Update on the London Underground and the public - private partnership (PPP) agreements (HC 100-i) Transport Committee 9 Dec 2009

Q8 Mr. Eric Martlew (Carlisle): Is it not a fact that Tube Lines are doing the work 30% cheaper than London Underground? I think there was a freedom of information request from The Guardian that says that. Is that not correct?

Mr Johnson: No, it is not.

Q9 Mr. Eric Martlew (Carlisle): Mr Parry, what is your view?

Mr Parry: We do not think that is correct.

Q10 Mr. Eric Martlew (Carlisle): Can I be less specific then and take the 30% out? Is it not correct that Tube Lines are doing the work cheaper than London Underground?

Mr Parry: There are exercises under way to benchmark the work that Tube Lines and London Underground undertake to maintain the railway and upgrade the railway.

Q11 Mr. Eric Martlew (Carlisle): Let us just talk about Tube Lines.

Mr Parry: When you examine those costs, there are various different ways of comparing costs. You have very different railways. You have very different arrangements that apply. There are some legacy arrangements and when you look at that you can find different ways of cutting that, some that will show you Tube Lines is cheaper, some that will show that London Underground is cheaper and some that will show that they are broadly the same. The key thing that we have tried to work with Tube Lines and the arbiter on is to understand how there is scope for improvement and for delivering greater economic efficiency in the way that we manage the Underground. It is not true that there is a simple comparison that just says they are 30% cheaper.

Q12 Mr. Eric Martlew (Carlisle): Therefore it is not true for the Mayor to say, "No, they are not" either, is it, by definition, which he has just said. You have the Jubilee Line which is a signalling issue. I think I was reading something in the paper about the number of weekends that it needs to be off operation recently. I think it was about 28, if I recall. How much of that will be for driver training on the Jubilee Line? It is a new signalling system. I understand you have not negotiated with the trade unions about this at all yet. Is that the case?

Mr Parry: No, that is not true.

Q13 Mr. Eric Martlew (Carlisle): How much of it will be for driver training?

Mr Parry: Any major project of this sort delivering new signalling includes within its programme a last stage which is about bringing the railway into operational readiness for use in revenue service. That has always been the case for the Jubilee Line upgrade, as it has been for every other upgrade. That will require a short amount of access at the back end of this plan. We are still discussing with Tube Lines the full scope of the additional closure that they need in 2010, having used significant access as we all know through 2009 and the years prior. We expect that Tube Lines will use of the order of 28 closures, as I said earlier this week. The exact detail of that is being worked out. They will not all be full line closures. They will not all be full weekends, but there will be some closure activity most weekends through first six to eight months of 2010. At the very back end of that, some of that time will be used with our drivers using the system prior to going into revenue service. It is a very, very small proportion of the overall volume of access that will be needed.

Q14 Mr. Eric Martlew (Carlisle): That is something we can take up with ASLEF when they come before us later. The Jubilee Line is being upgraded by Tube Lines. The Victoria Line is being upgraded by yourselves. When is that likely to be completed? Is there going to be any overrun on costs?

Mr Parry: On the Victoria Line, it was a former Metronet project to deliver. Their contract date was 2013. They always had a target date that was ahead of that. Since the collapse of Metronet and us picking up that work with Bombardier and Invensys as the contractors, we have sustained the programme. We are delivering the programme as expected. We are seeing the first new train running in passenger service on the line today. The new signalling system is also in place and is working when we are testing that system. That will run and we expect to deliver on schedule by something like the early part of 2012, which will actually be about a year ahead of the original date that Metronet were working to.

Q15 Mr. Eric Martlew (Carlisle): And the costs?

Mr Parry: We are confident that the costs are within the budget we are working to. A lot of the contractual arrangements were inherited from Metronet, but we have picked up those contracts and we are delivering that project on time and on budget as we stand today.

Mr Parry: We are confident that the costs are within the budget we are working to. A lot of the contractual arrangements were inherited from Metronet, but we have picked up those contracts and we are delivering that project on time and on budget as we stand today.

Q16 Chairman: And the Jubilee Line?

Mr Johnson: The Jubilee Line is being upgraded by Tube Lines, as Mr Martlew correctly indicated. That frankly is not going well. Mr Martlew referred to the number of closures he had read about in the newspaper. Indeed, there has been a very significant number of closures since last year. As he says, another 25 seem to be demanded by Tube Lines. The situation is really very unsatisfactory and I do think that it goes to the heart of what is wrong with the structure, because you fundamentally have a system in which Bechtel, a leading engineering firm as you know, has to manage a software programme which is basically being delivered by a bunch of Canadian software programmers in Toronto. With the best will in the world, I could not, hand on heart, now say that that programme of managing the software delivery for the Jubilee Line upgrade has been effectively done. I am going off piste here, but that is the fundamental problem.

Q17 Chairman: It is a management problem?

Mr Johnson: I would say it is a management problem. The difficulty that the Tube Lines/PPP structure creates is that, because Bechtel is not only a shareholder but also a contractor, there is no very clear way of making sure that Bechtel has a very strong incentive to get it done in a timely way and to deliver taxpayer value. Getting back to what Mr Martlew was saying about the relative costs of Tube Lines versus London Underground in doing the upgrades, I happen to think that Richard is right and that the statistics that you have seen are misleading. If Tube Lines can do this very cheaply and if they can do it in a timely, effective way, that is what we want to see. I want to be totally pragmatic about this. If they can do it cheaply and in a transparent way and get a grip on the upgrades, then I think that would be ideal for all concerned.

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Q47 Mr. Eric Martlew (Carlisle): You were obviously sitting at the back and you heard the comments both from the chief executive of London Underground and the Mayor. Is there anything in those comments that you disagree with?

Mr Finch: Yes, there is a number of things. In relation to Tube Lines, is it in the interest of the taxpayer, yes, I fundamentally believe it is. Its record is that since it took over it is 20 times safer for its employees; it has cut delays by half and its operating costs with regard to 2008/9 are a third cheaper than London Underground's. These are not data that we have invented. They are data that have been compiled by the arbiter. Indeed, I note in his submission to you he notes that in 07/8 Tube Lines' costs were cheaper than Metronet's costs and that in 08/9 Metronet's costs have gone up. In terms of a direct comparator between the average of the three lines that Tube Lines is responsible for and the five that were with the former Metronet companies, we are a third cheaper.

Q48 Mr. Eric Martlew (Carlisle): One of the excuses and reasons that you use for the delay is the fact that London Underground have not given you access to the line. Can you expand on that?

Mr Finch: There are a number of reasons why Tube Lines is late on the Jubilee Line. First and foremost, I think it is a huge leap in technology. As you may imagine, I have looked at this in some considerable detail and we have taken advice from others. Madrid did not attempt what is being attempted here in one leap. It tried to do it in at least two. I think Tube Lines and its contractor Thales failed to appreciate the extent of that leap. It is not as simple as to say that London Underground has not granted closures. 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.

Q49 Chairman: How many times has that happened?

Mr Finch: Just under 50% of match requests have not been met.

Q50 Mr. Eric Martlew (Carlisle): There has been no reference to the Northern Line which I understand you did work on. Is that correct? Is it not correct that if I look at London Underground's website they boast about how well that is working?

Mr Finch: The Northern Line is one of the best performing metro lines I think probably anywhere in the world at the moment. I think that is a great example of where the partnership between London Underground and Tube Lines has worked very well indeed.

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Q91 Mr Hollobone: If you had to split the responsibility in percentage terms between the two ----

Mr Crow: I am sorry?

Q92 Mr. Eric Martlew (Carlisle): The Chief Executive is behind you.

Mr Crow: I thought you were a heckler.

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Q98 Mr. Eric Martlew (Carlisle): Obviously the Jubilee Line has a very advanced signalling system and it will increase the capacity. Has the agreement between reached between the Trade Unions and London Underground on the operation of this and has the work been done on the training of the staff? Has the decision been taken or not how the training is going to be done?

Mr Grant: We have major issues with London Underground on the training of staff. These trains will eventually be totally automatic, like Victoria, but with the upgraded system, as you say. The comparison was made earlier between Central Line. When I was a driver I went through all that. It was an off-the-peg system; it was not started from scratch as this system is. Obviously any new system will have its problems and we do have concerns over the length of training and the quality of training. London Underground has had some good training over the years in safety, which has kept down the numbers of incidents, lost time injuries, deaths and accidents amongst staff and customers. To answer your question, no, we are not happy with it and there is major disagreement.

Q99 Mr. Eric Martlew (Carlisle): We have had evidence from the Mayor and the Chief Executive that this was not a problem, that it had all been sorted out. That is not the case, is it?

Mr Grant: From my point of view, dealing with the train operators who are the trainers and the managers who are the trainers and the staff who are being trained specifically on the Jubilee Line, I could send this Committee a whole year's worth of emails, complaints and concerns over the training quality and the content of that training.

Q100 Mr. Eric Martlew (Carlisle): This will be to London Underground.

Mr Grant: We work for London Underground, yes, sir.

Q101 Mr. Eric Martlew (Carlisle): When you do have the training on the line, does it mean that the line for some of the time will have to be closed to the public?

Mr Grant: Tube Lines in this particular case provide the trains and the signalling systems, and London Underground provide the shutdown, or blockade as my colleague here calls it. That training is then done for hands-on training by drivers, but we are arguing over the way that is being done. Just to slightly digress, on the comment about overruns, whether it is for weekends or for six months does not matter; the most annoying thing for the person concerned of Croydon, or whoever the person was, is when come Monday morning the Jubilee Line is not back up and running because of the overrun of the engineering work. That causes even more major disruption to hundreds of thousands of Londoners. It is my belief that it is easier for the companies to pay the fine of the overrun and get the work completed and of course the people of London are not compensated for that delay.

Q102 Mr. Eric Martlew (Carlisle): Mr Grant, you have been very helpful. Do you think that the training will be completed for the drivers in time for when Tube Lines say that the job will be completed?

Mr Grant: In my view, no, sir, because the argument is over the provision of the shutting of the line to enable drives to be trained in the signalling system that they wish to run.

Q103 Mr. Eric Martlew (Carlisle): Basically you are going to have to close the line to train the drivers.

Mr Grant: Yes. In the majority respect of physically driving, yes.

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Q122 Mr. Eric Martlew (Carlisle): We have had this evidence session today and we have a very high profile transport system in the London Underground, probably the most famous in the world. We put this partnership together between private sector and public sector and when things go wrong is it not going to be a great temptation for the politician in charge, the Mayor of London, to say, "It's not my problem, it is somebody else to blame." Is that not a fault with the system? With such a high profile Public Private Partnership, the Government should have known that they would have had this sort of problem when they were pushing it through, especially as the then Mayor was not in favour of it and, to be honest, quite a few of the backbenchers were not in favour of it. You were putting up something that was bound to be shot down.

Mr Khan: Let me answer the question in the context of PPP. I am the only parliamentarian here who represents a London constituency and who is a Londoner. I have seen the Tube system before PPP and after PPP. I can tell you that in the 1980s and 1990s there was huge underinvestment in our tubes: we had shabby stations, we had Tube trains that were very old. Clearly we have stations that are more than 100 years old and there had be no investment in the infrastructure for literally decades and London had no governance since the mid 1980s. Let us be transparent, we fought the 1997 General Election with a manifesto committed to a Private Public Partnership to generate investment in the Tube, when the then government wanted to privatise and sell off the Tube infrastructure. We then proceeded to devolve local government to a Mayor and a GLA, but the engine for the investment was the Public Private Partnership which led to the investments we have seen over the last period. I will give you one example by way of illustration. In the year preceding 1997, roughly speaking about £380 million was invested in the Tube. Last year, £1.8 billion was invested in the Tube. As I have said, on any objective criterion, for the experience of passenger in London there have been huge improvements.

Q123 Mr. Eric Martlew (Carlisle): Do we accept that that had to be done through the Public Private Partnership? We had not built any new schools in my constituency for 50 years and we are now building three, but that is not being done by PPP; it is because the Government have made more money available and that is what they have done with the Underground.

Mr Khan: If you see some of the ways that the private sector has levered in the money, it has been borrowing from the financial lenders. Of course we have been paying contractors with the performance element of the PPP. We have seen a huge leverage of investment from the private sector as well.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

On behalf of Eric Martlew, 3 Chatsworth Square Carlisle Cumbria CA1 1HB