Examination of Witnesses (Questions 60-74)
HIGHWAYS AGENCY
12 MAY 2008
Q60 Dr Pugh: That was a lot more
than you had originally estimated. Obviously, you had certain
goals in mind apart from simply informing people about things
they might like to know: you wished to improve traffic flows,
make people travel more sensibly, take more appropriate routes
and so on. You just mentioned the radio. I have a very impertinent
radio that tells me, whether or not I want it, when I approach
traffic obstructions. I have not found the switch to turn it off.
Lots of other cars have that. There are lots of ways in which
we can find out about traffic flows and so on. You have spent
a lot of money to provide us with information and therefore in
some sense it must be justified and there must be results we can
see. What are the results that we can all see now?
Mr Robertson: If you look at table
19 on pages 36 to 39 you will see a list of some of the products
that are enabled by the network. They are a combination of capabilities
by which information in one form or another is provided.
Q61 Dr Pugh: I want to know the benefits,
generally speaking, either to the motorist or the government.
Having done it, how is the world better for me and Mr Curry?
Mr Robertson: What we are providing
is greater reliability of journey and improved safety. We have
a target to reduce safety incidents to 2001 levels by 2010.
Q62 Dr Pugh: You have done that?
Mr Robertson: We are well on track
to do that.
Q63 Dr Pugh: You are telling me there
is a reduction in accidents. Telling me there are obstacles ahead
means that I slow down and therefore I do not run into the back
of another vehicle?
Mr Robertson: The motorway incident
detection and automatic signalling system (MIDAS) that detects
a queue and tells you by sign that you are about to run into congestion
cannot be done fast enough by radio. There may well be other things
you can do by radio, but that is a major contribution to safety.
Q64 Dr Pugh: In terms of people altering
their journeys, one sees signs saying "Junction 14 long delays",
for example. It appears to me that most motorists press on regardless
on the assumption it will change by the time they get to that
point, or they do not have many options. Do you detect a change
of behaviour on the part of the average motorway motorist that
we can all talk about and point to as a success?
Mr Robertson: We have motorists
who are educated to use planning tools and motorists who are not
so educated. The tools themselves are there now, but there is
not sufficient use made of them which is why the principal aspect
of our information strategy is not to roll out further tools but
to get more people to use what is already there, whether it is
to check the website, CCTV images, radio services or the signs.
Q65 Dr Pugh: Is it fair to say that
you are slightly disappointed by the extent to which the average
motorist has made use of this marvellous box of tools you have
given him?
Mr Robertson: I am not disappointed
by it. It is not surprising given I understand the character of
the motorist who wishes to press on in exactly the same way that
you do, but I think there is a big prize to get people to think
about the journey they are about to take particularly if it is
a long one.
Q66 Dr Pugh: You have encouraged
reflection on this?
Mr Robertson: If we can do that
it will also help to provide an even more robust market for the
private sector which at the end of the day has a bigger role to
play in the dissemination of information for motorists. The core
of the Highways Agency's offer has to be that it provides good
quality, reliable data.
Q67 Dr Pugh: To go back to the overruns
in cost, in your earlier answers you appeared to be stressing
two matters. One was the collapse of the telecommunications market
which you suggested had a detrimental effect on cost overrun.
Mr Robertson: The telecommunications
market meant that there was no opportunity to look for third-party
revenue for other things and other users.
Q68 Dr Pugh: You did not mean that
you would have got it cheaper? When a market collapses one normally
assumes that products become cheaper and people are anxious to
shift them. If they cannot shift them elsewhere prices fall, do
they not?
Mr Bradbrook: You are alluding
to the fact that technology prices in general become cheaper with
the passage of time. That is one of the matters that we have taken
into account in the contract. We have a bi-annual technology review
and any reductions in the cost of the technology are shared.
Q69 Dr Pugh: What have those savings
amounted to so far?
Mr Bradbrook: I believe that in
real terms at the end of the first two years the savings are 4%.
Q70 Dr Pugh: Have these been offset
by, as it were, ambition within the project because you also mentioned
new technology coming along, that is, various gadgets, tools and
add-ons that had not previously been thought of.
Mr Robertson: Basically, we have
the tools that we need, but we need more use of the tools and
more penetration of the services, if you like. One of the reasons
we went for a 10½-year contract, or 10-year plus a half-year
switchover, was that this was a fast-moving market. As you mention,
things like satnavs are improving in capability and coming down
in cost very quickly. They are now available for people to use
personally as well as in cars. I am pretty sure that the pace
of change which the private sector is driving through competition
will be of benefit to the road user in a way that the public sector
and Highways Agency should enable with good data but in which
it should not compete.
Q71 Dr Pugh: You made a 4% saving
on the basis of the bi-annual technology reviews. Do you have
any idea what profits your private partner made over this period?
Mr Bradbrook: I do not know what
their profits are but I am sure they will be published in their
annual accounts. What we do know is that the cost of the call-off
items is less than we were paying under conventional procurement,
so we are assured good value for money.
Q72 Dr Pugh: Have you imposed any
penalties over the course of the contract for the private contractor
not delivering on time?
Mr Bradbrook: Yes, we have. There
are about three penalty regimes. One is for loss of availability
of the service. This is a very simple regime with a fixed amount
deducted for each service that is unavailable, and in the seven
months since the new network was completed there have been deductions
of the order of £1.2 million for lost services. Some deductions
were also made due to delay in delivery of some of the minor items
on completion of the two-year build phase documents and things
like that.
Q73 Dr Pugh: Mr Robertson, at the
start you mentioned that a PPP contract was favoured because of
the real advantages of the flexibilities that it offered. What
are these flexibilities?
Mr Robertson: One flexibility
is that because at the margin the PFI company can go and borrow
more money to offset a risk when I am working within a fixed budget
all the time. It can do things to set off risk that would not
be easily available to me. I think there are some instances where
they have invested ahead of when we would have done it ourselves.
Mr Bradbrook: One of the big advantages
is the outsourcing or transfer of the technology risk. One matter
that is acknowledged by NAO's consultant Mason is that the national
network now installed is a leading edge solution. In taking a
risk on putting something in that is future-proof and able to
be very flexible, resilient and capable of easy change if the
level of usage increases it has paid a price in that it has had
some teething problems. In all those cases it has had to pick
up the cost of resolving the problems having taken on that risk.
But the solution from a technical point of view is significantly
more flexible than the proposed public sector solution.
Q74 Dr Pugh: You believe that that
could not be done under a standard public sector procurement contract
with an amenable and adaptable private contractor?
Mr Bradbrook: I am absolutely
convinced of that. We took a far more risk-averse approach in
our illustrative solution which we then built into a public sector
comparator.
Chairman: Mr Robertson, thank you very
much for your presence and your evidence. I wish you well in your
retirement or next role. Obviously, the Committee is concerned
about value for money. Undoubtedly, some aspects of this project
did go well in terms of transferring risk, but equally we are
concerned about the amount of money you spent on advisers and
the length of the procurement process. No doubt we will reflect
on this in our report.
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