Conclusions and recommendations
Introduction
1. As
we stated two years ago, the failure of Metronet demonstrates
the flawed nature of the PPP agreements which placed an unacceptable
burden of risk on the taxpayer. Metronet's demise, which cost
the taxpayer at least £170 million, has cast a long shadow
of doubt over the remaining PPP agreement with Tube Lines. (Paragraph
10)
The performance of Tube Lines and the London Underground
2. 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. (Paragraph 22)
3. 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. (Paragraph 23)
4. 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. (Paragraph
28)
5. 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.
(Paragraph 32)
6. 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. (Paragraph 38)
7. 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 (Paragraph
39)
8. 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. (Paragraph
42)
The role of the PPP Arbiter
9. As
we said two years ago, the Arbiter should be able to carry out
an annual review of all PPP contracts including those transferred
to London Underground. This would help companies address performance
problems and prepare for periodic reviews. We are disappointed
that the Government has not implemented our recommendation to
bring greater transparency and accountability to all of the work
being carried out on the Underground network. We call on the Government
to reconsider its stance. (Paragraph 46)
Conclusion
10. We
reiterate once again our judgement that the PPP scheme is flawed.
Some 20 months following the demise of Metronet, the Government
is no nearer to being able to demonstrate that the PPP provides
value for money for the taxpayer. The performance of Tube Lines
has, in some cases, been exemplary. However, the sorry tale of
the upgrade to the Jubilee line has marred its overall record
badly. In the light of this project which, on current estimates,
will be delivered 10 months late, the PPP has so far failed to
prove that it is capable of delivering consistent value for money.
(Paragraph 56)
11. On the other hand,
there is not sufficient evidence available to demonstrate whether
London Underground is providing value for money in its work on
the former Metronet lines. We reiterate our previous recommendations
that the Government should prioritise transparency and accountability
to taxpayers and passengers by extending the PPP Arbiter's powers
for the collection of data across the entire underground network—LU
managed lines as well as those managed by Tube Lines. (Paragraph
57)
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