Examination of Witnesses (Questions 99
- 119)
WEDNESDAY 17 OCTOBER 2007
MR TERRY
MORGAN
Q99 Chairman: Good afternoon. I know,
sir, that you know our ground rules, so may I invite you to identify
yourself for the record?
Mr Morgan: My name is Terry Morgan.
I am Chief Executive of Tube Lines.
Q100 Chairman: Did you have something
you wanted to say to us?
Mr Morgan: I did. I wanted to
make a few points, but in terms of the last session I also wanted
to add a little bit more, if I could, just to balance the story.
Q101 Chairman: Please do. On the
whole, we do not restrict freedom of speech.
Mr Morgan: I know you do not.
I would like to say Tube Lines has made good progress since we
were last here three years ago. We are investing more. We employ
more people, 1500 more people than when we first started. We continue
to deliver all our projects on time. That was a statement we made
three years ago and that is still the case today. The service
is more reliable. Yes, there are huge challenges out there, but
it is more reliable and we are able to do our upgrade and maintenance
programmes much quicker than before. My second point is that I
do believe quite strongly that PPP is working. Risk is transferred,
investment has increased and performance has improved, but I always
caveat that by saying there are huge challenges and obstacles
along the way, particularly around making the partnership work
as effectively as we would all wish it to, but we are confident
we can overcome those challenges as we have overcome those that
we have faced to date. My supplementary comment was really on
the question of safety. I cannot tell you how important safety
on the railway is to everybody in Tube Lines, including myself.
I listened to a few comments made this afternoon and I just feel
very strongly the need just to try and clarify what I think is
happening. We ask our employees, everybody in the business, what
they think about working for Tube Lines. One of the key questions
we ask them is, "How do you feel about safety?" There
is a number of themes you have through an employee survey and
safety and their views about safety is the strongest response
we get back in terms of the approach which everybody in the business
takes. Yes, there are examples, as we heard this afternoon, and
I do agree with the comment made this afternoon. When we find
those examples through audit the criticality is to ensure that
we respond to what we have learnt and make sure that it cannot
be repeated. There is a couple of things I would like to say.
If you are an employee of Tube Lines, you are four times less
likely to have an injury at work today than you would have done
four years ago. Four times. When we first started there is a process
in London Underground, as you would expect, that if there are
systematic concerns around safety then there is a process in London
Underground to regularise that process and you have to confirm,
where there is a concern, what actions you have taken and you
formally close it off. When we started four years ago there were
290 examples of regulatory notices on Tube Lines to actually deal
with issues the engineering function had with regard to the railway.
Today there are four concerns. So we have focused very, very heavily
on the whole question of safety. There were some things talked
about representation. There is representation, both at management
and at shop steward level with regard to London Underground and
its mechanism for safety. It is clearly a risk when you have a
number of different organisations delivering a service to the
public and it is a risk that we are only too consciously aware
of and something which drives us. If I use an example, every Monday
I have an executive meeting. First on the agenda is safety. "What
were the issues we had last week? What are we going to do about
them and how do we ensure that they can't be repeated?" So
it is a really important subject for us.
Q102 Chairman: I do not think, Mr
Morgan, to be fair, the criticism of you was that you were not
particularly interested in safety. The difficulty which was being
highlighted was that when there was a specific problem the communications
within the company were so poor that it appeared to get stuck
at a certain level in middle management and never reach much higher
than that.
Mr Morgan: I am not aware of that,
and it is interesting that it has stuck. This incident took place
five weeks ago and was dealt with five weeks ago. HMRI confirmed
their satisfaction with our mitigation three weeks ago. It is
pretty obvious to me that this story came up today because this
event is happening today.
Q103 Chairman: But then, on the other
hand, you would not presumably dissent from their suggestion that
it was only when they went to HMRI that they managed to get that
clearance because there were no obvious lines of communication?
Mr Morgan: Let me assure you.
I mentioned that on Mondays we have an executive meeting. This
particular incident was discussed at the executive a few days
after the incident. I have—which I switched off this afternoon—a
Blackberry in my pocket. Every single incident which occurs on
the railway with regard to safety gets text'd to me the minute
it is reported. I get that and so does the whole of my executive.
Q104 Chairman: Then do you think
you are not communicating too clearly to your own employees how
you are dealing with the safety problems if they really think
that they do not know who to report to and they do not know that
anybody is taking any notice when they do report? Do you think
maybe there is a failure in communication? I put it no higher.
Mr Morgan: I hope not. Clearly
there is a distinction—and perhaps I have tried to make
that—between the way I would want to represent it, which
is the views of the employee, and the membership views in the
way that it got expressed in the previous session. What I would
say is that again in terms of communication -
Q105 Chairman: Let me be sure. You
are saying that your individual employees have not given you a
problem, so the unions must be wrong?
Mr Morgan: Let me use an example.
I said we use an employee survey. We asked our people were they
satisfied with the level of communications they get. We had a
measure which four years ago, just after we started, said that
40% of our people were satisfied with the level of communication.
It moved within two years to 70% of our people saying they were
satisfied with the level of communication. A 30% change in two
years is huge in terms of changing attitudes and people responding
to those sorts of questions. So it is a measure we take very seriously.
Yes, we can improve, but we do things, the things you would expect
us to do, weekly news, team briefs, platform magazines. So there
is a lot of things we try to do to communicate with people in
our business to ensure they are engaged with the things we are
trying to do. It is very important.
Q106 Clive Efford: You are talking
about your own survey of your staff. Does that lead you then to
ignore legitimate concerns which may come through the trade union
representatives of your employees?
Mr Morgan: Not at all. As you
would expect me to say, we have a very robust Health & Safety
regime which includes a full representation from trade union shop
stewards in the business and they are very heavily engaged throughout
the business in terms of carrying out both the duties they see
as a responsible trade union, but equally importantly representing
the views of many people in the organisation in terms of changes
we could make. We have a process. It is there to identify concerns
and to deal with them. The point I was trying to make was that
in terms of that process, my measures which come back to me suggest
that we are making progress.
Q107 Chairman: Can I come back to
why you are going better than Metronet? Why do you think? Do you
think that the £200 million Materiality Threshold, which
is different from the £50 million which was your opponent's,
has had any effect upon how you work?
Mr Morgan: I honestly do not think
so. Chris Bolt made reference this afternoon to the fact that
we have a mechanism within our deal that says at £50 million
we are obliged to report a concern that we have that we are working
into an area which is beyond the cost we had indicated we could
do the work for. We have never needed to trigger that mechanism,
so although it is slightly different we have never got to the
£50 million level.
Q108 Chairman: Why is that? Because
you are so very much better at housekeeping? Because you are doing
less complicated systems? Because you have a much higher level
of executive planning? What is the reason, Mr Morgan?
Mr Morgan: I can tell you about
Tube Lines. It would be very difficult for me, obviously, to start
making comparisons.
Q109 Chairman: You must have thought
about it?
Mr Morgan: Of course.
Q110 Chairman: You must benchmark
yourself against someone who is a private company working within
an exactly comparable organisation, surely, or are you above these
things?
Mr Morgan: No, of course not.
We take a view that we started from the same place, and clearly
throughout the four or five years we have been engaged in this
process we are continually assessing ourselves, "Are we doing
the right things? What can we learn?" and we continually
compare ourselves with Metronet because not everything in Metronet
actually is in the sort of category of failure. There are some
very good things that occurred in Metronet that we have taken
back into the business and learned from.
Q111 Chairman: So I ask you again,
why are you operating much more successfully than Metronet?
Mr Morgan: Tube Lines is delivering
its objectives because, first of all, I have to say the management
team which is in Tube Lines was there in 2003 with a few changes.
So we have seen this journey all the way through. So we knew where
we started and we know where we are today. Reference is often
made to the supply chain and those arrangements. I am in no doubt
at all. I would not wish to have the Metronet supply chain running
in Tube Lines. It would be an impediment to the effectiveness
of the business. We procure competitively, but at the same time
we have recruited a lot of very good people who can manage those
projects so that they deliver the objectives that we set for them.
The one thing I would say, and perhaps in a way I have already
emphasised this at the beginning, which is that we have spent
a lot of time talking to our people. We have spent a lot of time
trying to understand what are the blockers, to actually allow
them to perform and we have spent a great deal of time and effort
talking about the cultural changes that we need to achieve now
you are in the private sector. So this whole driver around delivering
performance, "Don't tell me why you have failed, tell me
how you are going to succeed," is very much the language
of the private sector which I think brings out the best in people
and that is something we place huge emphasis on. Our investment
at Stratford which you made reference to, I can well remember
why we did it. I went to Acton, where there was a training centre.
It was raining. This is what we inherited. I gave up counting
how many buckets were actually catching the water coming through
the roof. For me, that was just not the message. So Stratford
was my answer to actually say to people that we care about them.
If they make a contribution, we are going to look after them.
Stratford is now turning out superb technical officers to the
extent—you may remember, or not, last time we talked about
the concern of our huge dependence on subcontractors with core
skills that we needed to have in the business. I can say today
that we have now almost a 100% complement of competencies that
we need to sustain this business through training.
Q112 Chairman: Yes. You are not actually
blaming God for raining on the public sector?
Mr Morgan: I am blaming somebody
for not looking after the training facility in such a way that
it creates the message, "We really don't care about your
training needs."
Chairman: Thank you very much.
Q113 Mrs Ellman: Is Tube Lines considering
a bid to take over Metronet's PPP Agreement?
Mr Morgan: I think the first answer
to that is that whatever we consider, I am not going to sacrifice
what we are doing on the Jubilee, Northern and Piccadilly lines.
Q114 Chairman: That is not the question,
Mr Morgan.
Mr Morgan: I know, but it is really
important for me. The answer would be that people say, "Well,
why don't you take it all on?" We are not capable of taking
it all on, not at the same time having the risk that what we have
achieved on the other three lines would be put at risk by taking
on too much. Do we have the capacity to do more? The answer to
that is, yes, and we have expressed that interest, that we would
be able to take on more if the opportunity existed.
Q115 Mrs Ellman: Does that mean that
you are considering a partial takeover?
Mr Morgan: My view is that we
would do nothing in terms of trying to widen our interest in the
Underground without the support of TfL and LU. It would not work
unless they supported that proposition. Clearly, under a PPP regime
we have learnt a lot about the benefits of working together and
the disadvantages of being adversarial. So for us, if there was
some encouragement to do that then there is interest in us doing
more.
Q116 Mrs Ellman: What are your views
on Transport for London taking over Metronet's PPP?
Mr Morgan: I have a concern because
it feels like the way it used to be. It is the old model. I know
what we have changed in the organisation to deliver what we have
said. The one thing that is absolutely true in terms of PPP is
the level of transparency between the operational side of the
business and the support for the infrastructure, and my concern
would be that if Metronet was to stay in the public sector this
level of transparency and the level of risk would be much more
difficult to find and see compared with what we are trying to
achieve in Tube Lines.
Q117 Mrs Ellman: Tube Lines has been
praised, but it has also been criticised for its work on the Northern
line. What are you going to do about that?
Mr Morgan: When we came to this
Committee three years ago that was a very, very hot topic and
I gave certain assurances at that time that we would accelerate
investment and that we would put additional investment into the
Northern line, and that we had a PFI contract with Alstom on the
fleet and that we would try to negotiate that contract so that
it actually delivered the objectives we were committed to achieve.
It was like pulling teeth, but I can proudly say today that we
have now renegotiated the Alstom contract as of today. It is useful
coming to meetings like this, but it is now concluded.
Q118 Chairman: I am glad we have
concentrated your mind, Mr Morgan!
Mr Morgan: It concentrated everybody's
mind that this was something which just could not be allowed to
continue. So that is now done. The acceleration of investment
means that on the Northern line, since the diabolical year that
we had when we first reported to you, this year it is 30% better
than it was in our first year and we are actually starting in
bonus on the Northern line for the first time. But I am not going
to get carried away. The Northern line is a huge challenge. It
is a very old facility. Yesterday, for example, we had a very
difficult day where a cable which was 50 years old failed on it,
and that is something that we are just going to have to keep working
at until we get all of our investment in place, which obviously
for me is a very important message. The investment needed on the
Underground has started. It is really important to keep that going.
Q119 Mrs Ellman: But your costs for
station refurbishment have been higher than the bids?
Mr Morgan: They have.
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