Memorandum from London First (PPP 07)
London First is a business membership organisation
whose mission is to make London the best city in the world in
which to do business. London First delivers its activities with
the support of 300 of the capital's major businesses, representing
approximately a quarter of London's GDP, from key sectors such
as financial, professional services, property, ICT, creative industries,
hospitality and retail. We also represent the interests of all
of London's higher education institutions as well as many of the
further education colleges.
EXECUTIVE SUMMARY
OF LONDON
FIRST POSITION:
— London's success is critical to UK
prosperity and dependent on sustained investment in the Tube system.
— Investment in the next major phase
of capacity increase must be safeguarded.
— Reliability on the worse performing
lines must be improved.
— The needs of the business community
must be considered when planning the extensive upgrade works.
— Contracts that replace Metronet BCV
and Metronet SSL must secure the forward programme.
LONDON'S
SUCCESS IS
CRITICAL TO
UK PROSPERITY AND
DEPENDENT ON
SUSTAINED INVESTMENT
IN THE
TUBE SYSTEM
1. London is the most highly productive
region in the UK, with GVA per head (on a workplace basis) 53%
above the national average (ONS, GLA 2007). Increasing employment
in the central business cluster adds not only the value of these
extra jobs, but increases the productivity of existing workers—the
agglomeration effect. With 12.4% of the UK population, London
produced 20% of GDP growth between 1994 and 2004. London also
contributes up to £20 billion more in taxes than it receives
from the Exchequer (Oxford Economic Forecasting November 2005).
2. The strength of London's economy—and
that of the UK—depends on its success as a world city. Foreign-owned
companies are responsible for 14% of employment in London. The
attractiveness of London for foreign investment also benefits
the rest of the UK. A survey of inward investors in 2002 showed
almost 60% of companies surveyed planned to expand their operations
to other parts of the UK. Between 2000 and 2004 London was responsible
for 39% of export growth. With the UK increasingly in deficit
as a net importer of goods, the export success of key service
sectors in London allows the country as a whole to buy goods from
across the world.
3. London's continued productivity and prosperity
depend on two key factors—investment in transport and its
ability to continue to attract and retain highly skilled individuals.
This continual growth is not constrained by domestic growth parameters
but, instead, potentially linked to the growth of the global economy.
It can also, however, take place in one of the other global economic
centres.
4. Around three million people rely on the
Tube every day. London's employers, workers, visitors and customers
depend on it to keep the capital moving. For businesses, a safe,
clean reliable Tube is a necessity. Sustaining the tube modernisation
programme, and finding the funding to do so, is crucial to
the future prosperity of London. The PPP has allowed investment
to be committed on a scale not seen before; while substantial
progress has been made, that commitment must not be allowed to
falter.
INVESTMENT IN
THE NEXT
MAJOR PHASE
OF CAPACITY
INCREASE MUST
BE SAFEGUARDED
5. There is no dispute about the forecasts
for the growth of population in London. Whereas the new homes
needed to house 900,000 more people by 2025 will be spread around
London, with the majority to the east, new jobs will be heavily
concentrated in financial and business services in the central
areas. The effect will be a huge increase in transport demand
on an already overloaded system. We welcome the Government's commitment
to funding of Crossrail, but understand that the scheme's earliest
opening date is 2017. On current plans, overcrowding on rail and
Tube lines will double by 2016, which will in turn cause greater
delays and breakdown.
6. This is not just a problem for over-stretched
transport operators and disgruntled commuters. It is a threat
to the growth and competitiveness of London's—and the UK's—economy.
Whereas population increase is likely to happen anyway, the potential
for 440,000 new jobs in financial and business services will not
be realised if transport into the central areas is full. This
sector cannot grow without increased transport capacity, including
Phase 2 of the tube modernisation programme.
7. Phase 2 of the tube upgrade programme
will need to increase capacity to accommodate growth and reduce
overcrowding. Most of the 28.5% planned increase in capacity is
due in this phase, including upgrading the Northern, Victoria,
Metropolitan and Piccadilly Lines. In addition, Phase 2 will need
to:
— Put in place high visibility safety
and security measures.
— See the upgrade of stations such
as Victoria.
— Introduce a tunnel cooling system,
which may be essential if the planned capacity increases are to
be realised.
Given the back-end loading of Phase 1 of the
PPP and provision for inflation, there will need to be a substantial
increase for Phase 2 in cash terms.
RELIABILITY ON
THE WORSE
PERFORMING LINES
MUST BE
IMPROVED
8. While it is not possible at present to
anticipate negotiations over roll-forward of the PPP contracts
from 2010, Phase 2 will need to cover renewing outworn assets
in order to maintain and improve reliability. Lost Customer Hours—a
key PPP measure of availability—saw an improvement across
the network of less than half a percent last year.[27]
THE NEEDS
OF THE
BUSINESS COMMUNITY
MUST BE
CONSIDERED WHEN
PLANNING THE
EXTENSIVE UPGRADE
WORKS
9. We welcome the work London Underground
(LU) has done in the life of the PPP contracts to improve dialogue
with the business community and exchange long-term, strategic
discussions around essential tube closures. The Tube User Forum
offers the regular opportunity to provide for and predict business
needs, and thereby minimise the negative effect of closures on
London's economy.
CONTRACTS THAT
REPLACE METRONET
BCV AND METRONET
SSL MUST SECURE
THE FORWARD
PROGRAMME
10. We believe Metronet Rail BCV & SSL
must emerge from administration at the earliest possible moment,
and mid-January 2008 at the latest. On that basis, there are good
arguments for Transport for London (TfL) taking on Metronet's
assets in the short term, and perhaps in the longer term for LU
bringing day-to-day maintenance in-house and contracting out packages
of upgrading work. However, this model must be backed up by sufficient
expertise in systems integration and contract management in order
to be successful, as the upgrading work will itself be vulnerable
to changes in funding.
11. The greatest value of the PPP is that
it commits LU to a programme. For Tube Lines this is fixed until
2010, and while the terms of its roll forward for another 7½
years will be subject to negotiation, once the contract is signed
the programme will be fixed. TfL may be able to parcel up upgrading
contracts so as to lock in the forward programme, but this could
require a large number of long-term contracts to be let at once.
If contract-letting is phased over several years there exists
the scope for delaying work, for example to make good a funding
gap. Such a delay must not be exploited to the detriment of the
vital modernisation programme currently enabled by the Tube PPP.
12. LU's project management capacity must
avoid a scenario in which the upgrade programme becomes subject
to the kind of spending pressures seen in the 1990s, when over-spends
on the Jubilee line extension were clawed back from funding intended
for the core Tube network. Whatever form the PPP contracts take,
they must lock in the forward programme and consign to history
the years of underinvestment that have plagued London's Tube.
October 2007
27 2006-07 compared to 2005-06-Network LCH (LU) [unpublished]. Back
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