underground do not get the same service that that part of East London does because of the new control centre. Q31 Mr Stringer: So East London is atypical? Mr Crow: We welcome it, but it just shows that where the resources have gone into one particular area staff assaults have gone down. What we want is the same resources across the rest of London Underground trains. Q32 Mr Stringer: You said at the beginning, and I was not surprised that you were against the PPP and that you would like to see the position reversed, but given that it is there, what in terms of the operation of the PPP has been better than you expected and what has been worse that you expected? Mr Crow: I am not being cynical, but I cannot see any difference. All I can see is they have changed the name from London Underground to an Infraco, and a few individuals are making a few quid out of it where before it went back into the coffers of London Underground. Mr Doherty: What has changed is, there are three standards that the Infracos are judged by. One is the capacity, which has not changed to a discernible effect; one is the day-to-day availability, which has not changed; and one is ambience, and I assume by ambience they mean that stations are cleaner and there is a brighter travelling environment for the public. One has to question if that is what the public actually wants; do they want stand about in stations with no graffiti but the trains taking longer to arrive? I would suggest that the priority should be to have an efficient and fast service, and that is what Londoners want. There is no discernible effect that the PPP has improved that, and indeed some of the contracts and some of the targets, the timescales are mind boggling - 2025 before we actually get things back to a decent standard. To have a private contractor that says it will take 20 odd years to improve in the City of London is mind-boggling. Q33 Mr Stringer: I do not want to put words into anybody's mouth but when you say that you cannot see a difference, can we imply from that that the different partners are working more closely together? Mr Crow: We have not got the figures, but I am sure the Mayor of London can provide the figures. The amount of delays there are now on Monday mornings. For instance, the engineering work being done at weekends is now over spilling onto a Monday morning, and that is causing delays for passengers to get to work, causing delay to commerce and industry, and we believe it is being done on purpose because it is cheaper to pay a fine if the trains are delayed on a Monday morning rather than getting the work completed at the weekend. Q34 Mr Stringer: So do you think that different partners are working closer together or not? Mr Crow: I cannot see the partnerships working together at all. Mr Katz: As we have already said, Mr Stringer, there is now an artificial divide certainly on the ground between members of the Health and Safety representatives of the Infracos and the members of the Health and Safety representatives of London Underground and that makes an ongoing dialogue over issues of safety and risk assessment, whether to do with staff or the state of stations or track or stock, makes it very difficult for there to be the kind of coordination there naturally would be under a unified structure, and that is a clear difference that PPP has brought about. Q35 Mr Stringer: It is quite clear that you do not like that PPP and wish it away, but if it is not going to happen do you have any suggestions about how it could be improved in the short term? How could the different bodies within the PPP work more effectively together? Mr Crow: As you say, Mr Stringer, we would like PPP to come back under the Mayor's control, but a better solution than it is now is to have one Infraco. Q36 Chairman: A little louder, Mr Crow, please, and I never thought I would hear myself say that to you! Mr Crow: Sorry, I missed that! Q37 Chairman: Louder, Mr Crow, louder. Mr Crow: I think the fact is to have one Infraco rather than three Infracos because you have Metronet, which is one company that operates two infrastructure companies, and Tube Lines, and to have one would be far better because you would have one engineering company to deal with, rather than interfaces. It is not directly the privatised company that we deal with; we are not saying here that because they are privatised they are completely bad, only nothing but bad comes out of the building of them; but what we are saying is it is the interfaces and different communications from different companies that cause the problems. Q38 Mr Stringer: Mr Doherty, do you agree with Mr Crow? Mr Doherty: One has to question how companies that are not improving performance to any measurable performance effect can end up being fined a total of £32 million for not reaching targets, but in the same hand get £12 million in bonuses for improved performance. So obviously if there is something that has to be done I think the contracts have to be looked at. Are the contracts hard enough? Are the targets set challenging enough? £93 million in the first year in profits for the three Infracos is not chicken feed; there is money in there to be made and are the targets stiff enough for it? Q39 Mr Stringer: That is an interesting point, Mr Doherty. Are those bonuses making industrial relations worse between the Underground System? Is there a great deal of resentment from ordinary employees about those bonuses? Mr Crow: There is always a deal of resentment because at the end of the day where is that £93 million coming from? It has to come from somewhere; it has to come from fare paying passengers, squeezing the terms and conditions of employees, of the taxpayer. That is where the money is coming from. There is a great deal of resentment that money that should be spent on improving the infrastructure is finding its way into private pockets, because that is what is happening at the end of the day. Mr Katz: If I could just add, Madam Chair, staff can see these systems, which are slightly ludicrous, where on the one hand they have money taken off them because of poor performance when it comes to punctuality and reliability, but then they can have money given back to them and have the penalties offset by concentrating on measures to improve ambience, and whilst it is an important part of the equation it is certainly not the be all and end all. It is certainly an issue that when the Infracos have access, say, after one of the derailments, at White City, they use their access period whilst White City was not working, to spend money improving ambience, rather than making good the repairs to get the service back up operating, because they realised it was an opportunity to offset some of the penalties they would be forfeit by the bonuses that they would make to improve ambience. Mr Crow: Can I make a point on Mr Stringer's point about resentment? What a person gets for their contract is a matter between them and their individual employer. But just to show you what is taking place with our members, for instance Tube Lines, Tube Lines failed to reach their targets in February, but the Chief Executive got £100,000 bonus and in the same breath shut down the pension fund for the new entrants. Is that fair? That leads to bitterness and resentment. People see if you have done well the Chief Executive gets a bonus, that is fine; but do we get a reward? And you would not think that the pension fund would be shut down. Chairman: Mrs Ellman. Q40 Mrs Ellman: Are you satisfied with the work of the Rail Inspectorate? Mr Crow: No, not at all. Q41 Mrs Ellman: Could you give a reason? Mr Crow: I think they are a spineless bunch of individuals, to be honest with you. Q42 Mrs Ellman: Are there any examples you can give us? Mr Crow: I will give you examples: Paddington, Ladbroke Grove, Hatfield, Potters Bar. No action taken against the individuals concerned; all they will do is have a report, they will give a big 50-page document to say this should not happen, that should not happen, but they actually have power to bring the people responsible for the safety of the travelling public and our members to bear, and they refuse to do it. Q43 Mrs Ellman: Does anyone have any other views on the Rail Inspectorate? Mr Doherty: I concur with Mr Crow. Q44 Mrs Ellman: Metronet say they have reached agreement with the Unions on good health and safety best practice. Has that produced anything? Mr Doherty: I would need to go back and check on that. Mr Crow: All I can say about Metronet, to be fair they have introduced these safety coordinators, which are people elected by the Health and Safety representatives, whose job is basically to be like trouble-shooters when there are problems that our members receive, and get on a safety issue. So we do welcome that fact. That was not there with London Underground for the infrastructure workers, but Metronet have brought that in, so I would not knock them on that. They have made progress about that valuable piece of work. Q45 Mrs Ellman: Has it produced anything constructive apart from being pleased it does exist? Mr Crow: I think what it has produced is that people now, good, experienced safety representatives, can actually go and see management very quickly, whereas before we had to wait for a committee to do something, and they can sort the safety matter out as quickly as possible. So we do welcome that. Q46 Mrs Ellman: What are the problems of staff shortages? Mr Crow: Staff shortages? I think the problems that the companies will have is basically if they go down the road of having apprenticeships or not. The highly skilled people in the signal and telecommunications area and highly skilled people in the lifts and escalators and also in train maintenance, where there has been a total decrease in safety skills over the course of the years - I know Tube Lines are now going to go down the road of having an apprenticeship school - but unless apprenticeships come in what is going to happen is that there will be a shortage of these people concerned, and what will happen is they will have to take people on, sub-contract people in at very, very high premium rates of pay from agencies because they will not be able to attract the skilled workers for the individual companies. Q47 Mrs Ellman: Tube Lines have invested £7.5 million in constructing a training school for their staff. Has that produced anything good yet? Can any effects be seen? Mr Crow: I do not think the effects of it have been seen yet, but I do know for a fact that they are intending to have this training academy down there which obviously, whether the company is private or nationalised, we would want any of our members working in the industry to have the proper and appropriate training and the best training going. Q48 Mrs Ellman: You mentioned sub-contractors. What are your impressions about the extent of the use of sub-contracting now? Has it increased a great deal? What are your views. Mr Doherty: There is no hard evidence to say it has increased. There is anecdotal evidence of larger staff turnovers and that is what happened in the National Rail Network, because you create a market place for marketable skills, particularly with engineers. It happened in the Main Line and evidence is coming through that it is beginning to happen on the Underground as well. You create a need for the job and the price goes up. That is one of the reasons we want to bring this back in-house, because what was happening was that the private maintenance contractors were poaching staff from one to another; they were not training their own staff, they were going to other companies' staff and poaching them and taking them in, cranking up the rate, cranking up the cost and the whole industry was losing out. That is the same evidence that is starting to come through on the Underground. It is early days yet but what we will end up with is what we have on the National Rail Network, a two-tier workforce, and we have been arguing against it throughout. We are getting that on the railway and if this continues on the Underground we will have the same again, with people doing the same jobs, getting different terms and conditions, standing in the same booking office getting different terms and conditions, which does not help in terms of an integrated system because railways. Whether underground or over ground they need everybody; they need somebody to tell the passenger what time the train leaves and somebody to sell the tickets; they need drivers; they need somebody to maintain the trains, they need somebody to maintain the track. It is a team game and when you fragment it like this the passengers suffer; the whole of the service suffers. Mr Crow: As Gerry says, it is a two-tier workforce. What we have after a year, year and a half after PPP are brought, we now have our London Underground staff working on platforms alongside Infraco staff working for one Infraco, that get travel facilities, those that were there before privatisation came in. We now have a new group of people that come in that do not get staff facilities at all in Metronet. Then you get groups of workers who work in Tube Lines, those before privatisation get travel facilities and, subsequently to the agreement we reached with them, that they get 75 per cent off travel from next year. So you have people doing exactly the same job get a different pension, different travel facilities, different rates of pay, and all that leads to is bitterness and jealousy and pressure on the Trade Unions to say, "If it is good enough for one worker to get those terms and conditions it should be good enough for me." Q49 Mrs Ellman: What would you say are the main issues of dispute between London Ground and the Trade Unions? Mr Crow: London Underground or the Infracos? Q50 Mrs Ellman: Take London Underground first? Mr Crow: With London Underground we have not got a particular dispute with the majority of the staff; we have a dispute at this moment in time with signalling control staff over the implementation of a 35-hour week. But with London Underground, apart from the station staff, who are the bulk of the people who work there, we have recently concluded agreement with them and we now have the situation where one group of staff will be having more annual leave than the others, which once again will lead to resentment and bitterness, which is why we are arguing for company wide pay and negotiations and company-wide conditions, so that you do not get resentment. If you all work for the same company, yes, there will be different rates of pay but due to the responsibility of the job you do, but conditions of service should be near enough identical. Q51 Mrs Ellman: Does anybody else want to say anything? Mr Doherty: I would concur with what Bob says. We do not have industrial relationship difficulties with London Underground, by and large we have harmonious relationships with them, but that is not to say that we do not have points of dispute and pressure, but we do try and work through them, and in my experience London Underground work well with us. Q52 Mrs Ellman: What about the Infracos? Mr Doherty: The Infracos have only been there really for a year, 18 months and we are still developing a relationship with them. The difficulty we have - and it is not specifically about any Infraco - is this fragmentation. The whole industry - and it happened on the Mainline - when you get blame cultures coming in, and that is what you get when there are penalties, somebody has to find out who is to blame because somebody has to apportion penalties, and it does not help when staff actually consider themselves not working for the industry any more, but they are working for a particular private company. I did speak to one of the Chief Executives of one of the major first companies that came into the railway, and he is having great difficulty trying to get the railway staff he has taken over. He is trying to get them more aligned with the company brand rather than with the industry, which he said he was very successful in doing when he took over privatised bus services, but he is finding it more difficulty on the railway. There is nothing worse than sitting on a train which is stopped somewhere, and somebody comes round says that there is a Virgin train stuck in front of us. The passengers are not interested; they want to know they are going to get to their destination. Q53 Mrs Ellman: Have you any specific suggestions of what can be done so that people work together more effectively to avoid the blame culture? Mr Doherty: Re-nationalise it. Q54 Mrs Ellman: If that is not going to happen? Mr Doherty: Quite seriously, bring it back into public ownership; stop the fragmentation, both National Rail and Underground. The problem that we had before - and it is a difficulty for Trade Unions - was lack of investment, and I do recognise the private sector coming in the argument is that there would be more money being spent and there is more money being spent on National Rail because of the taxpayer. The taxpayers have put in a hell of a lot more in National Rail than they were when it was nationalised and one has to ask the question what sort of return have you had from that? Which is why it is particularly disappointing that the experiment was repeated on the Underground. Perhaps not to the same extent but still the same experiment. It does not work in public transport as far as we are concerned. Mr Crow: Following on from what Gerry says. It is a bit of a contradiction taking place. You have the Infraco, the same companies, the Balfour Beattys and the Jarvises of the world, that used to maintain, which Mr Donohoe said earlier, Kings Cross Station up there on the top and 30 feet below them, where they have taken Jarvis and Balfour Beatty off the mainline railway, they have allowed them to join the consortium and do the Underground underneath. What is the difference? Surely they recognise on Network Rail that by bringing the maintenance in-house it has saved taxpayers' money and the money it has saved can be reinvested in a better railway network. If it is good enough for the Mainline Railway it surely should be good enough for London's capital. Chairman: Mr Efford. Q55 Clive Efford: Are your members satisfied with the response to major incidents like derailments on the network? We have had three in the last year - Hammersmith, Camden Town and White City. Are your members happy with the way that those issues were followed up? Mr Crow: I think the emergency services were exemplary. The ambulance staff, the fire brigade staff and our own emergency response unit, which is run by one of the Infracos, were in there in very good time. I do not think we can complain at all about the actual emergency services, about what took place; we are more concerned about why the incidents took place in the first place. Q56 Clive Efford: I accept what you say about the emergency services, but that was not actually what I was alluding to. It is actually learning the lessons and making sure that the recommendations are fed down to grass roots level so that people understand where changes need to be made. Mr Crow: I think myself that there are briefings afterwards, there is work done after an incident, and people do learn lessons from it. The biggest concern for staff in London at the moment is obviously a terrorist attack because there is supposed to be a plan but we do not know what the plan is. We have not been told. We have had consultation with the people concerned running the plan, but our staff have genuine concerns that in the event of a major operation that takes place on London Underground, would we have the ability? And what Mr Donohoe said earlier on recognises the fact that if you want to see panic taking place then stand at Kings Cross Station between eight and nine in the morning because that is an area where panic would take place. Mr Doherty: One of the difficulties we observe is that whenever an accident takes place on the railway there is always an investigation into it - and it does not have to be an accident, any incident - and when you have a privatised system you have the blame culture and therefore the commercial reality is that someone who is to blame has to pick up whatever are the consequences on a commercial basis, and so there is, in our view, a vested interest in not getting to the root cause of what cased the problem in the first place. For instance, Potters Bar, we have the crazy situation that Network Rail and Jarvis accepted liability for Potters Bar but not responsibility. When Clapham happened in 1988 the British Railways Board accepted responsibility within two hours; they identified it was their responsibility. What you have now is teams of lawyers rushing off and telling the supposed persons from their companies, whenever an incident happens, frankly, from our point of view, to say nothing, certainly in the first instance, because they realise the commercial liabilities. Our concern is the lessons learnt from incidents on the railways in the past, which actually changed methods of operation in numerous cases, are not being learnt because of the commercial responsibilities that these private people may have to pick up on and they are huge. Mr Crow: Madam Chair, in our submission, on the reference to the derailment at White City, "However, the investigation into the White City derailment found that these lessons were not being learnt. Metronet managers had not been fully conversant with the terms of the Chief Engineer's Regularity Notice (CERN) issued following the Camden Town derailment. In consequence measures required to avoid serious incident had not been adequately related to track operatives. The White City report said in relation to LUL that '... although significant management attention had been employed within London Underground to ensure that complete and full understanding of the conditions of the CERN had been established by those individuals accountable for its implementation, little attention was placed on seeking or providing assurance that robust processes were implemented on the ground'." That was from their report and not ours. Q57 Clive Efford: You have talked about fragmentation in the system and you have talked about the differential in pay and working conditions and difference in training on safety. Across the whole network, the three Infracos, is there a body where you can take all of these issues and try and get some uniformity of resolution? Mr Doherty: No. Mr Crow: No. Q58 Clive Efford: Do you see that as a failing in the system, given that we are not going to get one Infraco to cover the whole system, and that that will create problems in the future? Mr Crow: Yes, it is a big problem. For instance, Metronet, who have the ability to do something now - they are one infrastructure company -split into two so run two different Infracos with two lots of separate negotiations with the same consortium in charge. So we have one set of pay negotiations in the morning with one and other negotiations with the other in the afternoon. So you can actually have two sets of terms and conditions for two groups of workers working for the same company. Mr Doherty: The point you are making is actually to do with safety. We have been pressing to have one forum for safety, and that is the obvious one. Q59 Clive Efford: Has there been any attempt in the industry on the Underground to bring about a body where you can negotiate things, particularly around safety of staff, safety of passengers, so that there can be some uniformity in approach? Mr Crow: On the safety one there is. Before the PPP came in there was a London Underground Safety Forum where representatives of the Infracos were supposed to turn up with London Underground to talk about safety issues that affected all the combine. I do not know of that meeting at all within the last 12 months whatsoever. I do not think there is any significant responsibility being placed on either the Infracos or London Underground to bring them together on a regular basis. Q60 Clive Efford: Do you feel that there is a need for that sort of forum? Mr Crow: Definitely. It is one opportunity where we can talk to all the industry about safety. Q61 Chairman: When can passengers expect to see some late night operation of tube services on Friday and Saturday evenings? Mr Crow: You are okay this year because it is New Year's Eve, but beyond that I do not know. Q62 Chairman: What about other Fridays and Saturdays - other than New Year's Eve? Mr Crow: We have not got a problem working later on New Year's Eve; the Mayor has a particular problem, which he can speak for himself. He is doing a consultation exercise at the moment because the figures that came back said that if you keep the Underground running an extra hour at night it will perhaps attract an extra 140,000 people to the Tube, but the Tube will have to start an extra our later in the mornings for the maintenance to be done, and 40,000 key workers might not be able to get to work. So nurses and doctors that rely on the early trains in might not be able to come in. And we would say that if it comes to the crunch between the key workers getting to work or people coming home from their cocktail parties or wherever they want to go, key workers getting to work is far more crucial. Q63 Chairman: But as you and I know, Mr Crow, there are people who work late at night who are still essential workers. Mr Crow: No, they are still essential workers, but what I am saying is that the majority of shift patterns start at 11 o'clock or they start at six in the morning, or seven, in that period. What we would like to see is the trains running an hour later at night and also to start at the same time in the morning. We do not have a problem at all with the trains running later at night, providing a service to the travelling public, and then we are happy with that. Q64 Chairman: Is the Underground being run efficiently with value for money? Mr Crow: The London Underground? Q65 Chairman: The Underground system as a whole. I am not specifying the London Underground company, but is the whole system being run with value for money or not? Mr Crow: I do not know if it is. I have not been one to believe everything you read in the Evening Standard, but on the front page of the Evening Standard today it was saying they are actually buying parts off e-Bay because they cannot get the parts. Now, is that efficient? That is the nonsense that we are getting into. It is not me writing that story, but I know you must believe it because it is in the Evening Standard. But as far as we are concerned the Railways run a service and probably 70 per cent to 80 per cent of the operations they are being run efficiently, but it can be more efficient. We are all in favour of efficiency, and from our point of view instead of four train and hour we want five trains an hour. That is the sort of efficiency we want. Chairman: You have been very helpful, gentlemen; thank you very much indeed. Could we have our next witness, please? Witness: Mr Tim O'Toole, Managing Director of London Underground, examined. Q66 Chairman: Good afternoon. May I ask you to be kind enough to identify yourself, please? Mr O'Toole: I am Tim O'Toole, the Managing Director of London Underground. Q67 Chairman: Do you have something that you want to say before you begin? Mr O'Toole: Madam Chair, I just wanted to thank you for taking your time and the time of this Committee to look into this, with all the changes in front of you, with the many matters in your remit, it would be so easy to dismiss the Underground and the PPP as yesterday's news. But it is so important for me and the people who work there that this be kept in front of us because PPP did not solve and will not solve London Underground's issues with one favourable spending round decision, this will require examination and support for many, many years if we are going to turn this system around, and the only way that will happen is if people like you take the time to focus attention on it. For that I am grateful. Q68 Chairman: That is extraordinarily tactful of you, Mr O'Toole, and I think I can assure you that you are not going to escape our close attention over the coming years. Mr O'Toole: I shall look forward to it. Chairman: Mr Efford. Q69 Clive Efford: Before the PPPs were signed you were concerned by a reported "funding gap". Has this gap been closed? Mr O'Toole: Before the PPP was signed, you say I was concerned about the funding gap? Q70 Clive Efford: "You" in terms of TfL were concerned, prior to taking over the contracts. I accept that this may be a more appropriate question for the Mayor, who cannot be with us, so if it causes you a problem perhaps you can send a note on that? Mr O'Toole: I did come after most of the PPP wars were over with the mandate from the Mayor and the commissioning to make it work. But I will say that it was plain from the start that PPP was only a partial solution. It had been de-scoped in many ways; there were obligations that were implied in the arrangements that did not seem to be addressed in the PPP. In that respect the Department signed the Letter of Agreement with the Mayor at the time of transfer that said some of these uncertainties would be addressed by them as those liabilities materialised. And so far, in fact, they have been good to their word and that Agreement has been lived up to, the most obvious example being the expanding pension obligations of London Underground. Similarly there was much work that has to be done with the Underground if it is going to be truly rehabilitated that we do not get out of the PPP. The most obvious example is something like Victoria Station. Victoria Station simply cannot deliver the throughput required in order to take advantage of the line upgrade if it happens. If we do not do something about that station we have wasted money on the upgrade. With the government's agreement with the Mayor to allow prudential borrowing we now have the possibility, the capacity to bring new money into play to repair things and address things like Victoria Station, so that we can fill out the whole picture. Q71 Clive Efford: You say that you are using prudential borrowing to upgrade Victoria Station. Is there any input into that from the Infracos, the contracts for the PPP? Are any additional resources coming through from the PPP that were anticipated, and do they assist with schemes like Victoria Station? Mr O'Toole: That is a key question, for this reason. In many ways, for my money the real problem with the PPP is that it was kind of a failure of imagination. People assumed that this is as good as we are going to get so we might as well sign up to this, we cannot find anyone who will say this is the greatest thing in the world but the thing people will say is that at least it meant some money for the Underground where there was none before. Now we are in quite a different environment; we are in an environment of the East London Line extension, we are in an environment of maybe cross rail; we are in an environment of prudential borrowing where we can bring more money to bear to fix some of these problems. And yet we have the structure through which I have to deal that may not prove flexible; it is yet to be tested. It is no obligation for that work to be done by the Infracos. You can see there would be obvious efficiencies, however, if they did. So what we have done is to put in place - or we are putting in place right now - framework agreements with alternative suppliers. We will bid this, give the Infracos a chance for some of this new work and if the prices and the schedules are such that are satisfactory we are bringing in other companies. Q72 Chairman: You have sufficient flexibility to do that. You can, when you are in a situation where you have problems, begin to offer work outside in a way which you think will contribute to efficiencies; is that what you are telling us? Mr O'Toole: Only work that is outside of PPP, not the PPP work itself. I will say that there is the further complication - and I do not want to make it sound simple - that when the new asset is created, is brought into service, it has to then be given to the Infracos to maintain. So there is a further negotiation that you could see would be an advantage to them in bidding for the work, but the fact that that barrier is there is no reason, I think, not to expand our choices. Q73 Clive Efford: Who manages the contracts and how closely are they monitored? Mr O'Toole: Obviously they manage their own business. We manage the contracts in the sense that I have a Chief Programmes Officer with a team that is assigned to each of the Infracos and they work with them to help them get their capital work done, to keep score under the various measures that the prior witnesses talked about; to make sure that incidents are attributed to the companies accurately so that the right company pays for a failure, et cetera. Q74 Clive Efford: There are contracts for additional works that are let; are they let by the Infracos? Mr O'Toole: What do you mean by additional? Q75 Clive Efford: The National Audit Office was not sure that the PPP gave good value for money and they make reference to the fact that the additional works that have been carried out have been more expensive than had been anticipated. These additional works presumably go beyond the detail of the PPP. Mr O'Toole: I assume they are referring to things like the transition projects and the like that were delivered, or things like Wembley Park, where we have given a contract to Tube Lines to deliver Wembley Park in time for the opening of the national stadium, where the cost of that project was more than we anticipated it would be. To answer your question directly, we give out that business. Q76 Clive Efford: But they seem to be part of the PPP in the reference that I have in front of me from the National Audit Office, but you have control over who gets those contracts? Mr O'Toole: That is correct. Q77 Clive Efford: Are you concerned, as the National Audit Office seems to be, about whether we are getting value for money and the increasing costs of those contracts? Mr O'Toole: Naturally I am concerned. I am paid to always have that in front of me, which is why, as I said, we went to provide for alternative suppliers, so if I face another Wembley Park I do not have a choice of one, which is what I faced in this case. The only way I could make that deadline for the national stadium was to give that work to Tube Lines; there was no one else who could have pulled it off in time. If I face that decision again, once I have this framework of suppliers in place - and I had to go through an OJEU Notice to put them in place - I will have alternatives. Q78 Chairman: Do Tube Lines accept that? You must have had talks with them both on the urgency, the timetable and the ability to do the work. Do they really accept that you are now in a position where you have much more flexibility and do not have to go back to Tube Lines? Mr O'Toole: I am sure they accept the proposition that I am not required to give them the work; I am also sure that they would believe that in any similar project in the future, they would be able to deliver greater efficiency since they are ones who maintain the assets. Q79 Clive Efford: I am still not clear because if these are additional works they are not part of the money paid through the PPP to the Infracos? Mr O'Toole: That is correct. Q80 Clive Efford: It is additional money? Mr O'Toole: That is correct. Q81 Clive Efford: I am confused because the National Audit Office - this is London Underground PPP, were they good deals, this is the report of the National Audit Office, and they are making reference to these additional works that are increasing in price, but these are not part of the PPP? Mr O'Toole: I think they are alluding to this point I began with, which was that when the PPP was put in place it was not envisioned that there would be additional money or additional works, and so to my mind there was not enough thought given to how exactly would these additional works be negotiated. Now we have an example, Wembley Park, which did come in at more than we expected. In Tube Lines' defence, obviously the dispute was not over the actual construction costs, it is the risk element that went into, it has to be delivered within the time frame. This is a mini Jubilee line extension. Q82 Clive Efford: And it is you that oversees the letting of those contracts? Mr O'Toole: That is correct. Q83 Clive Efford: And you can go to companies outside the consortia to do that work? Mr O'Toole: Once these framework contracts are in place I can. I cannot at the moment but give me three more weeks. Q84 Mr Donohoe: How are you tackling overcrowding on the trains? Mr O'Toole: The only way to deal with overcrowding on the trains is to provide a more reliable service, until we have the line upgrades. When we have the line upgrades obviously we will be able to force more trains through the pipe which will deal with overcrowding on the trains. But it is the reliability of the service. When you do not have the bunching of the trains you have some opportunity to address it, and every time there is a signal failure or there is an incident with a passenger, or whatever, which if you have one train delayed that delay will amplify right down the line and you will end up with one very, very crowded train and three trains that are not used to capacity behind it. Q85 Mr Donohoe: Are you measuring these? Do you monitor the overcrowding aspect of the trains? Mr O'Toole: We do, but it is a kind of a derivative measurement in that. We do something called a Journey Time Measurement. That is an analysis of how long it takes to move from one point to another on a typical journey on a particular line, and there is a penalty in time added to that to measure overcrowding which really addresses the people left behind and the people who are forced to stand in circumstances that are much tighter than they would feel comfortable with. Q86 Mr Donohoe: Does anyone bear the brunt of that in terms of a hit for a penalty of any description? Do the Infracos have to pay a penalty for overcrowding at any point? Mr O'Toole: No, they do not, not strictly speaking. Q87 Mr Donohoe: Should they? Mr O'Toole: I am measured by the government, based on how we are doing on this Journey Time Measure. Q88 Mr Donohoe: But should they be? Mr O'Toole: They will in the long run, in the sense that where the really big money comes in, either penalty or in reward for them, will be in the line upgrades. If they deliver the line upgrades they are going to deal with overcrowding in the long run. In the short run they deal with it in the sense that if there is a signal failure and it occurs at Oxford Circus, say, at eight o'clock in the morning, the penalty on them is huge because that is the incident that causes gross overcrowding for me. So in that sense their penalties are in a way tied to that phenomenon but not directly. Q89 Mr Donohoe: To change the subject: are you satisfied with the Prestige PFI and the introduction of the Oyster Card system? Mr O'Toole: In one respect I think it has been a tremendous accomplishment that we have delivered Oyster Card without significant operational problems; they have been much less severe than I would have anticipated. It is, however, critical that we roll out full functionality in order for it to be taken up. In other words, there has to be capping; it has to be prepay, so that we can introduce it everywhere, and that is still in front of us. We hope to introduce that in February/March or some time of this coming year. I think at that point it will be easier to say positive things about that PFI. Q90 Mr Donohoe: Have you had any negotiations in the interim to extend these, perhaps with TOCs (Train Operating Companies); has there been any discussion? Mr O'Toole: Yes. It is done at TfL level; I want to point out, not by London Underground. It is done by Jay Walder and some folks working for them, Charlie Monhein principally. We have had extensive discussions with the train companies, trying to get them to come in within the Oyster Card technology. They were pursuing a different technology for a long time, but the fact of the matter is that we have a couple of million Oyster Cards out there, and we are creating the market. The smart thing, it seems to me, is to come with us. This is one of the interesting things about the Mayor getting greater authority over commuter rail, it is to find a way that will allow us to spread the Oyster Card, and I think it will be better for everyone. It will also allow me, by the way, to simplify the zonal structure. Q91 Mr Donohoe: So you do not accept the present zonal structure, is that what you are saying? Mr O'Toole: I think that the existing zonal structure is far too complex. I think nobody designs a business with a product list some 40 pages long, and people are supposed to comprehend it. It is not the way to deliver a simple straight system for people. The reason it largely exists is because of the elaborate permutations of pricing involved with the London Underground together with the TOCs. Q92 Mr Donohoe: So you are empowered to change that? Mr O'Toole: No, I am not, but I am saying that it is the new legislation that has been passed that suggested that the Mayor may get additional powers with regard to commuter rail, that offers perhaps a foot in the door to deal with that subject. Q93 Mr Donohoe: When will the Smart Pre-Pay Oyster cards become available? Mr O'Toole: You can get pre-paid now but it will not have the take up until you have capping because until people know that they are getting the cheapest journey I think they are going to be resistant. Q94 Mr Donohoe: The ones at present charge the maximum fare, they do not charge the best fare. Mr O'Toole: No, that is not correct. Right now they still charge the minimum. We will go to maximum when we are ready to roll out the capping, but right now we are not penalising people. Q95 Miss McIntosh: Do you expect to take the Oyster Card technology in the direction of some systems overseas, which have incorporated a travel card chip in mobile phones, for instance, and in credit cards? Is that something that you think to develop? Mr O'Toole: Again, I do not want to steal the thunder, take the credit for the goals someone else kicked. Q96 Chairman: Why not, Mr O'Toole - everybody around here does! Mr O'Toole: There are people at TfL working very hard in that direction because it makes so much sense to have a single card that will do everything; a card that lets you get into a building you are trying to get into, a card that lets you buy your milk, a card that lets you pay your congestion charge and a card that lets you pay your parking fee. Q97 Mr Donohoe: Some kind of ID card perhaps! Mr O'Toole: We do not have to go to that extent, but certainly the Octopus Card in Hong Kong, people even have chips installed in their watches and are able to walk right through the station. Q98 Miss McIntosh: How far ahead are you in recruiting and training a further and training a further 100 British Transport police officers? Mr O'Toole: I am sorry, I do not know the exact number; I do not have that in front of me. But we have made very good progress and of the 200 officers that we have funded new from the 470 inherited, I believe we are at somewhere like 130. But I can give you the exact number. Q99 Miss McIntosh: I understand from the union evidence that was given that there is concern that even though there is a new police control centre at West Ham it is not operating uniformly across the system. Do you wish to make a comment about the policing of the Underground? Mr O'Toole: I take their concerns very seriously and I know they are quite sincere because the place where crime has gone up on the Underground is not with regard to our passengers; it is with regard to our staff and it is one of the reasons why the Mayor not only funded 200 additional officers, something like a 40 per cent increase, but additionally we worked on them to completely change the deployment strategy. We have gone to this reassurance policing model where we put in officers who are assigned to groups of stations so that their deployment can be as a result of the agreement with the local management. If you are at a place like Elm Park and your problem is kids hanging around on Friday night, that is when you want the BTP there, so you work that sort of thing out. To kick-start this we assigned the redeployed officers to the east end first, so, for example, the group of stations at the east end of the network are all filled in. As these other officers come on board we are filling in the other areas, so there are parts of the Underground that still feel neglected under this redeployment. As was alluded to in that prior question, this has been a tremendous success. We did not expect to see results this soon and yet attacks on our staff are down, morale is up, property crime is down all on the east end of the District Line. I think it proves you do not have to be defeated by these people. You just have to put the resources in to deal with them. Q100 Miss McIntosh: Is it true that you still have a major problem with graffiti? Your document shows that it costs £12 million a year to clear it up. If you had more police officers do you think that the graffiti problem also would go down? Mr O'Toole: I hope so. There is a continuing dialogue with the police because they are trying to support us with the graffiti, but they have many other issues: crimes against people and the like. We do have a problem with graffiti but I think we are making some progress. I will give a compliment to the Infracos in this respect, that the work they have done to remove graffiti from the trains has been a tremendous success. The fact of the matter is that trains still get hit, and I think the current estimates are something like 800 tags a night. That requires the police to help us do something about that. Those tags are not yet being hit in the depot; they are being hit in service. It is mostly kids riding late at night hitting trailer cars and the like. Q101 Chairman: Do you not have CCTV? Mr O'Toole: We have CCTV on the stations, which is largely why we have licked the problem in stations. Unlike the Network Rail stations, our stations are largely clean if you think about them. We do not have CCTV in the train carriages themselves. The new train carriages will have CCTV, so that will be a big leg up. We are also starting an experiment with painting out line-side graffiti. This is a very hard one to do. We are looking for partnerships with boroughs and local people. If you look at the section of track between Barons Court and Hammersmith you will know that we have completely painted that out because we just wanted to see what would happen. It has been hit twice since. We have painted it again and since then it has been left clean. We are now going to paint out an entire line and see what happens. We are going to experiment with that and we are going to keep after it because we do believe that unless you are comprehensive in taking on these problems they just creep back at you. Q102 Miss McIntosh: Do you have a problem with homeless people riding on the trains at night? Mr O'Toole: I do not know whether they are homeless or not, to be honest with you. I do not have the statistics. Q103 Miss McIntosh: I was going to call them tramps. Mr O'Toole: There are difficulties in removing people, especially on the late night trains, and that is often where station staff run into assault situations, when they are trying to remove people who are sleeping on trains, often not entirely in control of their faculties. Q104 Miss McIntosh: Is that something that is going down? Mr O'Toole: I do not know what the numbers are on that. In fact, I do not know that we keep that specific category separate. Q105 Miss McIntosh: In the first 12-24 months you identified focusing on the signals crossed at "danger". Have they gone down? Mr O'Toole: They have gone down very marginally but we have a lot of work to do there. Though they have gone down I would not take credit for that. I would say it is more like they are fluctuating and we are just lucky where we are right now. We have a company-wide programme to do something about this. It is a very touchy subject. The drivers feel that it is a persecution and it is very important that we deliver a comprehensive effort about moving signals that are spad traps, about providing retraining that is actually useful, about making sure we have training for our instructor operators that is comprehensive. Finally, it is about the drivers living up to their responsibilities. This will take a while to tackle but we will. Q106 Miss McIntosh: Can I ask you specifically, are you saying that the drivers are not co-operating with you on this? Mr O'Toole: No; they are co-operating. I suppose there is enough bad blood from the past that when they hear of initiatives like this they think it is just an excuse to apply discipline. The thing I always say to them is, "Do you have any idea how much it costs me to create a driver? Why would I want to get rid of them?", but we do have to do something about spads. On the Underground, as you know, it is not primarily a safety issue because the trains are stopped if they go through a signal, but every time this happens the service is destroyed because it is a minimum three minutes and often it is 20 minutes in order to rectify the situation, so we have got to do something about this problem. Q107 Chairman: How much of it is ancient signalling? Mr O'Toole: Sometimes it is a function of the old signalling in the sense that the signalling bobs. We get what we call a category B spad and a category B spad, technical spads, spads that the driver could do nothing about, have increased over the past year as the assets continue to degrade, but the larger part of it has to do with the operation of the railway. Q108 Miss McIntosh: Many of the improvements that you have planned will not be delivered until after the first seven and a half year period, yet there appears to be no committed funding beyond the first seven and a half years. Do you want to comment on that? Mr O'Toole: That is why I said, and I was not being disingenuous, that I am happy for the spotlight because what concerns me is that a deal was struck to rehabilitate the Underground this way. That is what we have and that is what we are going to make work. What I do not want to happen is for people to get to the seven and a half year period and say, just when we are about to get all this rehabilitated kit delivered, "You know, it actually did not get that much better. Why would we want to put more money into that?" I want to make sure people are bought into the schedule that we have all agreed to. Chairman: Did you have an interest to declare, Ms McIntosh? Miss McIntosh: I did and I do apologise. I have a past interest to declare in Railtrack. I am currently doing a programme with Network Rail, I have interests in First Group and Eurotunnel and I travel frequently by train. Q109 Mr Stringer: You were describing the Wembley Park overspend as a mini Jubilee Line. Can you tell us what the exact overspend was? Mr O'Toole: It was not an overspend. All I meant by that was that the price was also largely a function of the arbitrary deadline placed on people who have to deliver the project, and if you ask for something sooner it costs more. That is all I meant by that allusion. Q110 Mr Stringer: How much more? Mr O'Toole: Terry and I could debate that for a long time, I imagine. The total price is going to come in somewhere around £60 million, and if you take away the £25 million (or whatever it is) actual construction costs and then another £15 million for the other PFIs that have to be installed that are nothing to do with Tube Lines problems, somewhere in that delta is the risk of the extra expense of doing things faster. Q111 Mr Stringer: Did you ask the project team of the national stadium to make a contribution because that is why you are having to do it so quickly, is it not? Mr O'Toole: Those negotiations predate me. There is some contribution out of the public agencies that are involved in that or the local borough but I could not tell you. That all predates me. Q112 Mr Stringer: Can you let us have a note on that? Mr O'Toole: Sure I can let you know. In fact, I can also let you know what the funding is from each source on that. Q113 Mr Stringer: That would be excellent. How would you describe industrial relations? Mr O'Toole: The actual amount of industrial action has been quite limited by historical standards but I must say I seem to be in this arms race of PR releases threatening me with industrial action on a regular basis. I was pleased to hear Bob say that most of the things are going well. It is just that about every fortnight I am told that I am going to be balloted. I think there is a natural period of feeling ourselves out here between the two groups in that this is a new management team. I feel like I get credibility that otherwise I would not have because of the Mayor. I think there is a sense among the trade unions that ultimately they will be treated fairly. If you are a trade union employee at London Underground I would defy them to say that they have not been treated fairly in the deals that I have struck since I have been here. Q114 Mr Stringer: Is the two-year deal going to bring peace in our time? Mr O'Toole: We will certainly avoid a wage negotiation in the spring. I cannot say they will deliver any more peace than that. Q115 Mr Stringer: Do you think it is reasonable or efficient to allow station staff 52 days' holiday a year? Mr O'Toole: Obviously, I think the deal I struck is reasonable and efficient. I am not responsible for the weekends they get off or the bank holidays and all the rest of it that I have been credited with in that press release, but what we faced was the following. We wanted to do a long term deal. The trade unions were very plain. They said, "Until London Underground lives up to its requirement" - which was, they believe, agreed to back in 1999 - "to deliver a 35-hour week for station staff" - the same as the train staff already had - "you can forget about a long term deal", so we set about agreeing to that. Ultimately what we said was, "We will agree to a wage increase but the reduction in hours has to be paid for with efficiencies", and we will move to 36 hours in the first year and then down to 35 after the second, depending on whether we can find efficiencies and if we can find them sooner we will go all at once, because actually it is cheaper for us only to re-roster the one time. The teams worked together. They came up with the efficiencies and it was then that the unions suggested an already existing procedure to use, and that is that the workers work the longer week and be allowed to bank the extra hours to be used as a rest day. For me it is slightly cheaper to roster it that way, so it sounds like a spectacular number but it is just the maths of going from a 371/2-hour week to a 35-hour week. Q116 Mr Stringer: Was this a negotiation that just focused on the Underground or did you look for external industrial comparators in terms of both pay and holidays? Mr O'Toole: In this one negotiation I have had so far and in every labour negotiation I have ever been in in the States, we begin the negotiations by setting forth those comparators. I would say most of the deals pale in comparison to the working conditions on London Underground. Q117 Mr Stringer: So they were not very helpful to your case? Mr O'Toole: The trade unions did not feel they were very relevant to the discussions. Q118 Mr Stringer: So how much around the industrial norm are you on this particular deal? Mr O'Toole: If you look at the train operating companies' pay, if you look at the top, say, 30 companies, on engineers we are, I think, in the top ten per cent. Q119 Mr Stringer: And station staff? Mr O'Toole: I am not quite sure of the number. I can give you that but it is somewhere similar. Q120 Mr Stringer: Do the large bonuses paid to the management of the private sector companies operating in the Tube system cause problems with industrial relations? Do they make it more difficult to come to a deal? Mr O'Toole: They have not been raised with me. Q121 Mr Stringer: Do you have a sense that they are pushing things along? Mr O'Toole: I think that they are obviously a fun thing to make headlines with but once people made the decision to go with private sector companies I think they were buying into the way they broadly went. Q122 Mrs Ellman: In your first year report you expressed disappointment that the Infracos had not invested in more modern equipment. What powers do you have to do anything about that? Mr O'Toole: Very little other than to enforce the contract. We do expect, however, that they are obligated to set forth on this whole life asset strategy which includes the way they would maintain those assets and we have been pushing them, and with their co-operation, quite frankly, for a complete articulation of this. It is all provided for under the contract. It is mostly a constant cajoling and negotiation. There is no reason for them not to do it once they decide it will deliver work more efficiently. Q123 Mrs Ellman: Are you satisfied that the companies will maintain safety as the assets age? Mr O'Toole: Yes, I am. One thing that was said here earlier that actually is inaccurate was about safety. Safety is unified. It is all under me, actually. The safety case for all four companies comes back to me. London Underground holds the safety case. It is our job to make sure that they work safely and it is our job to put the systems in place that establish safety assurance. As a result I can say to you that I believe they will maintain safety because I intend to ensure, and I know anyone in this chair would ensure, that they do. Q124 Mrs Ellman: Are you concerned about the complexity of the number of interfaces in relation to safety? Mr O'Toole: I am concerned, and I was also concerned about the fact that this was run around so much prior to the PPP that it was just kind of hanging out there. If you think about it, if something happened it would be very easy for people to say, "You never dealt with that allegation", so one of the first things I did when I came in here was to engage A D Liddell, a completely disinterested expert, to come in and examine those interfaces themselves. They did about a six-month study and came back and while they did comment on the complicated structure they also found that the interfaces were explicitly dealt with. To deal with them requires more work. There are no two ways about it. They do present safety risks but the risks have been dealt with within the safety case of the design. Q125 Mrs Ellman: I would just like to clarify what was said and minuted to. Are you saying that you are responsible for safety matters? Mr O'Toole: That is correct. Q126 Mrs Ellman: So if anything is wrong it is your responsibility, not the Infracos'? Mr O'Toole: Obviously, I look to them under our contract with them, but under the statutory regime that is set up the safety case that reports to the file with HMR and HSE is a London Underground safety case. Q127 Mrs Ellman: What is the current position concerning Jarvis apparently wishing to sell off its stake in Tube Lines? Mr O'Toole: They have had some preliminary negotiations with us. I can only tell you that we were not impressed with them. We are led to believe that some further proposal will be made and we have a right to object to anything they may do though we do not exactly have a veto right. It is very unclear the extent of our rights and it will be a function of the deal they present. For the last few days it has been quite quiet on that front. Q128 Mrs Ellman: You say you were not impressed with the case they made. What were the criteria that you were looking at? Mr O'Toole: It was not obvious how it was in the interests of London Underground. Q129 Mrs Ellman: And you are confident you will be able to maintain the interests of the public in making any future decision? Mr O'Toole: I can only assure you we are going to expend a lot of energy doing that. Q130 Mrs Ellman: Do you believe you have sufficient powers to achieve that? Mr O'Toole: Based on what I have been presented with so far I like to think so, yes. Q131 Mrs Ellman: You would like to think so? Do you think so? Mr O'Toole: I am sorry; I do not mean to be coy. The point is that they obviously spent some time and money trying to structure a deal so that it got around our power to do something about it. We do not think it succeeded and told them so. We think that at the end of the day common sense will prevail and the rights we are supposed to have will be honoured, but on the other hand I have spent a lot of my time in the finance sector and I know how clever people can be. Q132 Mrs Ellman: Do you think you have the powers to deal with the public interest despite how clever people may be? Mr O'Toole: I believe I do, but we will see. Q133 Mrs Ellman: What are your views on the PPP's ability to deliver step-free access to Underground stations? Mr O'Toole: The PPP delivers very little step-free access. I think at the end of the day of 255 stations of the stations we serve only 16 will receive step-free access as a result of the PPP work. It was explicitly taken out of the deal. That is one of the primary things we hope to deliver through this new work via the Prudential borrowing. It is very difficult. The engineering on this is really tough but the Mayor is absolutely determined to do something about this and it is clear; I have my marching orders. What we are doing is looking at every single station project and we are not trying to design the perfect system. We are trying to make use of the works that are going to go on anyway to figure out where is it we can put in an MIP lift, where is it we can do something about the platforms and try to be very opportunistic. Our hope is that at least by 2010 25 per cent of the network will be cleared and we will keep going from there. We are ultimately hoping to get half the network step-free. Q134 Chairman: Have you got enough information to scrutinise the Infracos' performance? Mr O'Toole: No. We have final agreement on the information we will get. We are finishing the creation of the systems that will supply it, but I still do not have the information. Q135 Chairman: Why not? Mr O'Toole: Because it has taken us the better part of the year to argue over what it is and what it should look like between us and the Infracos. Peace has finally broken all over but, as I say, it is still to be finalised. Q136 Chairman: London Underground did not have a register over the condition of its access before it handed over the infrastructure to the PPP, did it? Mr O'Toole: No, it did not. Q137 Chairman: So how are you going to solve many of the problems which will undoubtedly arise from that lack of information? Mr O'Toole: Fortunately, unlike the Railtrack situation, this deal provided for the creation of what are called asset catalogues by each of them. Tube Lines was required to deliver theirs within two years and Metronet was supposed to try to do it in two years but ultimately four. This is one area where there has been co-operation because what has happened is that the companies have pulled together. They are delivering those catalogues on time but then they have worked with us and we are separately funding what we modestly call the single source of truth that will be an asset register for all the assets they maintain, the assets we maintain and the assets the PFI contractors, who you cannot forget because they have a big slug of this too, maintain. There will be a single asset register so that anyone will be able to tell the state of the assets, when they were last touched, etc, the very things that should tell us how to maintain the assets. Q138 Chairman: How long will it be before that magic state is achieved? Mr O'Toole: It is starting to come on line now. We are not waiting to do it as one big bang. Q139 Chairman: A final date? What are we talking about? Mr O'Toole: The final date is another year from now but it will have limited functionality within the next few months. Q140 Chairman: I want to know about performance scores. Why are they going to dispute resolution in quite such numbers? Mr O'Toole: Why do we have so many disputes? Q141 Chairman: Yes. Mr O'Toole: If you think about the number of attributions we go through it is a miracle how few do go to dispute. Q142 Chairman: How long does it normally take? Mr O'Toole: Outside it can take as much as four to five months to get through adjudication. That is a theoretical possibility. There have only been to my mind two or three disputes that have even gone that far. Some disputes are listed as disputes but are not being actively pursued while I think people wait to see how this gets defined and whether it gets resolved another way. Some of these disputes are currency to solve other problems. I will say that as more and more money starts to get involved here disputes are going up. Q143 Chairman: What about the PPP arbiter? Is it a good process? Is it producing fair results? Mr O'Toole: The PPP Arbiter does not have a role in the disputes you are talking about. This is a separate process. He as yet has not been called on to settle anything. Q144 Chairman: At all? Not even though he has had a first year? Mr O'Toole: No. Q145 Chairman: You did talk about the engineering overruns and you criticised the private companies. Have they got worse under the PPP? Mr O'Toole: They did for a period. The second half of last year they got far worse if you measure them in the kind of service point system that is used in the PPP. They have now come back down again and they are performing at about the level that they did prior to the PPP and a lot more work is being done. Q146 Chairman: Do they walk away with the money, these Infracos, if the work is not completed in the way it should be? Mr O'Toole: Ultimately if the assets fail they have to pay for that. Q147 Chairman: Yes, but that is a rather long way down the line. Are they walking away with the money in the interim? You will understand, Mr O'Toole, that the taxpayer looks for sums that appear to be being paid to these companies at the same time as they are getting what may be quite arbitrary and small fines in comparison, and one begins to wonder who is being taken to the cleaners here. Mr O'Toole: The way it works is that if they have an engineering overrun the inter-option to service hits them with an availability penalty. At the same time they are hit with service points which cost a lot more, so there is a financial penalty. Whether or not that penalty is sufficient to drive them is what we are all learning as we experience this contract. Q148 Chairman: Have you got enough power? Are you convinced that you know that the safety case for London Underground is being upheld by the Infracos? Mr O'Toole: I definitely have the power to do that. It is just a question of whether I exercise the right judgement with the amount of resources that I have put into that and I think I have. I do not have enough power with regard to forcing the PPPs to work with the PFIs. I do not think anyone appreciates the enormity of that problem. If you think about the fact that they have an obligation to deliver trains and I have an obligation to deliver power, some of these companies are on both sides of this deal. This gets very complex going forward. You cannot help but read the headlines of this awful situation on the Northern Line with this ancient radio that is falling over and crippling our service. At the end of the day the real cause of that is the fact that to connect the radio system this other PFI is at least two years late now and over budget and it makes the PPP look like pure elegance, believe me. Q149 Chairman: I do not find that a comforting thought. Mr O'Toole: No, it is not, but forcing everyone to co-operate to deliver these assets is something I do not have sufficient power over. Q150 Chairman: Is this an American version of, "It cannot get any worse"? Mr O'Toole: No. I would not sit here if I did not think ultimately we would deliver. We will deliver. Q151 Clive Efford: The HSE report into the derailment at White City concluded that the underlying cause of the derailment was the failure by Metronet Rail BCV Ltd to fully comply with specified measures which had been prescribed by London Underground as a result of the Camden Town derailment in October 2003. That clearly suggests that there were specific recommendations made by yourself that they failed to carry out. Are you saying that you do not have any powers to penalise or enforce those recommendations? Mr O'Toole: No; actually, I do. If you go further into the report you will see the self-criticism that we should have made explicit and this is our lesson learned for the future: the methodology by which they assure us that they have actually followed through and done that, or we put more people in the field so that we can assure ourselves. In fact, in this case we had made the decision when it came to track to put more people in the field. We decided to expand that force so that we would have more human beings out there watching the work that was done. The gap between the cup and the lip here was that the decision was made that we were going to enforce our terms that way but people had not been recruited at the time of that accident. That is why there is criticism of London Underground in there as well as of Metronet. Q152 Clive Efford: Okay, but there was Chancery Lane. Lessons should have been learned from that which could have assisted when White City occurred and Camden Town. Again, there was the Chief Engineer's regulatory notice. Are you putting enough pressure on the Infracos to invest in the areas that would avoid these accidents and learn the lessons of these accidents and avoid them in future against, for instance, spending money on ambience? Mr O'Toole: I do not choose to spend money on ambience, although I am happy that they do it. I do not think the things are mutually exclusive. No-one is more interested in the subject than I am given whose signature is on the bottom of that safety case, I assure you. I think that we could have done better on White City. We will not make that mistake again. Once we issue one of these CERNs how they have to assure us that they have complied with it. At the end of the day a derailment happened and it should not have. Q153 Clive Efford: What about safety in terms of overcrowding? Are you tackling overcrowding? Mr O'Toole: As I said before, the only way to deal with overcrowding is to have a more reliable train service. I would say with regard to dealing with overcrowding when it comes to the safety issue that there are probably few organisations in the world that know as much about it or are as good as London Underground in terms of being able to control the crowds by the station staff in our network. Unfortunately, it produces some uncomfortable situations, such as it does every morning at 8.00 am at Victoria when we lock people out of the Bosworth gates or lock people out of the Bosworth gates at Kings Cross now, but all that is dictated by the safety plans for each of the stations. Q154 Chairman: We would just like to know whether you are going to improve the attempt of Jarvis to sell one third of its stake of Tube Lines. Mr O'Toole: I will not know until I am presented with the proposal but I can see situations where existing shareholders might want more of Tube Lines and that might be a good thing. I think it is very important for us as London Underground to be assured that the technical resources that are being supplied under this secondment agreement are preserved. It is very important that if there is any return that should be coming to London Underground (the taxpayers in effect) it is provided, and that the entire structure is not made more fragile as a result of any change in ownership. Q155 Chairman: You see, that is the point. What controls do you have on the sort of company that could replace a sponsor company like Jarvis? Mr O'Toole: The contract has a series of tests about what we may object to. With regard to the character of the company, it refers to ----- Q156 Chairman: But you will forgive us saying so: one would not have found that any relevant test was necessarily applied to Jarvis given its subsequent history, so are we going to do better? Mr O'Toole: It defines it in terms of someone being convicted of a crime. Oddly, it defines it as someone who presents a security risk under UK or US law, so presumably Cat Stevens could not buy it. Q157 Chairman: I would not dream of quoting that. Mr O'Toole: I assure you we are going to go through every single word possible with a fine toothcomb to protect London Underground's interests. Q158 Chairman: You did say that with Connect PFI you inherited a poorly managed contract which failed to deliver. Have you turned it round? Mr O'Toole: We have certainly taken out the management and put in new management. We have made it quite plain that we are no longer going to pay claims whenever they file them. That is going to be a big court case. Q159 Chairman: What about the power outage? That was last year really quite a problem and it called into question the resilience of the PFI. What improvements have you made since that? Mr O'Toole: In a couple of different areas. The biggest improvement probably is the own goal that happened there, which was the grid and EDF not communicating with London Underground and telling them when they were taking resources off line and removing resilience that would have allowed us to rebalance the power intake from our supply points. Even if it had gone out it would not have affected us. That has now been dealt with. We now have regular meetings with them. Their maintenance schedules are given to us. Any time they introduce a weakness into their network because of their maintenance activity we change the sourcing of our power. That is one thing. We have also spent a lot of money trying to change our whole command control system, such as it is, with more discriminating phone systems and the like so that we can deal with the management of the situation faster. As you know, that evening our station staff performed brilliantly in the sense that they moved that many people out of the network and no-one was hurt. What we were not designed for was putting them back in again and that was the great distress. People wanted to know, "Why can I not get on a train?" an hour and a half later. It was because the power had to be left off because somebody was still de-training over here. We have spent a lot of time changing our own management systems to address that. Q160 Chairman: That is very good. Since you are very aware of the need for consultation and understanding and certainly training in a thing like that why is it that you have not had all your safety representatives called together in the last year if we are to believe what the union say? Mr O'Toole: Certainly they did not allege that I have not. The four companies did not call them in. Q161 Chairman: No, no. Believe me, Mr O'Toole, when I am having a go at you you will know. Mr O'Toole: I was a little bit confused by that. I wondered if terminology was the issue. I have been in a room with some of the gentlemen who were around this panel with the company-wide safety forum, and such a group does exist. Where I am going to fail you though is that I do not know how many times it has been convened since PPP started but when it was convened I know for certain was after the Hammersmith and Camden Town derailments because it was that group that dealt with the trade unions' claims regarding the inspections. In fact, the whole incident was, I think, if anything a model of how trade unions and management should get together because I think they did a lot to restore the credibility in what we were doing. Q162 Chairman: Will the London Underground PPP be able to deliver the improvements that we need in line with the projected increase in London's population over the next ten and then 20 years? Mr O'Toole: It will stay just about even with the demand that is forecast for us but it will not do anything to improve the situation, which is why we have to have Crossrail. Q163 Chairman: Does that satisfy you or would you rather plan for something different? Mr O'Toole: Obviously, I would like more, but the only relief valve I have right now on the horizon is Crossrail. Q164 Chairman: And? Mr O'Toole: And I hope that a hybrid bill is passed and it gets funded. Chairman: You have been very helpful, Mr O'Toole. Thank you very much indeed. We are very grateful. Examination of Witnesses Witnesses: Mr John Weight, Chief Executive, Metronet, and Mr Terry Morgan, Chief Executive, Tube Lines, examined. Q165 Chairman: Good afternoon, gentlemen. Could you please identify yourselves for the record? Mr Morgan: I am Terry Morgan. I am Chief Executive of Tube Lines. Mr Weight: My name is John Weight and I am the Executive Chairman of Metronet. Q166 Chairman: Thank you. Do either of you have anything you want to say before we begin? Mr Weight: Madam Chairman, I would like to thank you for inviting us here today to address your meeting and to answer your questions. We have put before the committee the report for the first 12 months of our operations and we submitted a further report on our last six to seven months and I hope that has been of use to you. Q167 Chairman: It has been very useful. Mr Morgan? Mr Morgan: I will avoid repetition. I say the same. Q168 Chairman: Metronet is spending £2.5 million and Tube Lines £1.6 million every single working day. What can passengers see for that money? Mr Weight: If I may refer to our report for the last six or seven months, we have seen a significant improvement in train reliability across the fleets. We have had a 150 per cent improvement on the Central Line. We have something in the order of 125 per cent on the Circle Line and 30 per cent on the Bakerloo Line; that is on train fleets themselves. The maintenance regimes are being maintained across the system. We are now working virtually every night somewhere on the network. There is work going on across the whole system. We are now well into our track renewal programme with a lot of work being done on the Victoria Line and you may be aware of the weekend closures that we have been operating for some time now on the south side of the District and Circle Line. All of that is investment that is going into the system in accordance with our plan. Mr Morgan: The first thing I have to say in terms of where the money is going is that clearly there is a massive programme in terms of capital expenditure. What we inherited was a profile of about £12 million a month. In the month that we have just closed we have invested £34 million, so there is a tripling of investment going into the infrastructure. What passengers will see is that over the period that we have been operating there has been a significant reduction in the number of incidences. We have had a report of some form of asset fail on the network. We did promise that we would put a high priority on trying to improve the ambience of the trains in particular and we have done. Tim made reference to the fact that on graffiti it would be very rare today if you saw a train in service which had graffiti on it. Also, we had a strong determination that passengers should expect to have the same cleanliness on trains at six o'clock in the morning and at nine o'clock at night and we have put a lot of effort into trying to standardise the condition. We have a much higher quality of trains for passengers to use. The other thing I would say in that regard is that investment is coming through. The other thing that we have been prioritising is increased investment into safety. I can point to many examples where, because the funds are now available, we have been able to address long-standing safety issues that London Underground have never had the funding to resolve and that is where our money is going. Q169 Chairman: I will ask you both what proportion of your performance targets have you met over the past year? Mr Weight: Over the past year, the first 12 months, because there is a definitive report on that, so far as the sub-surface company is concerned I think we have beat all of our performance targets as per the contract. Q170 Chairman: All of them? Mr Weight: Yes, and we showed a positive trend in the availability and other scores. It is not quite the same for the Bakerloo and Central and Victoria Lines. The performance there was flat, given our inheritance. We have put a lot of energy and effort and attention into recovering the Central Line service from the Chancery Lane incident which happened just before the contracts were signed, but nevertheless we had the inheritance of that so a lot of work went into that to get that back up to an acceptable standard. So far as the last six or seven months are concerned we have seen a continuing improvement in sub-surface. I wish I could see more improvements on Bakerloo, Central and Victoria. Much of it I think is the condition of the Victoria signalling systems and that is an early part of our investment, albeit that it does not come on stream until around 2009. Q171 Chairman: Before I come to Mr Morgan, you would not agree then that there have been problems with performance, derailments, lost cost customer hours above your benchmark and similar rates of rolling stock failures as before the PPP? Mr Weight: My measure is from the day we took over. We trend those lines and the performance in each of those measures from that time. My trends are positive for sub-surface. They are not so positive for the Bakerloo, Central and Victoria. Q172 Chairman: Mr Morgan, why has there been a dispute on performance scores between you and London Underground? Mr Morgan: In the earlier two parts reference, for example, was made to Camden Town. There was a full inquiry. I must admit that when the derailment occurred there was a great deal of anguish about the fact that we had a gang of people working down there the night before and it was not surprising that some people made the linkage, but there must be something happening down there which made the railway unsafe. We took risk with the transfer of the assets to us from London Underground but the inquiry absolved us of any responsibility for the occurrence of the derailment. We do get abated seven million pounds for that. It is in dispute because I want to make sure that Camden Town cannot be repeated, so I will pay the money but I want to get to a position with regard to that issue that gives me confidence that that type of derailment cannot occur again. There are issues like that where we are learning from these things to make sure that they are not forgotten about. Q173 Chairman: So you are not suggesting that the dispute resolution process is unfair? Mr Morgan: Not at all. I think we are in a very similar position to how Tim described it. I have five issues in dispute and when I think about the range of assets and the things we are trying to do, that is not a big issue for me. Q174 Chairman: What proportion of your performance targets did you meet over the last year? Mr Morgan: Over the last year I am particularly proud of the Piccadilly line. We have seen a significant improvement and over the last 13 periods we have hit our target each month. The Jubilee Line has been improving. In fact, in the latest TFI report it reported that in the last period we had just had the best month ever since the JLE was commissioned five years ago, so I see that as being very positive. There is no doubt that our biggest challenge is on the Northern Line. It has hit some targets in some of our periods but, to be frank, I am still not satisfied that we have the consistency in our performance which would enable me to be confident that we know and can ensure that the assets are performing every day. Q175 Chairman: Then perhaps both of you gentlemen would not worry if I asked you to give me a written note on those so I can have accurate performance measures. Mr Morgan: Of course. Q176 Clive Efford: How have the financial incentives contained in the contracts influenced your work? Mr Weight: Over the 30 years of the contract, if I look at the model that I am running to - and forgive me because I might refer to the model in the financial plan on a number of occasions and it reflects the nature of this contract - I will be at risk on around 20 per cent of my revenues for the abatement reward schemes, so it is significant and certainly would absorb profits that my shareholders are expecting to get out of this business. Mr Morgan: I think I am in a similar position to John. Performance in terms of the financial performance is directly linked to the performance of the network, so there is a linkage. I have heard a number of references this afternoon to engineering overruns, for example. The cost of a train service failing during the rush hour can be as high as £700,000 in an hour. What happens in the very short period at night we have is that we might find a cracked rail. It might be safe to run with a speed restriction. One of the decisions we have to make during the night is, do we take longer to repair it so that we can offer a full service for rush hour or do we take an engineering overrun, so we would have to take an engineering overrun to do that, or do we put a speed restriction on and delay the service? That is a conscious decision that we have to make and the weighting between taking a delay at five o'clock in the morning and 8.30 in the morning is a multiple of 15-20 times. There are considerations but I believe they are driven to ensure that we offer the fullest services when customers need them. Q177 Clive Efford: There are a number of incentives but is the system one of the reasons why you give so much attention to ambience over another target such as availability? Mr Weight: I do not think the two are necessarily competing. I think they are all important and you have to look at these measures in the round. We do pay attention to ambience because it is something that we are at risk of. If we fail to keep stations clean or trains free from graffiti our scores will go down and the abatements will kick in, so it is in our interest to use cleaning crews, mobile crews, people at depots in order to maintain that service. It is a different regime that is looking after, say, the engineering work that is done each night on the train service. Can I make one further point, which is one that Mr O'Toole made? The whole proportion of abatements and rewards increases dramatically as the new assets come in. We are at risk for the delivery of the new assets to improve the service of the system. That is the measure, and if we fail to deliver on that score then these abatements really do kick in. That is where the companies have to show commitment and delivery. Q178 Clive Efford: Do you have anything to add, Mr Morgan? Mr Morgan: I do not think it is a compromise between ambience and asset reliability. The reality is that doing ambience is very resource intensive but you can do it immediately. You can recruit cleaning crews and you can put them on the trains, and we have. We have increased the frequency of cleaning on some of our network by a factor of ten to 12 times more cleaning going on. Asset reliability takes time. There is a very limited window of opportunity at night and it does take a lot longer to go down there and replace our service from a reliability point of view compared to ambience. Q179 Clive Efford: So why have Tube Lines been fined £8.1 million for poor performance? Mr Morgan: You may find this very surprising. We inherited a very unreliable network. The number that you refer to was based on a performance which was similar to the network that we inherited. It is incentivised to reduce the abatement that I paid to London Underground as a result of my performance. Q180 Clive Efford: But it is true that your targets are set lower than the average performance before PPP, are they not? They are set at 105 per cent of the performance that existed prior to PPP. Mr Weight: The rationale behind that was to recognise that transitioning from the public sector, if I may say, taking the numbers of people out, into the new arrangements, in my case something in the order of 5,000, was bound to come with a certain degree of risk on the disruption during that transition. The target was set to reflect the experiences during shadow running to help cope with that. Q181 Clive Efford: Surely the travelling public have a right to expect, under the PPP and the sort of money that we were told was going to be invested, an improvement in performance, yet your benchmark for lost customer hours is set at 105 per cent of the period prior to PPP. Is that reasonable? Mr Weight: These benchmarks do increase. They tighten as we go forward through the contract. Q182 Clive Efford: When will they tighten? In the next seven and a half year period? Mr Weight: They tighten each year and for me on the SSL performance for this year they tighten by 20 per cent. Q183 Clive Efford: So the customer hours set for next year are what, in comparison to pre-PPP? Mr Weight: I have not got the exact figure to hand. I can provide that to you. Q184 Clive Efford: So people can expect a continued improved performance in that regard? Mr Weight: That is the whole rationale behind what we are doing and the investment that we are making. Q185 Clive Efford: Do penalty fines under ten million have any impact on you when you receive £300 million in payments? Mr Weight: Of course they do because the penalty payment flows right the way through to the bottom line. It is not a hit on revenues; it is a hit on the profit of the business. Mr Morgan: I am in a similar position to John. It is true that in the new relationship between the public and private sector it is a commercial relationship and what we saw during transfer was an increase in reported incidents. I do not have a problem with that. I actually want to know what is happening on the network, so we saw on day one an increase. What we have had already is two reductions in our targets since transfer, because we are slightly ahead of John in terms of timing, and the targets are getting tightened. In our modelling we assumed, because this system is unreliable, a degree of unreliability and we set ourselves some targets. We based our business on achieving those targets, which is very close to the numbers that you have just referred to. Q186 Clive Efford: What profits have you made running the Underground in the first year? Mr Morgan: In year one, which took us up to the end of March 2004, we made £46 million. Mr Weight: Our pre-tax profits for the first year were £50 million. I have to say it is an accounting profit because under the terms of the contract those profits are not distributed to the shareholders; they stay in the business for the first seven and a half years. Q187 Clive Efford: So these profits are fed back into the system? Mr Weight: They are held in reserve and the cash represents a cash benefit into the business to be used to invest in the business. Q188 Clive Efford: Into the Underground? Mr Weight: Yes. It helps fund the work that we have to do. Q189 Chairman: That was, of course, the basis on which you agreed the contracts in the first place, so it does not come as a surprise to you that the system was run down and that you had a lot to do. You negotiated much better benchmarks on that basis and you accepted the fact that the money was going to have to be held in reserve, so none of this is a surprise to you? Mr Weight: Not at all, madam Chairman. Q190 Clive Efford: The National Audit Office was unable to determine whether the PPP deal offered value for money. What measures do you have in place to ensure that you will always give value for money in the future? Mr Morgan: The National Audit Office reviewed our performance about six months after transfer. That is very early to take any sort of assessment about value for money. In terms of our own progress, if I take my projects today, which is a very large part of my business, I have not got a single project today that is running late. I have some projects that are running ahead of programme but the projects we have committed are now approaching £1.6 billion to £1.7 billion. We do not as yet have a programme that is beyond the cost that we forecast for those programmes. When the NAO said that it is difficult to take an assessment on value for money it was very early in the assessment. I personally will be very confident as we go forward that they will see better evidence of how we have been using the funding. Mr Weight: I am not surprised by the NAO's comments. Indeed, any informed commentator would say that it is all there to do; it is all in front of us, and that is clearly the truth. Q191 Clive Efford: The National Audit Office reported that the additional works had been more expensive than anticipated. Do you have an explanation as to why this is? Mr Morgan: There has obviously been a discussion around Wembley. I am probably one of the few individuals who got quite despairing about the fact that Wembley Stadium was going ahead of plan and that, rather than wait for the Cup Final in 2006, it was more likely to be complete at the end of 2005. We had to do a very accelerated programme for Wembley and that is where we had to rank up our cost because we had to take a lot more resources in a shorter period of time and we put risk into that programme by going for an accelerated programme. I have to say right now that that accelerated programme is delivering and we are very confident that Wembley Stadium will be supported in September 2005 and if we do that there will not have been a programme done like that on the Underground in that sort of timescale before. Q192 Chairman: On the London Underground? Mr Morgan: Yes. Q193 Chairman: There are other underground systems which this committee has seen which operate with enormous speed. Mr Morgan: Correct. Q194 Chairman: If you can compete with Seoul, which is building its ninth new line in a city at least the size of London in under ten years, then we will agree with you, Mr Morgan, that you are doing extraordinarily well. Mr Morgan: Thank you. Mr Weight: I might refer to another example, which is not directly under the PPP but illustrates a particular point, and that is Kings Cross itself and the ticket hall arrangements. Under the contract arrangements that were put in place for Metronet that was a negotiation, we were asked to take on some project management oversight works that were on behalf of London Underground at Kings Cross. There has been a huge issue on that project and the costs will overrun by in the order of £200 million, I think £300 million to £500-and something million. I will just make the point that you have to be realistic on the original cost estimates if we are comparing like for like, which is, why does it cost more? Is it the actual cost to complete compared with the estimated cost or the estimated cost in the first place? There is an example there which is not directly related to the PPP but I think set up false expectations as far as the Department of Transport was concerned. Q195 Clive Efford: Mr Morgan, what impact will there be on your consortium when Jarvis sell their stake? Mr Morgan: I have to say that sometimes I feel as though I have been here before. You may or may not remember but about 18 months ago I had some difficulties with Amey. Today Amey are owned by Ferrovial, a very strong contributor to Tube Lines. Today I have difficulty with Jarvis. There are two elements if perhaps I could have the opportunity to explain what Jarvis's involvement is with the business. It holds equity. It owns one third of Tube Lines. It was always envisaged in the way the deal was set up that at some stage Jarvis, as with Amey and Bechtel, had the opportunity to dilute their equity. The other element of the deal that Jarvis are involved in is what I call my secondment agreement. I take resources from each of my shareholders and they are in line positions in the business. Today, for me personally, my biggest operational risk is the people I have from Jarvis in the business. To put that into context, today I employ 3,000 people and the Jarvis secondees represent nine people. All nine people will stay with Tube Lines irrespective of what happens to Jarvis. If they go to a new shareholder or a new secondee they will transfer to them. If there is not a natural home for them then they will stay with Tube Lines. I have protected in the short term the operational knowledge that those individuals bring to Tube Lines. Clearly it would be in everybody's interest to get this resolved quickly, not least for Jarvis and certainly for Tube Lines in terms of its plans. In the same way that Tim said, there has to be a resolution but there are mechanisms in place that would handle the sale of Jarvis's interest in Tube Lines. Q196 Clive Efford: So you say that it was always envisaged that Jarvis would sell part of its interest in the consortium? Mr Morgan: As was the case for Bechtel and for Amey. Q197 Clive Efford: And that knowledge was around at the time the PPP was being drawn up and so on? Mr Morgan: It is in the public domain, yes. Q198 Clive Efford: Are there any controls over the companies that can buy into your consortium? Mr Morgan: There certainly are. There are agreements between shareholders themselves and, as Tim has already indicated, there needs to be agreement from London Underground to the changes that we would propose. Q199 Clive Efford: And the government - do they have any control over it at all now, or is that completely handed over to TFL? Mr Morgan: My understanding is that it is transferred to TFL. Q200 Clive Efford: Given the performance of your company over the last year, is your bonus justified? Mr Morgan: That obviously is fixed in terms of my remuneration 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 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 per cent 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 refurbishment on that of area. Today we are trying to do it in ten 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 40 per cent. 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 incidences per month - of 34 per cent. 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 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 poly-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. Q220 Mr Donohoe: Again, I go back to being a travelling passenger on a very regular basis when I am here in London. I have seen a marked difference in terms of the number of trains that pull into stations that are overcrowded and I think that responsibility is down to you. It is not myself that is saying that. It is the passengers per se who are saying that. You are responsible for overcrowding and it does not look to me and it does not look to the passengers that they are getting a better service. Mr Weight: Perhaps we have not succeeded in explaining how it works. Q221 Mr Donohoe: What do you do to explain to the passengers? Mr Weight: If I may first attempt to explain to you, that is whether or not we are running to timetable. Let me take by way of example the Central Line. The peak numbers of trains that I have to make available onto the Central Line to deliver the timetable as set by London Underground is 72. Post-Chancery Lane when that fleet first came back into service I have to say I struggled to turn out something of the order of 63 trains at peak. That was because of the condition of the trains. The responsibility for that was partly mine; I had to deal with that. I brought in a team from Bombardier to work on the Central Line depots and now we are regularly turning out in excess of 72. That is my commitment to the contract, that I make those trains available to run to that timetable. Next year that timetable moves up to 79 trains. There are 85 trains in that fleet. My contract commitment is that I will deliver those 79 trains for Mr O'Toole to run his timetable. I do not answer for the timetable. I answer for the number of trains that are put into service on each of those peaks. Where I am responsible is if the assets fail while they are in service. Q222 Mr Donohoe: Do you monitor the overcrowding on trains? Mr Weight: Overcrowding is not something that I directly monitor. Q223 Mr Donohoe: Do you monitor it, Mr Morgan? Mr Morgan: No, I do not. Q224 Mr Donohoe: Do you not think you should monitor it? Mr Morgan: I think it is very important that we do and, if you take overcrowding as a good example, if you take the Jubilee Line, Canary Wharf continues to grow. No more capacity has been put in there but there are more people travelling to Canary Wharf. All we can do and will do is that at the end of 2005 there will be an additional car going on every Jubilee Line train and it will be delivered. On our plan right now the first of them will start coming into play at the beginning of 2005 and we will do a conversion of the fleet at the end of the year. That will raise the capacity of the Jubilee Line by almost 20 per cent. That will make a substantive difference in terms of capacity to get people down to London. That is the deliverables that we are very concerned about delivering on time. That is our project work which is critically important. Q225 Mrs Ellman: Transport for London have criticised you for failing to invest in new equipment. What are you going to do about that? Mr Weight: I hear the comment and I referred in the opening to the plan. One of the things that we have to be certain about as we move forward and are deemed to be efficient and improve our efficiency is that we have a plan that we are working to, that we have an understood commitment and that our customer and our partner, London Underground, understands what we are delivering to. That is the commitment that we have made. There is now a discussion around, "What more can you do?". There is certainly a lot that we can do within the contract. I talked earlier about the work that we did at Farringdon, Finchley Road and down at Southfields. There will be more things like that which come along. There are other things that London Underground are doing. I do not want to breach the commercial sensitivity of it but there is discussion around the new cars that are coming in now for the sub-surface routes, which will come in around 2009, as to whether or not we can enhance and improve the capacity of those trains by putting more trains into service. There is a whole lot to be done. Q226 Mrs Ellman: But is your track maintenance on schedule? Mr Weight: Our track maintenance is broadly in line with schedule. We are certainly meeting all of the safety standards. The inheritance meant that there were a number of so-called non-conformities. These are not necessarily unsafe conditions. Clearly, if they were unsafe the system would not be allowed to be run. Q227 Mrs Ellman: But does your own annual report not say that you have a shortage of workers to install important signalling work? Mr Weight: I would agree with all the comments that have been made so far, that there are shortages in certain key areas. There are shortages in some of the technical staff. Q228 Mrs Ellman: What about the safety areas and I am pointing now to one in your own report? Mr Weight: No, not in safety. We will not put safety at risk. Q229 Mrs Ellman: Do you not say that there is a shortage of technical officers to maintain and install safety critical signalling? That has come from your report. Mr Weight: We will maintain a safe system. It may well be that we have to contract people in. In the longer term, of course, we are training our own. For the record, Metronet have responsibility for the single largest apprentice training programme on engineering in the whole of London. Q230 Mrs Ellman: How much is sub-contracting increasing? Mr Weight: We will use sub-contracting resource in certain areas. I could not put a particular figure on it. By the way, that is not a new question. That has always been done on the London Underground. Q231 Mrs Ellman: But is it increasing? Mr Weight: No, it is not. Q232 Chairman: Could you give us a figure for investment in new equipment? Mr Weight: We are investing in the order of a billion pounds a year over the next seven and a half years. That is the size of our capital programme. Q233 Chairman: And is that sufficient to cope with the problems you have got? Mr Weight: I believe it will cope with the problems we have got because some of those problems, indeed many of them, are to do with the ageing assets and it has to be said, and I think I have mentioned this before, that the real essence of this work is to replace ageing assets. Q234 Chairman: That was why you were brought in, of course, was it not, Mr Weight? I do not think you need to keep repeating why you were brought in. You were brought in because there were ageing assets and it was alleged you were going to bring large amounts of money in that would deal with some of these problems. Mr Weight: And I am going to spend a billion pounds a year over the next seven years to deliver that process. Q235 Chairman: So you are not behind schedule with track maintenance work? Mr Weight: I am not where I want to be in some of the areas that are non-critical. Q236 Chairman: So that is yes, you are behind? Mr Weight: I am behind in certain areas which are not key to safety and I intend to catch up. Q237 Mrs Ellman: What are you doing about catching up? Mr Weight: We are looking to work smarter; I think that is the key. Certainly we are looking to work differently to see how we can improve the situation, and we are forever training people to come in and do work directly employed by us. Q238 Mrs Ellman: We have been told that there is a deskilling of workers involved in maintenance. Is that correct? Mr Morgan: There are a couple of factors that have to be taken into account. Both Metronet and Tube Lines in certain areas have offered to accelerate work. That is possible. The challenge of accelerating work is that we disrupt the network more, so there is a balance to be struck. You only have to look at the local newspapers every weekend to see that there is a massive amount of modernisation of the system going on. London Underground have to decide whether they can permit more access. I can say that in Tube Lines we have the capacity to do that. Q239 Chairman: You have not taken up the amount of track positions that you are entitled to, have you? Mr Morgan: We have. We have a programme of work agreed with London Underground and we are ahead of the programme we have agreed with them. On track maintenance we have increased it. In terms of retaining resources we had problems at the beginning in that people were leaving and were looking to come back on a contractor basis to work for the Underground again. It was a surprise to me that when we started I thought we had 2,500 employees. We did not. We had 1,800. The remainder were people who worked for London Underground who were not employed by the company. I am very proud of the fact that not only have we increased our head count from 2,500 to 3,000 but we have converted 500 of the people who were previously contractors to be full time employees of Tube Lines. We have the massive advantage of long term planning. We can offer people long term careers and that is why we have been recruiting people into our business. Q240 Mrs Ellman: Is it correct that there is a six-month waiting list for training in fire and safety? Mr Weight: I need to check the figure. There is a delay because we offer training not only for our own staff but for sub-contractor staff as well. The point that was made earlier, I think by one of the gentlemen from the trade unions, that we are not working to the same accreditation is not right. There is a common training standard, there is common recognised certification throughout direct employees or sub-contractors working on the system. There is a huge demand for these places and these training schools are run at the moment mostly by us at Acton, although Terry is opening his own school so that will help alleviate that problem. Q241 Chairman: I am not very bright. Did that mean that there is a six-month waiting list for the safety training or did it mean there is not? Mr Weight: I am sorry. There is a waiting list. I am not sure that it is still six months but there is a waiting list because there is a demand but we will not allow anybody out onto the track ----- Q242 Chairman: I understand that, but if they are not there to do the work must that not impact upon the quality of your work? Mr Weight: We need to get more throughput, yes. Q243 Chairman: So we can assume that there is indeed a gap between the training programmes, the number of people you need and the speed with which they are being turned out? Mr Weight: There will be a relationship there, yes. Those things are linked, obviously. Q244 Chairman: Your staff undergo the same safety training as London Underground? Mr Weight: For the particular skill sets that they need, certainly. Q245 Mrs Ellman: What about staff turnover? How does that compare with before PPP? Mr Morgan: I would describe it today as very low. We have had some staff turnover but we have been recruiting at a very heavy rate. I do not deny that there is pressure to deliver performance and some people will decide that the environment has changed significantly and that they might want to try something else, but our churn in terms of turnover is less than five per cent. Q246 Mrs Ellman: What are you doing to ensure you have sufficient planning capacity for the future when the renewals work accelerates? Mr Weight: I think the planning skills are important and I think it goes to the heart of something that Mr O'Toole said about effective asset management, whole life costing and that whole regime. It is important that we get skills in those key areas. That is one of the things that our shareholders bring because we have got companies that are international, global, that have experienced people in these key areas, and where we bring secondments in all these key posts that is what we do. It is also helpful, of course, to develop people we have inherited because there are a lot of very bright and highly professional people who came across to us. One of our responsibilities is to develop their skill sets as well. Q247 Mrs Ellman: Transport for London have criticised your planning and programme management. Mr Morgan: They had a requirement for a level of detail that we had not planned for. Like John, I have Bechtel in my business who bring global world-class skills to play in terms of project management. I will retain that capability. It is the whole essence of how I am going to deliver my performance, so marrying the requirements of TfL to what I am bringing in, the world's best practice ----- Q248 Chairman: You are not telling us, Mr Morgan, that Bechtel try and run everything with a broad brush but do not do much detailed work? Mr Morgan: They do it in their own way, in the specific way that enables them to bring best practice and continue to learn how they develop project skills. Q249 Chairman: But you knew who you had to deal with, you knew the detail that you were asked for, and you are telling us that Bechtel do not normally do that? Is that what you are telling us? Mr Morgan: No, Chair. You will know just as well as I do that we took four years to negotiate the deal in terms of ----- Q250 Chairman: So you knew the detail you were going to be asked for? Mr Morgan: We did not know about this level of detail till three months after ----- Q251 Chairman: And as for Bechtel, who have been responsible for large numbers of infrastructure projects all over the world, including underground trains, it came as a great shock to them to be asked for this detail? Mr Morgan: To be asked for a level of detail that they would not normally have done in the way that it was requested. Yes, we go into enormous detail, but it was not of the template that London Underground were asking us to work to. We have now modified those processes to get compatibility between them and what TfL were asking for so that I did not lose my best practices from Bechtel. Q252 Chairman: I just want to ask you one thing because I think we are getting to the end of the usefulness of this. Is it really satisfactory that you should be prepared to close so many of the lines over the weekend and in some cases three weekends in a row? Is that fair on the customers? Mr Weight: It is a question of balance. Q253 Chairman: The balance is that the customers are paying and they are not getting any services. That is the balance. Is it fair? Mr Weight: I cannot renew a rail if a passenger train is travelling down it. I have to have access to the system. Q254 Chairman: Yes, but we have just been told that, of course, you have not taken up the numbers you have said you are entitled to. Mr Weight: I am sorry; we are and that is not true. There is certainly availability on certain nights but in terms of the programme of track renewals and signalling renewal, that is up to speed. The point has been made, and indeed I think it has been made by TfL, that this investment will not be made without a degree of disruption. I can assure you that we talk regularly to interested groups, including passenger groups and interested representatives throughout the City of London, about whether or not it is best to bite at this in short chunks or whether it is better to do it at weekends or whether there is a regime of a large closure. It is in our interests and in London Underground's to do this in the most efficient manner, but that includes taking full account of the impact on the customer. Q255 Chairman: So on 22 and 23 January, 5 and 6 February, 12-13 February, 19 and 20 February, 5 and 6 March, and 26-28 March, which is Easter weekend, passengers on the District and Circle Lines will have no service? Mr Weight: I cannot replace the rail if there is a passenger train running down it. Q256 Chairman: So you are willing to give Travelcard holders a refund? Mr Weight: That is a matter for London Underground. I am not responsible for the fare box. Chairman: I see. I think, gentlemen, you have been enlightening and we are very grateful to you for coming. Thank you very much. |