PPP lesson for new boy Alexander

One hopes that Douglas Alexander, the new man at the Department for Transport, is looking closely at events on the London Underground, for there are lessons to be learnt from the recent failings of Metronet which recently claimed the job of its chief operating officer.Metronet, the infrastructure company responsible for the maintenance on all but three of London’s Underground lines, has had a bad month.

A series of mishaps range from the closure over Easter of part of the Central Line for engineering works which had to be cancelled to having to impost a host of speed restrictions on the District Line because the rails had not been stressed in time for hotter weather.None of this has come as much of a surprise to those of us who criticised the creation of the Public Private Partnership, a hugely complicated 30-year contract that was always going to be unworkable.

The PPP was designed to be output based – in other words, allowing the private companies to deliver the vague notion of improved journey times which then determine the level of payments due to the infracos.This was always going to be a recipe for trouble. Contractors will always play to the letter of the contracts rather than to genuinely desired outcomes. Why else has Metronet spent a vast amount of money on refurbishing obscure sections of the Underground like the track and stations on the Hainault loop where some stations are used by a mere few hundred people?

The PPP – which, of course, was pushed forward by Alexander’s mentor, Gordon Brown – deliberately allows the contractors a fantastic amount of leeway in what work they carry out in order to transfer risk and, therefore, allow the expenditure to be outside the government spending limits. This is a silly game which has cost taxpayers millions – starting with the £500m cost of drawing up the contracts – and while undoubtedly some improvements will be delivered, clearly ‘value for money’ will not be.The lesson for Alexander, therefore, is to be wary of complex procurement processes that place too much onus on the ability of the private sector to deliver solutions for government.

Specifically, one of the big items in his in tray is the national road user charging scheme, which, in his first major interview, he fully endorsed.At the moment the idea floating around the Department for Transport is that the private sector should come forward with lots of ideas and suggestions as to how this should be done, and then ministers will select the best concept and put it out to tender. The prevailing philosophy is that government agencies cannot be trusted to have anything but the most remote involvement in such contracts.

This is the wrong way to go about this immensely complex process. The lessons of the successful implementation of the London congestion charge is that the procurement process works best when the public sector is very clear about what it wants and is able to act as an intelligent client.Recent government history is littered with failed IT projects, precisely because schemes were not sufficiently specified and the boundary between tasks allocated to the public and private was skewed far too much towards the latter. Asking for lots of very different companies to come forward with their pet schemes is a recipe for chaos and uncertainty.This is exactly the basis on which the PPP scheme was drawn up.

Now, London Underground and Ken Livingstone are left to fulminate about a contract that they have very little ability to police, let alone change.So be canny, young Alexander, and look at what has happened with the PPP and be very clear about you want for a national road charging scheme … even if it will be your successor’s successor who will probably get the flak for your mistakes.

Scroll to Top