Memorandum from London TravelWatch (PPP
03)
1. INTRODUCTION
London TravelWatch is the official body set
up by Parliament to provide a voice for London's travelling public,
including the users of all forms of public transport. Our role
is to speak up for transport users in discussions with policy-makers
and the media; to consult with the transport industry, its regulators
and funders on matters affecting users; to investigate complaints
users have been unable to resolve with service providers; and
to monitor trends in service quality. Our aim is to press in all
that we do for a better travel experience all those living, working
or visiting London and its region.
2. THE INQUIRY
London TravelWatch welcomes the House of Commons
Transport Committee's new inquiry, which will build on its previous
work in this area to consider whether the PPP is:
— producing real benefits for Underground
passengers
— ensuring the maintenance of the highest
standards of safety
— providing value-for-money for the
taxpayer
— spreading the associated risk fairly
between the public and private sectors.
The inquiry will also consider the likely impact
of Metronet Rail BCV (Bakerloo, Central and Victoria) and SSL
(Sub-surface lines) going into administration.
This submission concentrates on the first three
of the inquiry's objectives: benefiting London Underground (LU)
passengers, ensuring safety and providing value for money. We
also express views on the impact on LU's users of Metronet going
into administration. We recognise the apportionment of risk between
the public and private sectors to be a delicate issue, but make
no judgements on this aspect except in so far as it influences
the level, cost and quality of service experienced by users.
3. GENERAL PRINCIPLES
OF THE
PPP
London TravelWatch supports the objective of
the PPP to guarantee the flow of investment into the Underground,
after many years of inconsistency and fluctuation. We consider
it of the utmost importance that the periodic reviews at 7.5 year
intervals should not be allowed to become vehicles for under-funded
price rises and for the scope of investment plans to be cancelled
or reduced in scope. This concern is given added importance by
the slippage that has occurred in parts of the investment schedule,
and by Metronet going into administration, each of which phenomena
increases the opportunity for cuts to be made in previously agreed
investment programmes.
We were initially concerned that animosity to
the principle of the PPP would adversely affect relationships
between LU and the PPP contractors. We are therefore encouraged
by the determination of LU's top management to work constructively
for the success of the PPP in the interests of Undergound users,
whatever may have been the political debate over its introduction.
We are, however, concerned that—despite
assurances that the infracos (Tube Lines and Metronet) would get
on top of the problems, once the period of climbing the "learning
curve" had passed—placing contracts for looking after
70% of the LU network with a single organisation was too much.
Tube Lines, with only 30% of the business, has shown itself to
be more capable of delivering projects on time and to budget,
although its slowness to rise to the challenge of improving performance
on the Northern line has been disappointing.
4. PRODUCING
BENEFITS FOR
UNDERGROUND PASSENGERS
London TravelWatch is concerned that the PPP
is not delivering improvements as quickly as had been expected,
or indeed contracted for, in particular by Metronet. Tube Lines'
website provides specific information which shows its programme
of station investment to be on schedule, although the reliability
of the Northern line was initially poor. We are encouraged that
LU recognises the importance of pressing the infracos on the delivery
of renewal projects, but share its frustration when delays continue.
Metronet made several unfulfilled promises to get work back on
schedule, before it eventually brought in assistance in the form
of external contractors early in 2007.
As the PPP is largely "behind the scenes"
project, delivered when trains are not running and stations are
closed, we have not experienced a large postbag of casework directly
connected to the performance of the infracos. But we can cite
two examples from our case load which relate to aspects of the
PPP:
— Several appeals which have reached
us were concerned with aspects of station upgrading, including
the length of time a station has to be closed for renovation to
be completed, and with closures of lifts and escalators for reconstruction
or refurbishment.
— A further example relates to the
rolling stock replacement programme for the Circle, Metropolitan
and Hammersmith & City lines, for which a single type of train
has been ordered. This is viewed as a retrograde step by long-distance
Metropolitan line commuters, for whom the smaller seats (including
a higher proportion of inward-facing seating) and greater provision
for standing passengers will be inferior both to the present dedicated
rolling stock and to trains on equivalent routes on the National
Rail network. We anticipate that there may be strong adverse reaction
to the new trains when they come into service. We found the attitude
of the PPP contractor to be somewhat inflexible, and unduly resistant
to considering the option of building two versions of the new
trains (for use on different lines) although no additional costs
would have been incurred if they had been ordered at the same
time.
Delays to journeys caused by weekend line closures
and by over-running engineering work are of particular concern
to Underground users. Passengers are prepared to accept the inevitability
of some disruption to weekend travel where major engineering work
is essential to bring lines up to modern standards, but we believe
that the boundaries of this tolerance have sometimes been reached.
LU must do all it can ensure that alternative parallel routes
are not both closed at the same time, whether these are other
Underground lines or parts of the National Rail network.
London TravelWatch has consistently been concerned
at the failure of PPP contractors to reduce the number of engineering
overruns, ie the incidence of work not completed on time with
consequential delay in reopening lines or stations to traffic.
We do not fully accept the explanation that, for example, discovering
a broken rail towards the end of a night's engineering work is
"unavoidable"". The closure on a Monday morning
in July of the northbound Victoria Line platform at Victoria,
one of London's busiest platforms, because of excessive dust caused
left over from weekend engineering works was a further example
of poor work by Metronet which impacted severely on thousands
of passengers.
A problem during 2006 was the imposition of
speed restrictions in hot weather resulting from Metronet's failure
adequately to de-stress rails, which caused slower running and
therefore fewer trains and resultant overcrowding on the Piccadilly,
District, Metropolitan, Circle and Hammersmith & City lines.
And the reopening of Queensway station after its renovation was
delayed. LU has reported some concern at the quality and timeliness
of Tube Lines' track project work, due to an insufficiency of
experienced staff. In each of these cases, better planning of
engineering tasks is called for.
We are concerned lest attempts to make up for
delays occurring during the first 7.5 year period of the 30-year
PPP increase the incidence of line closures later on. The balance
between full and partial closures, ie between short bursts of
intensive activity necessitating complete closures of sections
of line or extended periods of weekend and night-time activity,
may need to be re-examined. The balance of advantage, from the
users' perspective, is not always clear cut.
5. MAINTAINING
SYSTEM SAFETY
The members and officers of London TravelWatch
are not safety experts. Nevertheless, we have become aware in
the course of site visits with each of the infracos of an apparent
difference in their safety cultures, with Tube Lines taking a
more diligent approach to managing workplace safety than Metronet.
Following the derailment on the Central line
in July 2007 which was caused by a badly-stored roll of plastic
sheeting becoming dislodged in a tunnel, we expressed our grave
concern at what appeared to be a further serious failure by Metronet
and/or its sub contractors. This was not the first occasion when
that organisation had been warned about the safety implications
of apparent poor workmanship.
6. ENSURING VALUE-FOR-MONEY
IN COMMISSIONING
WORK
One of the main reasons for Metronet's failure
to deliver station upgrades on time was its tied supply chain,
in which work was allocated to members of its consortium of shareholders
without open competition. This meant that the programme fell seriously
behind schedule, and raised questions about whether the contracts
were being let on the best value for money terms.
We are pleased that the Metronet management
team eventually persuaded its board to let third party contractors
bid for the work. Tube Lines, in contrast, invited outside tenders
from the outset, with the result that it had stronger influence
and control over performance, and largely avoided slippage. Upgrades
are more likely to be delivered on time with a flexible supply
chain, so Metronet's change of practice is good news for Underground
passengers desperate to see the improvements delivered.
7. IMPACT OF
METRONET GOING
INTO ADMINISTRATION
A likely impact of the financial collapse of
Metronet is that there will be a substantial element of cost to
be picked up. London TravelWatch considers that the shareholders
in Metronet should bear the bulk of any cost overruns, as those
shareholders entered into the PPP agreements voluntarily and as
the independent PPP Arbiter has ruled that Metronet had not always
been acting efficiently or economically. But London TravelWatch
believes that the Government should consider funding the extra
costs that the Arbiter has agreed may be owed to Metronet, that
were not changes of specification, as it was the Government that
required LU to enter into these PPP agreements against the better
judgement of the Mayor and Transport for London.
A relevant comparator in preparing for the post-Metronet
future is that of the changes wrought by Network Rail to the policies
of its predecessor Railtrack. Network Rail has achieved considerable
success in reducing its cost base and improving the maintenance
of the national rail network by bringing this task back in-house,
allowing external contractors to concentrate exclusively on investment
in renewals and network development. Such an option might be explored
by LU as part of its future strategy, provided that this does
not jeopardise the guarantee of future funding needed to secure
the delivery of the entire PPP project.
8. CONCLUSIONS
London TravelWatch believes that the PPP was
always going to be an extremely challenging proposition to deliver.
Whatever the rights or wrongs of the way in which it was carried
out, it has attempted to tackle the historic problem that has
faced London Underground and its passengers—namely the need
for long term commitment to fund investment in the system, which
had previously been cursed with a stop-start cycle of capital
funding governed by the fiscal requirements of the Government
of the day. It would seriously detriment the interests of London's
transport users if the administration of Metronet was to put in
jeopardy the commitment to continuing investment that the PPP
has sought to guarantee. But, that said, there are undoubtedly
ways in which the performance of the PPP could be improved for
the benefit of passengers, and we await the Select Committee's
conclusions with interest.
Note: This paper was prepared before the PPP
Arbiter's recent publication of further preliminary findings in
his Extraordinary Review of Metronet's contract performance.
September 2007
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