The battle for London’s underground is almost over. Five years ago, the government drew up plans for a massive investment programme, the Public Private Partnership, to renovate the crumbling Tube system. BBC Radio Five Live Report investigates.
Christian Wolmar presented Down the Tube on Five Live Report at 12:00 GMT on Sunday 3 November 2002.
It seems “a marriage made in heaven”, with billions of pounds being invested to improve the lot of the three million people who use the Tube daily.
This, at least, is how London Underground’s managing director Paul Godier put it in Radio Five Live’s Down the Tube, broadcast on Sunday 3 November 2002.
But instead of thanks, the Labour Government has received nothing but grief over the its plan for the underground.
There is widespread opposition – not just from Mayor of London Ken Livingstone, trade unions, independent experts and the media – but also, crucially, from within the ranks of government backbenchers.
‘Lawyers’ field day’
So why have proposals for a Public Private Partnership – or PPP – proved so difficult for the government to sell?
The main problems with the deal are its complexity and its pioneering nature.
The PPP involves splitting the Tube up into four sections – three infrastructure companies, which will be privatised and will carry out the investment programme, and an operator, which will stay in the public sector.
The infrastructure companies will get paid on the basis of how efficient they are at reducing delays and journey times of passengers.
On the face of it, that sounds sensible.
But the idea quickly gets bogged down in a mass of detail which could lead to endless legal wrangling.
Peter Ford, a former chairman of London Transport, told the programme: “Every time there is any problem on the system you phone up the lawyers to see who was responsible. It’s a lawyers’ field day”.
The contracts have become so complex that they are full of highly detailed mathematical formulae which determine the amount of money to be paid to the companies.
One example of the complexity is that the contractors will get more money if they reduce the distance between the driver’s cab and the toilets at the station.
Paul Godier explains: “If you have the toilets a long way from the trains, then we will have to have more drivers to cover the time when a driver does need to have a break. We do not want those kinds of costs.”
But such performance criteria may lead to unexpected outcomes, such as the construction of too many toilet facilities.
Another example of the complexity is the way that the companies will be paid for investment.
When they make improvements, contractors will not be paid for the amount spent on the investment, such as the cost of new signalling or rails, but on the consequent reduction in passenger journey time that will result.
Every extra hour of passenger time saved is worth £6 to the company.
So companies will have to work out whether it will be worthwhile carrying out massive improvement schemes on the basis of estimated reduction in journey time.
Such a method of paying for investment is completely novel, so Londoners are being subjected to a massive experiment unlike anything else tried anywhere in the world.
The PPP deal is supposed to be signed in the next few days, however there are still doubts over whether this will be possible.
This is because of the financial difficulties of some of the companies involved and worries over a continued legal challenge by Ken Livingstone.
The PPP is so lucrative for some of the private companies involved that their very financial future rests on the deal being successfully completed.
If the deal goes ahead, Londoners – and all the other Tube users – will be living with this experiment for the next 30 years.