Memorandum from Unite Amicus Section (PPP
10)
1. INTRODUCTION
1.1 Unite Amicus Section is the UK's second
largest trade union with 1.2 million members across the private
and public sectors. Our members work in a range of industries
including transport, manufacturing, financial services, print,
media, construction and not for profit sectors, local government,
education and the health service. The union has just completed
a merger with the TGWU to form the UK's largest union of over
2 million members.
1.2 At a time when investment in the UK's
rail network is at an unprecedented level, Unite Amicus Section
welcomes the decision by the Transport Select Committee to conduct
a far reaching inquiry into the effect of PPP on the London Underground
(LU).
1.3 Unite Amicus Section members are involved
in all aspects of maintenance on the London Underground and are
employed currently within both the defined public and private
sector.
1.4 Our members are responsible for maintenance
and repair of key elements of LU infrastructure including signaling,
escalators, station lighting and electrics and communications
equipment. In addition our members are also employed in the maintenance
of the train fleets.
2. BENEFITS FOR
TUBE PASSENGERS
2.1 Unite Amicus Section believe that whilst
PPP has accelerated the financial investment of funds into the
ongoing refurbishment of the LU network, it has not delivered
within the timescale stated in the original contract.
2.2 This fact is evident when we consider
that on the 23 February 2007 Metronet Rail announced that it had
awarded a tranche of six contracts for station upgrades outside
of its tied supply chain. This was the first time Metronet Rail
had moved out of its own supply chain and is clear and concise
evidence that its own structure was failing to deliver on time
and on budget.
3. HEALTH AND
SAFETY
3.1 It must be understood that LU standards
of health and safety have historically been over and above any
statutory or legal requirements. Unite Amicus Section have concerns
that the involvement of the private sector has increased the propensity
for profit margins to become the primary motive behind relevant
decision making.
3.2 Furthermore Unite Amicus Section is
concerned that the increasingly complex networks of responsibility
are diluting the direct involvement of experienced LU health and
safety advisors.
3.3 In the union's opinion health and safety
on the LU is now alarmingly fragmented. There is minimal interaction
between safety committees that exist within LU and the private
sector.
3.4 In the union's experience it is becoming
increasingly difficult for operatives to address safety issues.
This becomes more relevant when it is understood that many sites
are in effect "multi-user", engaging operatives from
not only the defined public and private sectors but also sub-contractors.
3.5 The risks involved in such a fragmented
and overly complex supply chain were brought into sharp focus
on the morning of 5 July 2007 when a Central Line train hit an
object in the tunnel between Mile End and Bethnal Green. On investigation
it was discovered that operatives from one of Metronet's shareholder
partners Balfour Beatty had left a roll of industrial plastic
sheeting too close to the track.[50]
Clearly objective evidence does not exist to suggest that such
an oversight is solely a result of private sector involvement
in the LU, but there is sufficient anecdotal evidence to confirm
that the structure that is currently in place does nothing to
facilitate "joined up thinking".
3.6 The health and safety issues of the
fragmented supply chain were further highlighted in March 2007
when 12 electricians were thrown off the Hainault station site
after it was discovered they were doing a full shift on their
day jobs before working on the LU in the evening.[51]
4. RISK AND
"VALUE FOR
MONEY"
4.1 Unite Amicus Section believes that the
very fact that Metronet Rail has now gone into PPP administration
and is, in effect, being funded by Transport for London (TfL),
provides objective evidence that on this occasion PPP has certainly
not been "value for money" especially for London tax
payers. Not least when it is widely reported that TfL is paying
Metronet £17 million[52]
a week (roughly double the normal rate under their 2003 agreement)
to keep the contractor and the railway operating during administration.
4.2 It should be noted that as recently
as 4 October it was being reported that the PPP Arbiter, Chris
Bolt, had still to determine the exact amount Metronet was owed
by LU for the first seven and a half years of its tube contracts,
in order to have some idea of the complexity of the issues. A
perspective of the scale can be seen when information suggests
that this figure could be anywhere between £370 million and
£1.1 billion.[53]
The fact that the figure is so wide ranging doesn't exactly create
the impression of prudent financial management.
4.3 This ambiguity was further highlighted
in a recent statement from Tube Lines. When questioned as to whether
they would consider a bid for Metronet they stated that, "We
need more transparency about what is being sold before we would
consider making a bid".[54]
4.4 Unite Amicus Section firmly believes
that across the majority of the rail network there is little or
no competition. The union believes that the private sector is
taking only a marginal amount of the risks involved in both running
and investing in the network. In this respect London Underground
is no different.
4.5 The private sector that has been brought
into the LU network is entirely confident in the fact that the
Government cannot allow any part of the infrastructure to fail
and therefore has a limited commitment in terms of long term investment
in the industry. In effect the private sector can "go bust"
but the network must continue to operate, funded by the taxpayer.
4.6 The very fact that other private sector
stakeholders are awaiting the publication of Metronet's valuation
by investment bank Rothschild provides sufficient evidence that
the private sector are unwilling to take any of the potential
risks involved in undertaking its work.
4.7 Given the very nature of the private
sector this should not be surprising. Equally it should not be
surprising that the private sector enters those parts of the industry
where it can extract the largest profit margins whilst avoiding
any unnecessary obligation to invest in the long term growth and
expansion of the LU network.
5. METRONET RAIL
BCV AND SSL IN
PPP ADMINISTRATION
5.1 The consequences of Metronet entering
into PPP administration are significant, not least for increasing
the financial burden on the taxpayer as outlined above.
5.2 The situation that has been allowed
to develop calls into question the long term planned infrastructure
improvements on the LU network. It will also act as a deterrent
in sourcing long term financial investment.
5.3 Historically maintenance staff employed
by the LU in the public sector were prepared to accept remuneration
less than they could expect in the private sector for the additional
benefit of stable and direct employment. The increasing role of
the private sector has in part increased job insecurity.
5.4 The uncertainty that Metronet's administration
has caused is creating the potential for skilled operatives to
leave the LU network and seek stable employment elsewhere in the
sector or in the wider construction and contracting industry,
where demand for their skills is set to increase at least into
the medium term. Headlines such as, "Metronet workers poised
to walk out over late pay",[55]
set against observations that the UK construction industry needs
an additional 87,590[56]
workers every year until 2011 to meet increasing demand, does
not bode well for LU recruitment and retention policies.
5.5 Anecdotal evidence suggests that as
specialist operatives, such as signaling technicians, leave the
network the cost of employing them in the future through any kind
of third party agency arrangement will inevitably increase the
overall wage bill in the long term.
5.6 Despite reassurances from Metronet that
the terms of PPP administration ensure that staff, suppliers and
third party creditors will continue to be paid Unite Amicus Section
believes that there will be the inevitable haemorrhaging of staff
and suppliers that will further undermine the long term improvements
to the LU infrastructure network.
October 2007
50 Construction News 4 October 2007. Back
51
Construction News 19 April 2007. Back
52
Construction News 4 October 2007. Back
53
www.cnplus.co.uk/News/metronets_uncertain_future.html Back
54
Contract Journal 19 September 2007. Back
55
Contract Journal 18 July 2007. Back
56
Construction Skills Network Report 2007. Back
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