Rail 627: PPP will be a burden for new Underground boss

Transport for London has, wisely, played safe by appointing an old hand, Mike Brown, as head of London Underground to replace the much-missed American, Tim O’Toole. While O’Toole was selected after a worldwide trawl of experienced railroad managers, and was something of a surprise choice given that he had worked mostly with freight railways, Brown is an insider, a longstanding Underground man who left only a year ago to run Heathrow Airport for BAA.

 While the task facing O’Toole when he arrived at the Underground in 2003 was difficult as it coincided the introduction of the Public Private Partnership following the protracted controversy over its implementation, Brown’s is no less daunting given the financial constraints and contractual chaos facing the organisation.

 On the plus side, there is a lot to be excited about and in his departing interview with me, O’Toole, who left for family reasons, was deeply disappointed not to be staying on. New trains for the Victoria Line and London Overground are being delivered, and, even more exciting, the sub surface lines (Metropolitan, District, Hammersmith & City and Circle) stock, also now coming into service, are the Underground’s first air conditioned trains. Work has started on Crossrail  – though more on that later – the new and extended East London line is due to open next July, the massive Kings Cross St Pancras complex is being totally remodelled and the first of the major line refurbishments to be delivered under the PPP, the Jubilee is scheduled to be completed at the end of the year – though more on that, too, later.

 So it is easy to see why Brown has been tempted back. Brown is an operator – in the old fashioned railway sense of the word who knows how to run a railway – and is good in front of the cameras, managing, like O’Toole, to provide an impression of calm that not always accord entirely with what passengers experience on their daily journey.

 Once in the Underground family, it is difficult to leave it and Brown will be welcomed back on all sides. However, there is much that will be hugely unwelcome in Brown’s in-tray. Despite the huge sums being spent on investment – indeed partly because of them – Transport for London is facing a financial crisis which is bound to impact on the Underground budget. It is, in fact, being squeezed from all sides. Boris Johnson, elected on a low taxation platform and therefore reluctant to put up the council tax, has backed himself into a corner by spending money on the unnecessary replacement of bendy buses and cutting the western extension of the congestion charge zone at a time when the huge capital spending programme and the difficulties with the PPP is putting pressure on his budget.

 The PPP is, of course, by far Brown’s biggest problem. As I have written before, it is one of the great unheralded scandals of our age. There is no doubt that it has resulted in the waste of billions of pounds, all thanks to the dogmatism of Gordon Brown and the pusillanimity of ministers like Stephen Byers, the transport secretary who nodded it through like a donkey shielding from the sun. Yet, because of its complexity and lack of transparency, the national media has rarely taken an interest in the subject, allowing the Labour government to get away with one of its biggest and most expensive blunders in domestic policy.

 The biggest outrage was the £500m cost of setting up the contracts in the first place, but this probably pales into insignificance with the sums now pouring out of TfL to the contractors and to clear up the mess of the failed Metronet contract. The PPP was foisted on Transport for London by Brown and the Treasury in the face of widespread opposition and warnings from virtually everyone in the transport industry that the concept was unworkable, far too complex, and unlikely to deliver the investment programme at a reasonable price.

 And so it has proved. With the demise of Metronet, the PPP is two thirds dead (if that is possible!) and the remaining third, the Tube Lines contract for the Jubilee, Northern and Piccadilly lines is in the balance. First, the company is clearly in danger of not completing the Jubilee upgrade, including the complicated resignalling scheme, in time.

 Transport for London have gone on the offensive. In a remarkable attack on Tube Lines, Brown’s temporary predecessor, Richard Parry lambasted the company for its performance on the Jubilee. He used the annual report into PPP performance, published in early September, to mount an extraordinary attack on Tube Lines using most undiplomatic language. He wrote that Tube Lines ‘hunger for more weekend closures has stretched stakeholder and customer patience to breaking point’ and that the company’s progress was ‘unacceptable’.

 Secondly, there is the small matter of the gap in the assessment of what the next phase of the PPP contract will cost. The massive PPP programme is divided into 7.5 year chunks with the price of the next period being renegotiated with the arbiter. Currently there is a gap of around £3bn between what Tube Lines is seeking and what Transport for London wants to pay. Already, in his preliminary determination, the Arbiter suggested an extra £1.4bn already blowing a hole in TfL’s budget. If the Arbiter decides on any extra, that will put further pressure on TfL but if he holds firm, then Tube Lines may walk away from the contract.

 Crossrail, too, remains an issue. As I have mentioned before, even though work has started on a couple of sites, there is still a lack of certainty that the scheme will actually come to fruition. The Tories, while apparently promising it will go ahead, still do not give the unequivocal commitment to funding it which is required (although at a conference early in the summer, I managed to get Stephen Hammond MP, the junior shadow transport spokesman, to say that it would go ahead, but ultimately the decision will be with his namesake, Philip, who is shadow chief secretary to the treasury)

 Just to add to Brown’s problems, there is the thorniest issue, the one which may have the most immediate impact, which is, of course, industrial relations. Brown has long experience of the troublesome Tube unions in his five years as chief operating officer and probably one of the reasons for appointing him is that he is more likely than most to be able to negotiate with them and avert strikes. However, they are in particularly truculent mood and may try to test his mettle early on.

 One suspects that there must have been a bit of a push factor in driving Brown back to the Tube family given that BAA has falling passenger numbers,  more building work in the offing, a terrible reputation and teething problems over Terminal 5 (though by all accounts largely solved), all overshadowed by the massive controversy over the third runway. Maybe he thinks the Underground will be a cushier life after that lot. But I doubt it.


A long wait at Waterloo


Sometimes the occasionally hapless Mystic Wolmar gets it right. Too bloody right! At the beginning of last year he predicted that the Waterloo International platforms would remain empty at least until the end of 2008, and he reiterated the prediction this year. Now, it has emerged that the five much needed platforms are unlikely to be in service until at least 2013/4 because there is no money to pay for the required works.

 This information was elicited in a completely garbled and semi-literate response from the Department for Transport by a Freedom of Information request by Caroline Pigeon, the Libdems representative on the London Assembly Transport Committee. After a few vague sentences about work being planned for 2013/4, the Department says: ‘The Department’s expectation is that WIT platforms will be used in the future’. Well that’s a relief, then.

 To be fair to the Department, Waterloo is the subject of a massive building programme and the precise plan has still not been worked out but keeping five platforms empty (although platform 20 may be used earlier) for five years shows the lack of flexibility and can-do spirit in today’s railway. Of course they may not be correctly signalled and there are not the right points to provide services for where they are most needed, but it is a fantastic waste of a resource that, with a bit of common sense and application, could be used.

 Add to that, the Office of Rail Regulation wants to get involved, having issued a statement that the platforms should be open by December 2011.  That’s all very well, but what if no one gets their act together – what will the regulator do about it? Fine Network Rail, or the Department for that matter? Such episodes expose the whole nonsense of having a toothless regulator, getting involved in the minutiae of running the railway which creates more bureaucracy and achieves little.

 Yes, all those involved need a kick in the pants, but rather than waiting so long for the perfect solution, why not put these platforms into use on a temporary basis. Now here’s an idea – since these platforms lead to an over pass which takes the line through south London, why not use them for passengers to Gatwick. Surely that could happen straight away, relieving pressure from Victoria, where the Tube is frequently closed because of the number of passengers coming in from the main line station. Oh but then the franchisees would need to be involved, as well as the regulator, Network Rail, the Department and ….oh I give up, leave them empty.