Examination of Witness (Questions 145-200)
MR CHRIS
BOLT CB
6 JANUARY 2010
Chairman: Good afternoon and welcome
to the Committee. Do members have any interests to declare?
Mr Martlew: Member of GMB and Unite trade
unions.
Graham Stringer: Member of Unite.
Q145 Chairman: Louise Ellman, member
of Unite. Would our witness identify himself please for our records?
Mr Bolt: I am Chris Bolt, the
PPP Arbiter.
Q146 Chairman: I think we would all
like to congratulate you, Mr Bolt, on your New Year's honour.
Mr Bolt: Thank you very much.
Q147 Chairman: When you spoke to
us in the past about the London Underground PPP you said that
you thought the PPP was essentially sound? Do you still hold that
view?
Mr Bolt: I think it is really
what is underlying that question. Do I think that private sector
involvement in delivering the renewal and upgrade of the Tube
is capable of delivering more efficiently than the public sector?
Yes, I remain of that view. I think some of the more recent benchmarking
information, some of which is reflected in the draft direction
I published before Christmas, continues to reflect that. Do I
think the PPP as a contract is sound? No, I think it has lots
of deficiencies.
Q148 Chairman: Deficiencies that
could have been anticipated?
Mr Bolt: I think some of them
yes. It is quite a complex legal document and one of the problems
I have experienced is actually trying to make sense of provisions
which in some cases are unclear; in other cases are actually mutually
contradictory. If I took one example of the problems which are
reflected in the draft directions I issued before Christmas, we
have two parallel regimes within the PPP contract: a process of
periodic and extraordinary review, where the Arbiter determines
the appropriate costs and revenue payments through the contract,
and separately a contractual claims mechanism. If those contractual
claims were dealing with small matters that would not be a problem
but, as is currently the case where there is over half a billion
pounds worth of outstanding claims against London Underground,
that creates difficulties in putting those two regimes together.
That would be one example where I think really from the beginning
that issue ought to have been identified and dealt with more effectively.
Q149 Chairman: Metronet failed spectacularly
at great cost to the taxpayer. Do you think the lessons have been
learned?
Mr Bolt: Some of them, yes. Clearly,
one of the big issues with Metronet was the corporate governance
structure, the relationship between the five shareholders as shareholders
and as contractors. Clearly Tube Lines has a different structure
to that one. For example, they have always competitively tendered
the major contracts. Have all the lessons in terms of monitoring
and fully assessing value for money as you go along been learned?
Possibly not. I think there are still some outstanding questions:
for example, picking up recommendations that this Committee has
made in the past about the visibility of performance information
and independent assessment of that information.
Q150 Chairman: And how do you think
that could be improved?
Mr Bolt: On that specific issue
for example it is accepted by London Underground that the Arbiter
has access to information for the BCV and SSL lines to use as
a benchmark for Tube Lines. In practice, in the work I have done,
those have not been useful benchmarks because international benchmarks
suggest that rather different levels of cost are achievable. I
have no ability to go in to look at the BCV and SSL costs and
do the equivalent of the periodic review and say London Underground
itself could be delivering more efficiently. That could happen
if they asked me to do it because I have the powers on request
but I do not have unilateral powers to go in and carry out that
sort of investigation.
Q151 Chairman: One of Metronet's
major failings was its tied supply chain. Do you feel that Tube
Lines is replicating that problem with its secondments from its
parent companies?
Mr Bolt: As a general point I
think no. As I said, Tube Lines has generally gone through competitive
tender for its major contracts. 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.
Q152 Chairman: The Mayor of London
told us that the PPP was not delivering value for money. Do you
agree with that judgment?
Mr Bolt: I think, to be honest,
in the way the point was put, no, because if the comparison is
delivery by London Underground there is certainly no evidence
that I have seen that London Underground is delivering through
the BCV and SSL more cost effectively than Tube Lines is. In fact
to the extent there is evidence it is rather to the contrary.
Q153 Chairman: There really is a
major difference between Transport for London and Tube Lines in
their cost estimates for the period 2010-17. Have you got any
proper explanation for why that is? Looking at the list we have
let me just take one example—depots—Tube Lines' submission,
£46 million, London Underground's, £17 million and the
Arbiter's assessment, nil. How can it be nil?
Mr Bolt: I think if you take an
item like that, the reason my number is nil is because the equivalent
costs are in other lines in the table, so it is probably more
helpful to take numbers at the more aggregate level for say the
line upgrades or for rolling stock to make sure they are fully
comparable. In very headline terms the reason Tube Line's costs
are higher than the ones I have considered appropriate fall into
two broad headings. One is unit costs. I believe they can deliver
at significantly lower unit costs than they were projecting for
the second review period. As I said, I have used international
benchmarking information and other things to reach that conclusion.
The other is on line upgrades particularly they are starting from
the actual position where the Jubilee Line is delayed and therefore
a lot of the work on the Northern Line falls into the second review
period. My assessment is that the notional infraco, which is the
standard I have to use for pricing, would have delivered or could
have delivered the Jubilee Line on time and that as a consequence
about three-quarters of the work on the Northern Line would be
completed in the first review period. That is shifting costs from
the second review period into the first period.
Q154 Chairman: Given the very wide
difference in cost do you think it is inevitable that the proposed
upgrades to the Piccadilly Line and the station upgrades are actually
going to be cut back?
Mr Bolt: I think that is entirely
a question for London Underground, TfL and the Mayor. What I have
said is that my assessment of the costs that will fall into the
second review period is higher than London Underground's figure
and that creates an affordability question. It is for LU and TfL
to decide whether it can meet that difference elsewhere within
the TfL budget or not and if it cannot then, yes, it will have
to look at the requirements to be funded in the second review
period. I have asked them precisely that question: can they afford
this figure and, if not, will they tell me how they propose to
modify the requirements?
Q155 Chairman: What would your best
guess be? Are we going to have a reduction in upgrades?
Mr Bolt: The public expenditure
environment clearly is extremely challenging. Given that the difference
on my numbers is over £400 million and if they then have
to meet the costs of some of the claims of Tube Lines on top of
that, there is clearly a very challenging position for London
Underground and TfL. As I say, it is for them to decide whether
they can find those resources elsewhere within their budget or
whether they want to scale back the requirements for the second
review period.
Q156 Chairman: You say "challenging".
May we interpret that as a big question mark?
Mr Bolt: There is a clear question
mark. Although there are questions about how that gap should be
financed, should it be through higher infrastructure service charges
paid by LU or by Tube Lines' borrowing, even if it was Tube Lines'
borrowing, that is LU using the private sector credit card, it
will have to be paid back, so over the life of the contracts there
is clearly an affordability question.
Q157 Graham Stringer: If I can take
you back to one of your answers to the Chairman, you said that
so far as you could tell Transport for London was less efficient
than Tube Lines. Do you have complete access to all the information
from both TfL and Tube Lines to be able to make that assessment
objectively and can you tell us how you have done it?
Mr Bolt: I think what I was trying
to say is I see no evidence that says the public sector is delivering
more cheaply and such evidence as there is points to Tube Lines
being more efficient.
Q158 Graham Stringer: Can you spell
out for us how you do this?
Mr Bolt: Essentially there are
two broad elements to this. One is to look at costs as they are
actually incurred. There is a joint benchmarking exercise which
takes costs or different aspects of performance reflecting the
sorts of asset breakdowns that are in my report and compares the
unit cost of maintaining a kilometre of track between each individual
line as well as for the infracos. That has been done for five
years now so there is five years' worth of data and the most recent
joint benchmarking exercise showed increases in unit costs within
BCV and SSL for track extensions particularly, some of which reflects
extra work being done but none of which shows the costs below
the Tube Lines level. So that is looking at the past. Looking
for the future, it goes back to the answer I gave the Chairman,
what I would like to be able to do is to understand properly the
basis on which the BCV and SSL projections for the next seven
and a half years have been produced to see whether the same efficiency
drive is reflected in those numbers that is clearly reflected
in my 4.4 billion number for Tube Lines.
Q159 Graham Stringer: Have you had
meetings with the Secretary of State or other Transport ministers
and asked for more powers?
Mr Bolt: I have had discussions
with officials in the Department. I think, as the Committee will
be aware from the responses from the Minister when you saw him
before Christmas, there is a clear recognition that giving the
Arbiter more powers would be one way forward but without LU in
a sense embracing that voluntarily it would require legislation.
The view they have taken—and it is clearly a matter for
ministers—is that legislation is not something they want
to pursue at the moment.
Q160 Graham Stringer: That is a very
helpful answer.
Mr Bolt: Is the DfT clear that
I think it would be useful for me to be doing that work? Yes.
Q161 Graham Stringer: That is a very
helpful answer but have you had meetings with ministers?
Mr Bolt: I have not discussed
that matter directly with ministers.
Q162 Graham Stringer: That is rather
surprising, is it not, because this is a huge wodge of public
money that appears to be going pear-shaped. I would expect you
to have been inside Andrew Adonis's office on a number of occasions.
Is this any particular reason you have not been there?
Mr Bolt: I think the honest reason
is that I have had very constructive discussions with officials
and I know that they have been reporting my views to ministers.
I think the basis of their decision reflected, as I say, the view
that legislation would not be appropriate at the current time
and the point the Minister was making when he appeared before
you about local accountability. I am sure ministers are well aware
of my position on that matter.
Q163 Graham Stringer: The Mayor of
London said he was not—and I have not got his quote in front
of me—prepared yet to read the last rites over Tube Lines.
Do you think Tube Lines is going to go to the wall?
Mr Bolt: It is a personal view;
no. Certainly if the Chief Executive was quoted accurately what
he was reported as saying in the Guardian yesterday that
this settlement was extremely challenging, it was a good deal
for the taxpayer but did not give much money for shareholders
(and in a sense that was precisely it was intended to do: to give
them the return that they are entitled to and to make them work
hard to achieve that). He certainly was not saying it is unachievable.
Q164 Graham Stringer: Are you going
to charge Tube Lines? Are there going to be any financial penalties
or any fines on Tube Lines for under-performance?
Mr Bolt: Under the terms of the
contract if they do not deliver the performance matrix for availability,
ambience and capability then, under the performance regime, payments
from London Underground are abated to reflect that under-performance.
They clearly are being abated at the moment for late delivery
of the Jubilee Line. Those are matters set out in the contract
not things that I oversee.
Q165 Graham Stringer: Not that you
control. So in effect they are going to be fined?
Mr Bolt: Yes.
Q166 Graham Stringer: I do not want
to put words in your mouth but that is almost bound to make them
less viable, is it not, and closer to going to the wall?
Mr Bolt: If you are paying financial
penalties of that sort on top of the extra costs which they have
incurred in delivering the Jubilee Line, yes, clearly those are
both costs which the shareholders will have to bear. Does it threaten
their viability? That is a matter for the company but that is
not the indication they have given so far.
Q167 Graham Stringer: Just a last
point, when Tube Lines were here, and it was in Dan Milmo's article
in the Guardian yesterday, they made a strong point that
what was affecting their performance quite severely was access
at weekends in particular but at other times in the Tube. They
were given very small periods in which to get the equipment down
to do the work. Firstly, do you think that is fair comment and,
secondly, is that not a fundamental failure in the system? Dan
Milmo's argument in the Guardian was there may well be
a political incentive with the Mayor of London to prove that the
PPP does not work and he can do it by stealth, if you like, by
not allowing them access. Do you think that is a fair comment?
Do you think that is going on?
Mr Bolt: It is not something that
I have been asked to look at. It is one of the reasons Tube Lines
has a claim against London Underground on the signalling upgrades
of over £300 million to include what they regard as additional
costs resulting from London Underground's behaviour. That is going
through adjudication and goes back to the point I was making earlier
about the claims mechanism, and the adjudicator is due to reach
a decision on that by early February. What I am saying in my report
is, based on the concept of a notional infraco that Tube Lines
could have managed the delivery of the Jubilee Line in a way which
delivered it on time and within the original contracted amounts
of access if it had gone about it in a different way. With hindsight,
the approach that London Underground has adopted or, to be honest,
it was the approach Metronet originally developed for the Victoria
Line, which was to develop the new signalling as an overlay system
so you could run trains with the new signalling system at the
same time as other trains on the existing system reduces the requirement
for access, compared with the approach that Tube Lines adopted
where everything has to be switched over to the new system and
switched back again at the end of a weekend's testing.
Q168 Graham Stringer: That is a really
interesting point but I would repeat the question which is I know
you have not been asked to do that but you have made general comments
about the structure of the PPP work. Do you think the Mayor/TfL's
control over access is a fundamental flaw in the system?
Mr Bolt: I understand for obvious
reasons why London Underground needs to have the final say on
that because you cannot have all the lines on the Underground
shut at the same time and LU clearly want to avoid clashes with
things on at Wembley or O2. That is why there is a process set
out in the contract for the infraco to give notice to London Underground
and that is the sort of thing where I think the contractual claims
mechanism is perfectly sensible if those mechanisms are not working.
When the cost consequences of that behaviour have got to the sorts
of levels which are in the contractual claims, it makes a nonsense
of the whole thing. I genuinely do not know and cannot say whether
LU has been exercising that process in the contract sensibly but
I think it is a fundamentally sensible process to have an access
allowance, which is what is there, and for a requirement for the
infraco to bid for specific closures on a basis which LU has to
approve but should not refuse unreasonably.
Q169 Chairman: How would you describe
the relationship between Tube Lines and London Underground?
Mr Bolt: I think it has been at
times extremely difficult. Again one of the points which Tube
Lines has expressed concern about is that they think that I have
done my work on the basis of what they call the notional client—the
perfectly behaving London Underground. I have not done that. I
have recognised that both the contract itself and the approach
that London Underground has adopted do cause some additional cost
and some delay. One of the reasons for example I have a much bigger
risk provision in my numbers than either Tube Lines or London
Underground is to reflect that, but I have not priced in the specific
things that are the subject of the claims.
Q170 Mr Wilshire: I want to go back
to the point Mr Stringer raised but get there via a general question
first, if I may. Do you consider that it in the interests of passengers
and the taxpayer that Tube Lines survives or is it in their interests
that it finishes?
Mr Bolt: My view very clearly
is that it is in the interests of taxpayers and users of the Tube
that Tube Lines does survive because the ability to compare performance
is a very powerful spur to improvement.
Q171 Mr Wilshire: Yes, I hoped you
would say that because we have a situation, if that is your view,
where the Guardian has been referred to and whether or
not the Guardian or any newspaper writing this sort of
thing is correct, the effect of writing that the Mayor and the
Mayor's Office would like to bring it to an end or to do this
or to do that, you in your submission to us giving a list of risks
and problems and other commentators routinely sucking through
their teeth and saying, "Oh dear me", are not those
sorts of things likely to make the end of Tube Lines more of a
possibility than less of a possibility, even if they are not accurately
said?
Mr Bolt: It is absolutely clear
that the financial markets, the lenders and investors in Tube
Lines are concerned about the long-term viability of the company.
I have had people like the European Investment Bank and some of
the rating agencies talking to me to understand the basis of the
draft directions for precisely that reason so, yes, there is concern
there. What really matters, going back to a previous question,
is whether Tube Lines can deliver for this cost, and that is a
matter for the company.
Q172 Mr Wilshire: You rather indicated
it was predictable that Tube Lines would not be wildly enthusiastic
about the decision you took a few weeks ago. Would you accept
that that decision in itself could potentially make matters worse,
whether or not the decision was right in the end, as being yet
another problem for them?
Mr Bolt: Clearly it creates a
problem. I emphasise it is a draft direction and both London Underground
and Tube Lines will be making further representations so it might
change but, yes, the whole structure of the PPP is that this is
a long-term contract with sub-periods within it. The pricing for
a seven and a half year period is designed to give the company
a clear framework within which to plan its work to deliver greater
efficiency but the flip side of that is every seven and a half
years there will be this sort of process which creates a significant
measure of uncertainty.
Q173 Mr Wilshire: You say you think
it is in most people's interests for Tube Lines to continue to
survive. You accept that your draft decision might have made life
more difficult. Have you had the opportunity and made it your
business to watch at all what the effect of that draft decision
has been vis-a"-vis the viability in the medium and longer
term?
Mr Bolt: It has clearly been a
concern for me but there is a very clear difference between the
framework set out in the PPP contract and for example that which
applies to a price regulated utility. Take Network Rail as an
example that you and I are familiar with, one of the duties on
the Regulator in the Railways Act is not to make it unduly difficult
for Network Rail to finance its activities; it is there as a statutory
duty. There is no such equivalent on the PPP. I am told to price
on the basis of the notional infraco, which is the company from
transfer operating in an efficient and economic manner in accordance
with good practice. If the actual infraco has not delivered to
that standard in the first review period, by definition, it is
going to have some catching up to do in the second period. Whether
that catching up is achievable or not is precisely the question
that Tube Lines is now deliberating about.
Q174 Mr Wilshire: I am not seeking
to criticise. I am trying to see with a little bit of hindsight
now available to you whether you have reached any sorts of conclusions
about what impact that draft decision of yours might have had
thus far?
Mr Bolt: Clearly it is forcing
Tube Lines to think very carefully about whether it is able to
deliver its future obligations on the basis of funding reflecting
those costs. The reason for emphasising that distinction between
the regimes is that the PPP contract could have said "price
on the basis of the notional infraco starting from the start of
the second review period". It did not. It is very clearly
saying any inefficiency in the first review period is down to
the company. You do not restart the clock. So that issue about
viability is inherent in the way the contract was established.
Q175 Mr Wilshire: Just one last question,
if I may, off the back of that. You are keen that Tube Lines survives.
You can see that what you have done in the draft decision may
harm them—I am not saying it will but it may—so in
order to help Tube Lines to continue, are there things that you
are entitled to do or could do to assist and to help or is that
way beyond you?
Mr Bolt: In shading things up
to reflect their actual position rather than the notional infraco,
I would be having London Underground, rightly, saying I had not
done the job as defined in the contract. The short answer to your
question is no there is nothing under the terms of the contract
I can do to take account of those sorts of factors.
Q176 Mr Wilshire: Not necessarily
take account in changing your mind or taking decisions, I am just
interested in what you see from your independent position and
being able to make comparisons, as you said, was a valuable reason
why you should have Tube Lines, whether you can then go to Tube
Lines and say, "This is what I have seen. These are the things
I really do think would help you," and to volunteer that
rather than wait to be asked?
Mr Bolt: Maybe I misunderstood
your question.
Q177 Mr Wilshire: It is as much my
fault as yours.
Mr Bolt: One of the things that
I have been keen to do is not simply to use international benchmarking
as a device for setting costs but to promote understanding about
what it is that metros in Madrid or Paris or some of the others
we have looked at in detail do that is different so that Tube
Lines can learn and London Underground can learn, because it is
absolutely clear that in a number of areas, not just the Underground
because it applies to the national rail network, costs in the
UK are higher than in comparable activities in other European
countries. We need to understand why to help drive further efficiencies,
so, yes, I do see it as part of my role not simply to hand this
to Tube Lines and say get on with it but to help them understand
what it is that some of the benchmarks I have used are doing differently.
Q178 Mr Martlew: Mr Bolt, you say
things very reasonably, but having listened to some of the things
you have said they are quite startling. At one point you indicated
that you fined—my word "fined"—or charged
London Underground for being unreasonable. Is that the case?
Mr Bolt: The nature of the PPP
contract involves a lot of interfaces between London Underground
as client and Tube Lines, and I think on previous occasions when
this Committee has looked at the PPP, examples have been raised
about the number of signatures that were originally required to
sign off a station project and things like that, and it was included
in the NAO's report which the Public Accounts Committee looked
at recently. Yes, this sort of relationship involves costs. There
have been some areas. I have had to exercise judgments in interpreting
benchmarks and in two areas—admin costs and risk—I
have shaded that upwards because of my view that that relationship
does add to costs and that even the most efficient company would
incur those sorts of costs.
Q179 Mr Martlew: I am not totally
sure what you said there, Mr Bolt. The question I am asking you
is you have looked at it and you have increased the amount of
money due to Tube Lines because you accept that in certain instances
London Underground has been unreasonable. Is that correct?
Mr Bolt: Where I have exercised
judgments in some areas I have shaded the judgment up. Can I point
to a precise number in here? No. It is in the overall judgments
and weighing the balance of arguments between the two parties.
Q180 Chairman: Do you consider you
have access to enough information to make those judgments?
Mr Bolt: To be honest, I do not
think that is the sort of decision which is one that you can say
the cost of London Underground's behaviour is X. It is a judgment
about what you would expect and whether in all cases London Underground
has acted as constructively as it can. Within the contracts there
is this description of a partnership and it is absolutely clear
that that concept of partnership has not always operated.
Q181 Mr Martlew: In some ways you
think instead of an arbiter they need a marriage guidance counsellor?
At one point you said that the Bechtel model did not appear to
be right for this. Could you develop that point?
Mr Bolt: The point I was making
quite simply was a signalling project is essentially software
and the way you manage software projects is very different from
the way you manage a civils projects. Bechtel have a good reputation
on managing civils projects. When I appeared in front of this
Committee wearing another hat we have talked about the failings
that Network Rail had on signalling projects. It is one of these
areas where it seems the UK is not very good yet.
Q182 Mr Martlew: You made the point
and the present Rail Regulator is making the point that the cost
of doing work on rail is probably 25% greater in the UK than it
is in comparative countries and that goes for the Tube as well,
but can I take it that what you are saying is that none of them,
be it Tube Lines or London Underground, are as efficient as they
should be but that Tube Lines are more efficient than London Underground?
If that is the case, how do you explain the Mayor denying that
when he came before us?
Mr Bolt: I cannot explain what
led the Mayor to say what he said.
Q183 Mr Martlew: What you are saying
is there is no evidence to back up his view?
Mr Bolt: No, not that I have seen.
One point he was making could be a very different point which
is that London Underground undoubtedly has managed to drive costs
out of the former Metronet infracos but so it should have done
because that was starting from a woefully inefficient position.
Q184 Mr Martlew: A final point, and
it is a question Mr Stringer asked, is that you are saying there
would be a cost to Tube Lines for the delay in completing the
Jubilee Line and that would amount to a fine. Have you got any
idea about what sort of figure that would be?
Mr Bolt: From memory it is of
the order of £10 million a month.
Q185 Mr Martlew: So it is a lot of
money?
Mr Bolt: It is a significant sum
of money, yes.
Q186 Mr Martlew: How long do you
think it is going to be overrunning?
Mr Bolt: I believe Tube Line's
current estimate is they will deliver the full contractual capability
by October so ten months late.
Q187 Mr Martlew: So you are talking
about a £100 million fine?
Mr Bolt: Against that they have
claimed £300 million from London Underground which includes
in a sense their view that the primary cause of that delay is
London Underground itself.
Q188 Mr Martlew: That is to be decided?
Mr Bolt: That is the matter which
the adjudicator is currently considering.
Q189 Mr Martlew: Finally again, going
back to the issue of when you were the Rail Regulator, have you
ever been in a situation where you have had two so-called partners
who have been at loggerheads as much as these two organisations
are?
Mr Bolt: I think it is fair to
say that relationships between train operators and Network Rail
were not always straightforward and the Rail Regulator felt like
a marriage guidance counsellor on occasions.
Q190 Mr Martlew: But I am asking
is this worse than that?
Mr Bolt: It is worse in the sense
that quite often on the national rail network, if you take the
West Coast, Virgin had a particular view but the freight operators
or London Midland or Cross Country might have had a different
view, and it was the job of the Regulator to balance competing
views and make sure Network Rail was delivering efficiently. In
this case you have just got two so you probably get more extremes
in the views coming out.
Q191 Mr Martlew: Do you suspect there
could be politics involved in this as well?
Mr Bolt: I do not get involved
with politics.
Mr Martlew: I am sure you do not but
I thought I would ask you anyway.
Q192 Chairman: A diplomatic answer
but we might decide to pursue this further. You referred earlier
to this Committee's earlier representations that you should have
increased powers. Which powers do you think it is most important
to increase to let you do your job more efficiently?
Mr Bolt: You recommended in your
previous report that I should have the power unilaterally to carry
out the equivalent of the annual Metronet report without being
asked to do it, and for Tube Lines as well as Metronet. I think
the ability and in a sense the duty to report for the benefit
of taxpayers and users of the Underground on all three infracos—BCV
and SSL within London Underground ownership, and Tube Lines in
private sector ownership—and to do that independently would
be valuable.
Q193 Chairman: Have you been given
any indication that there might be any change in that area?
Mr Bolt: As I say, that could
be done within the existing statutory framework if London Underground
were prepared to make a reference to me. I have received absolutely
no indication that they are minded to do that and indeed the answer
Mr Parry gave to one of your questions in December suggests that
that remains their position.
Q194 Chairman: Why do you think they
are so opposed to that?
Mr Bolt: He expressed his position
there. I think there is clearly a governance structure within
TfL and if the Mayor believes that is delivering the same rigour
and transparency as me looking at it then that is his view, but
it seems to me that the ability to do the comparison on an equal
basis between all three infracos would be extremely valuable and
only I could do that because clearly the Mayor is not in a position,
nor is the independent advisory group he is setting up, to look
at what is going on within the Tube Lines contract.
Q195 Chairman: Do you get enough
information from London Underground about its performance?
Mr Bolt: I get information. I
get the information I ask for so it is not their willingness to
provide it. It is sometimes the understanding of that information.
I referred earlier to the asset management plans, the projections
for BCV[1]
and SSL[2]
for the next seven and a half years and I am able to ask the independent
reporters that I appoint to look at the basis of those plans and
will do so in the new year and their report will be published,
but that is not the same as carrying out, for example, a periodic
review of the BCV and SSL costs for the next seven and a half
years.
Q196 Chairman: Do you think you should
have powers to monitor the performance of all parties?
Mr Bolt: Of all the infracos?
Q197 Chairman: Yes?
Mr Bolt: Yes, and that goes back
to the answer I gave earlier. In doing that analysis on a comparable
basis for the three infracos and within the infraco comparing
different lines is a source of learning—the joint benchmarking
I referred to earlier. It is true that both Tube Lines and London
Underground have learned from those comparisons—why is it
for example on track work that the Piccadilly Line has very much
lower unit costs than any other line? They have learned from that.
That is one thing. It is just that the knowledge that you are
subject to scrutiny keeps you on your toes.
Q198 Chairman: You said earlier that
the UK was not very good at delivering infrastructure developments
economically. Why do you think that is?
Mr Bolt: A variety of factors
I think. I would emphasise the point, you certainly observe differences
in wage rates between London and other cities, and I am not suggesting
that London overnight can become a low-wage economy. What I am
saying is the way that projects are planned in other areas is
different. There are clear lessons for Tube Lines as it moves
from the Jubilee Line to the Northern Line to the Piccadilly Line.
Quite often—and the Madrid experience has been particularly
relevant here—that can be done with relatively few closures
if you plan the project properly. Standards are different. They
tend to be more reliant on risk-based approaches to maintenance
rather than a frequency basis. There is a whole raft of things
like that all of which add up to a significant difference in costs.
Q199 Chairman: Do you think we are
learning any of those lessons?
Mr Bolt: I think we are learning.
It is all about the pace of learning.
Q200 Chairman: Is the pace fast enough?
Mr Bolt: Personally I think the
pace is not fast enough, which is one of the reasons Network Rail
finished up with more challenging efficiency targets than it started
off with proposing and why the numbers for Tube Lines also involve
lower costs than they proposed.
Chairman: Thank you very much.
1 Bakerloo, Central and Victoria lines Back
2
Sub-surface line Back
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