2 The performance of Tube Lines and
the London Underground
11. Following Metronet's demise, responsibility for
improvement and maintenance work on the Underground is as follows:
Table 1: Responsibility
for improvements to the Underground network, March 2010
Tube Lines
| TfL (formerly Metronet BCV)
| TfL (formerly Metronet SSL)
|
Jubilee | Bakerloo
| Circle |
Northern | Central
| District |
Piccadilly | Victoria
| Hammersmith & City
|
| Waterloo & City
| Metropolitan |
Source: Department for Transport
Tube Lines (in collaboration with its parent companies
Bechtel, and Amey, a subsidiary of Ferrovial) has been responsible
for the upgrade and maintenance of the Jubilee, Northern and Piccadilly
lines since 2002. The two former Metronet companies were transferred
to TfL ownership in May 2008. London Underground, a subsidiary
of TfL, is currently responsible for the day-to-day running and
upkeep of the lines previously managed by Metronet on behalf of
TfL.
12. The day-to-day performance of Tube Lines, and
now London Underground, is judged on three outcomes: availability
(assessed in lost customer hours, weighted according to the type
of service disruption), the ambience of the network (the quality
of the passenger experience) and the speed and quality of fault
rectification.[14]
13. As we have noted in previous Reports, the ambience
of travelling on the Tube has improved under the PPP. During this
inquiry, Tube Lines told us that, since 2002, it has completed
the upgrade and refurbishment of 72 of the 96 stations along the
Jubilee, Northern and Piccadilly lines. In addition, improvement
work was in progress on 13 stations, with work on the remaining
11 due to begin shortly. Tube Lines has also completed 76 lift
and escalator refurbishments across the three lines.[15]
14. The improvements made to station infrastructures
are welcome. However, as we noted in our 2005 report:
ambience is the easiest of the three performance
measures to improve, and although it is important to customers,
it is less important than a speedy, reliable service.[16]
Tube passengers are most concerned about whether
trains are available and reliable and it is against this measure
that the performance of Tube Lines, and now London Underground,
is judged.
Tube Lines
15. The Department for Transport (DfT) measures reliability
against "the availability indicator". The measure records
"Lost Customer Hours", resulting from delays and service
interruptions, against a benchmark figure set out in the PPP agreements.
The performance of Tube Lines between 2003 and 2009 is shown in
Table 2 below. Table
2: Lost customer hours against benchmark on the lines managed
by Tube Lines
| 2003-04
| 2004-05
| 2005-06
| 2006-07
| 2007-08
| 2008-09
|
Jubilee
| 33% worse |
1% better | 8% better
| 20% better |
0% | 9% worse
|
Northern
| 32% worse |
95% worse | 62% worse
| 23% worse |
25% worse | 31% better
|
Piccadilly
| 8% better |
52% better | 63% better
| 51% better |
49% better | 54% better
|
Source: London Underground PPP & Performance
Report 2008-09[17]
16. In every year since 2003-04, Tube Lines has performed
consistently better than its benchmark target on the Piccadilly
line. On the Northern line, the infraco's performance has bettered
the benchmark only once, in 2008-09. This is because Tube Lines
took over the Northern line when its infrastructure was in a particularly
parlous state. Having completed a number of track and infrastructure
improvements, Dean Finch, the former Chief Executive of Tube Lines,
told us that the Northern line was now "one of the best performing
metro lines [...] anywhere in the world".[18]
Taken together, the performance of Tube Lines on the two lines,
compares favourably with the record of Metroneta point
recognised by TfL which noted that Tube Lines had "showed
more consistency in day-to- day maintenance performance".[19]
THE JUBILEE LINE UPGRADE
17. Tube Lines' recent performance on the Jubilee
line, has been less satisfactory.[20]
Until 2008-2009, the performance on the line was deemed satisfactory,
but since then, it has been judged to fall short of the "acceptable
level" of performance. The cause of Tube Lines' underperformance
on the Jubilee line over the past 18 months is the overrun of
the upgrade to the signalling system which has resulted in serious
disruption to passengers. The upgrade to the line, when completed,
will provide a third more capacity. It was scheduled to have been
completed by 31 December 2009, but will now not be finished before
October 2010.
18. To enable the work to take place, Tube Lines
initially asked London Underground for permission to close the
line wholly or partially for up to 52 weekend days. However, the
line was eventually closed either wholly or partially for 120
weekend days from April 2007 through December 2009. As the deadline
for completion of the project approached, the line closed with
greater frequency, sometimes with little noticebetween
September and November 2009, there was a full or partial closure
of the Jubilee line on one or both days of every weekend.[21]
Over the Christmas holidays in 2009, the line was closed for four
days, causing disruption at a particularly busy time of the year.
19. The disruption caused to the lives of residents
and commuters who rely on the Jubilee line for work or leisure
has been considerable. Tim Bellenger, Director of Research and
Development, London TravelWatch, told us about the experience
of a member of the public who relied on the Jubilee line to move
around London:
She cannot plan her life properly now because she
does not know whether or not the Jubilee line is going to be available,
whether she is going to have to use a replacement bus for all
or part of her journey. Essentially she is more dissatisfied now,
because she does not know what is going to happen on the weekend.[22]
20. In addition to providing a vital link for commuters,
the Jubilee line serves the entertainment venues of Wembley Stadium
in North West London and the O2 Arena in South East London, and
the ExCel exhibition centre in East London. In December 2009,
The London Assembly Transport Committee reported the impact that
the Jubilee line weekend closures had on those venues and their
customers:
ExCel estimated that over one million visitors have
been affected by disruption to public transport over the last
two years and that it has lost 25% of its turnover due to the
closures. It had paid some £500,000 a year in compensation
to clients and measures to reduce the impact on visitors. The
O2 had paid £400,000 in the last year for additional replacement
transport for its customers when the Jubilee line was closed.[23]
21. Dean Finch, the then Chief Executive of Tube
Lines, acknowledged that Tube Lines had underestimated the complexity
and scale of the project on the Jubilee line and that this had
contributed to the project running severely late. To his credit,
Dean Finch apologised for the disruption to services on the Jubilee
line and for the inconvenience experienced by passengers.[24]
However, he also acknowledged that the disruption would continue
until October 2010 and that Tube Lines had requested further line
closures over the Easter holidays. As a consequence of its failure
to meet the deadline, Tube Lines will be fined £10 million
per month from January 2010 until completion of the works.[25]
22. We are concerned
that, despite over 100 weekend closures of the Jubilee line, including
complete closures of the line during seasonal holidays, Tube Lines
has failed to complete the upgrade on time. The ongoing disruption
caused to people who rely on the Jubilee line to go about their
daily lives, and the cost to businesses, is unacceptable.
23. We welcome
Tube Lines' apology and recognise that, in accordance with its
PPP agreement, the company has been fined for its poor performance.
However, that alone is not enough. Tube Lines must learn the lessons
from its poor performance on the Jubilee line upgrade so that,
in any future upgrades it undertakes, missed deadlines and disruptions
for passengers are minimised. We call on Tube Lines to publish
its plans for avoiding similar overruns to its projects in the
future.
Changes to the scope of the project
24. Tube Lines placed much of the blame for the overrun
of the signalling upgrade on LU. Both Tube Lines and TfL acknowledged
that the upgrade is a complex project involving the introduction
of signalling technology that has not been implemented in any
other metro system in the world.[26]
According to Tube Lines, LU had, on a number of occasions, changed
its requirements for the project quite significantly beyond the
scope of the original agreement. It claimed that these changes
had added significant costs and delayed the project further. The
task was, according to Tube Lines, made harder because London
Underground had:
Constantly sought to depart from the contractual
structure established under the PPP Agreement [
] by repeatedly
seeking changes to the scope and/or manner in which works are
carried out.[27]
Tube Lines claimed that LU's behaviour had resulted
in the project costing the company an additional £327million
beyond the agreed price for the work. In an attempt to reclaim
these costs and, in the face of opposition from TfL, Tube Lines
appealed to the PPP Adjudicator, Alex Charlton QC.[28]
However, on 22 January 2010, the PPP Adjudicator ruled that:
Tube Lines case is dismissed in its entirety [
]
LU has not breached the PPP Contract as alleged [by Tube Lines]
and is not liable for the amounts claimed (or any amount) in respect
of the alleged breaches.[29]
Track access
25. Any requests by Tube Lines for line closures
over and above those set out in its PPP agreement have to be agreed
by LU. There is only recourse of appeal to an independent bodythe
PPP Arbiterif both parties agree to a referral. Dean Finch,
the then Chief Executive of Tube Lines, argued that LU had contributed
to the delay to the Jubilee line project by not granting his company
sufficient track access to move heavy machinery into place and
to turn off the power to the system:
London Underground is quite right in saying that
it has granted a substantial volume of closures to Tube Lines.
However, the important point is: has it granted those closures
in the pattern, both in terms of duration and geography, that
Tube Lines requested? In terms of the match request, they have
only matched Tube Lines' request to the extent of something just
over 50%. The consequence of that is that Tube Lines has needed
more access. If Tube Lines has requested a 52 hour closure and
is granted two 27 hour closures, they do not amount to 52 hours
of work because you have to power down and power up the railway.[30]
26. Tube Lines commissioned a review of its work
on the Jubilee line from Phil Gaffney Consulting Ltd which concluded
that Tube Lines and TfL were both to blame for delays. According
to the report, Tube Lines had "significantly underestimated"
the scope and complexity of the project and its management was
slow to respond to problems when they occurred. On the other hand,
the report concluded that TfL had allowed only a "limited
amount of track access" to carry out the upgrade and that,
while it had agreed to closures on 52 occasions, it was either
for less time than requested or for a shorter section of the line,
meaning Tube Lines could not make as much progress as it had planned.[31]
27. TfL responded that, rather than hampering the
work of Tube Lines, it had tried to meet all "reasonable"
requests for line closures. Its prime concern had been to restrict
disruption to passengers as much as possible in the face of Tube
Lines' requests for ever more closures. TfL told us they had faced
repeated requests for additional closures: "we were assured
that granting a further 12, then a further six, closures was all
that was needed".[32]
28. The terms
of the PPP agreement give TfL power to allow or to refuse requests
for line closures over and above those stated in the agreement.
There is clearly an inherent conflict between Tube Lines' need
to gain adequate access to the track and signalling system so
that it can finish its work on time and TfL's wish to minimise
disruption to passengers. While there is insufficient evidence
to conclude that TfL has behaved unreasonably in this instance,
there is some evidence that it could have responded to Tube Lines'
requests for whole closures of the line more readily. We recommend
that to avoid such squabbles in the future, the neutral PPP Arbiter
should be responsible for making decisions on requests for additional
line closures. The Department should make the necessary amendments
to the PPP agreement to put this change into effect.
The use of secondments
29. We have noted previously that a prime cause of
Metronet's demise was its tied supply chain whereby Metronet intended
to award some 60% of its projected capital projects in the first
seven and a half year period to its parent companies. In our 2008
Report, we concluded that:
The fact that such a management structure was judged
to be capable of efficient and economic delivery seems extraordinary
now that Metronet has collapsed but the ultimate recipients of
the money which was paid to the company have walked away with
limited losses. The Government must not allow this blurring between
the roles of shareholder and supplier in future bids to carry
out work by the private sector.[33]
30. Some witnesses argued that Tube Lines was in
danger of replicating Metronet's tied supply chain through its
use of seconding work to its parent companies. However, Tube Lines
told us that it seconded companies to carry out work on its behalf
only after a competitive tendering exercise. The company argued
that, unlike Metronet, it had not experienced any of the inherent
conflicts of interests associated with operating a tied supply
chain.
31. The PPP Arbiter accepted that Tube Lines' use
of secondments had generally avoided the problems experienced
by Metronet. However, the Arbiter argued that in relation to the
signalling upgrade:
I think there is an issue, and maybe this is part
of the experience with the Jubilee line, that a signalling project
is actually an IT software project rather than a civil engineering
one. I think there are questions about whether reliance on the
Bechtel secondment arrangements in that case has enabled Tube
Lines to manage that project as effectively as it might have done.[34]
32. We
remain convinced that Metronet's tied supply chain was a major
cause of its demise. Although we note similarities between Tube
Lines' practice of seconding work to its parent companies, we
also note that, unlike Metronet, Tube Lines awards contracts only
after a process of competitive tendering. We are concerned, however,
that there may be a temptation for Tube Lines to award projects
to its parent companies for which they do not possess the required
expertise. Such practices may have contributed to delays on the
upgrade.
London Underground
33. It is widely accepted that LU inherited from
Metronet some of the worst performing lines on the network. Starting
from a low base, in the one full reporting year since then (2008-09),
the company's performance on lost customer hours has been better
than the benchmark target on all lines apart from the Waterloo
and City line, which is a remarkable 219 % below the benchmark.Table
3: Lost customer hours against benchmark on the lines formerly
managed by Metronet, now managed by London Underground
| 2003-04
Metronet
| 2004-05
Metronet
| 2005-06
Metronet
| 2006-07
Metronet
| 2007-08
Metronet
| 2008-09
LU
|
Metropolitan, Circle, Hammersmith & City
| 21% better |
50% better | 39% better
| 37% better |
44% better | 48% better
|
District
| 43% better |
35% better | 16% better
| 19% worse |
53% worse | 14% better
|
East London
| 4% better |
2% better | 34% better
| 29% better |
20% better | Line closed
|
Bakerloo
| 15% better |
34% better | 13% better
| 10.7% worse
| 3% better |
34% better |
Central
| 16% worse
| 2% better |
14% better | 24% better
| 33% worse |
33% better |
Victoria
| 16% worse |
9% worse | 11% worse
| 26.7% worse
| 40% worse |
23% better |
Waterloo & City
| 58% worse |
12% worse | 66% worse
| 29.2% worse
| 66% worse |
219% worse |
Source: London Underground PPP & Performance
Report 2008-09.
34. Richard Parry, Interim Chief Executive at London
Underground, told us that LU's first aim had been to eliminate
Metronet's inefficient practices. As a consequence, a number of
central support functions across LU were removed and duplications
eliminated with the loss of around 1,000 jobs. In addition, LU
had renegotiated Metronet's key contracts and taken measures that
it estimated would "save Londoners and taxpayers an estimated
£2.5bn, now and in future".[35]
35. LU also maintained that, since 2008, it had carried
out work on the former Metronet lines very efficiently. This claim
was disputed by Tube Lines which further argued that it compared
very favourably to LU in terms of value for money. The Tube Lines
Chief Executive told us that Tube Lines' delivered improvements
to its three lines, at a cost approximately one-third cheaper
than similar work carried out by LU on its lines.[36]
36. Making comparisons on costs under the PPP is
difficult. We have previously noted that the lack of comparable
performance data is a significant failing of the PPP, a point
also emphasised by the PPP Arbiter, Chris Bolt. The Arbiter went
on to say that although he would value more information with which
to make a direct comparison, the available information suggests
that Tube Lines' maintenance costs are lower on average than those
of LU.[37]
37. We were pleased to hear from the Arbiter that
better information about both costs and the quality of the work
undertaken by Tube Lines and LU is forthcoming. Chris Bolt told
us that:
It is currently difficult to make a full assessment
of the upgrade projects, given that most are still under way,
and because of changes in reporting arrangements for Metronet
following administration. The Arbiter is working with London Underground
to develop information that would permit him to monitor the Metronet
upgrades and use data gathered in this way as a benchmark for
Tube Lines.[38]
38. It
is clear that London Underground inherited from Metronet a number
of lines that were under performing. Early indications are that
London Underground has succeeded in cutting costs and improving
performance on the lines it inherited. That is welcome.
39. We are,
however, concerned by indications that London Underground's work
is up to one third more expensive than similar work undertaken
by Tube Lines. It is important that reliable data about costs
and the quality of work undertaken on all Underground lines is
collated. We therefore welcome the Arbiter's work with London
Underground on developing information that will enable him to
set performance benchmarks for the former Metronet lines. We look
forward to these benchmarks being made public as soon as practicable.
RELATIONS BETWEEN TUBE LINES AND
TFL
40. For the remaining PPP agreement to function effectively
there must be good working relations between TfL and Tube Lines.
Unfortunately, due to the disagreements over the Jubilee line
upgrade, including a series of claims and counter-claims made
by the two parties in public, relations between TfL and Tube Lines
have deteriorated. The Mayor, Boris Johnson, told us about an
acrimonious exchange he had in September 2009 with Riley Bechtel,
one of Tube Lines' parent companies.[39]
The Mayor has also written a number of letters to Tube Lines that
are highly critical of its performance and which subsequently
appeared in the press. Tube Lines described TfL as having adopted
an "unco-operative approach" to Tube Lines since the
PPP started in 2003.[40]
41. The lack of co-operation between the parties
has had a detrimental effect on the programme to renovate the
underground network and on the experience of passengers. The PPP
Arbiter argued that "Tube Lines, operating in effective partnership
with London Underground, could have delivered the Jubilee line
upgrade on time and to budget, and could now be progressing well
with the Northern line upgrade".[41]
Laying blame on both sides, the Arbiter described how "it
is absolutely clear that that concept of partnership has not always
operated.[42] The relationship
between the two organisations was the poorest he had come across
both in his current role and during his time as Chairman of the
Office of Rail Regulation.[43]
42. We are deeply
concerned at the increasingly antagonistic relationship, stoked
by the Mayor, between TfL and London Underground on one side,
and Tube Lines on the other. Relations between the parties have
deteriorated further over the past year. They are the poorest
that the PPP Arbiter has ever witnessed and both TfL and Tube
Lines must bear responsibility for this sorry state of affairs.
The PPP Agreement between Tube Lines and TfL will only succeed
if all parties work in co-operation and in a spirit of goodwill
on all sides.
14 See www.tfl.gov.uk/pppreport for monthly performance
figures. Back
15
Ev 35 Back
16
Transport Committee, Sixth Report of Session 2004-05, The Performance
of the London Underground, HC 94 Back
17
See www.tfl.gov.uk/corporate/modesoftransport/londonunderground/management/1582.aspx. Back
18
Q 50 Back
19
Ev 46 Back
20
The Jubilee line runs from Stanmore in North West London to Stratford
in East London. Back
21
London Assembly Transport Committee, Too close for comfort,
Passengers' experiences of the London Underground, December
2009 Back
22
Q 86 Back
23
London Assembly Transport Committee, Too close for comfort,
Passengers' experiences of the London Underground, December
2009 Back
24
Q 35 Back
25
Q 184 Back
26
Ev 35 Back
27
Ev 43 Back
28
Under the 1999 Act, if TfL and the infraco are unable to agree
on a dispute then upon the request of the party who referred the
dispute or difference to adjudication, a person is chosen by London
Court of International Arbitration to act as adjudicator. Back
29
www.Tfl.gov.uk Back
30
Q 48 Back
31
Phil Gaffney Consulting Ltd, Review of status of Jubilee Line
Upgrade, October 2009. Back
32
Ev 49 Back
33
Transport Committee, Second Report of Session 2007-08, The
London Underground and the Public-Private Partnership Agreements,
HC 45, para 18 Back
34
Q 151 Back
35
Ev 46 Back
36
Q 47 Back
37
Q 158 Back
38
Ev 28 Back
39
Q 25 Back
40
Ev 35 Back
41
www.ppparbiter.org.uk/ Back
42
Q 181 Back
43
Q 189 Back
|