Select Committee on Transport, Local Government and the Regions Minutes of Evidence


Examination of Witnesses (Questions 40 - 59)

WEDNESDAY 21 NOVEMBER 2001

MR DEREK SMITH, MR MARTIN CALLAGHAN, MR MIKE STRZELECKI AND MR TONY POULTER

  40. One would assume so, Mr Poulter, otherwise you would not be there?
  (Mr Poulter) That assessment is not in spite of what the National Audit Office have said in their report. The National Audit Office reported nearly a year ago; so a lot of the work that has gone on since then has been focused on addressing the sorts of issues they were raising.

  41. And so you have solved this business of subjectivity?
  (Mr Poulter) We are addressing the sorts of factors that they are talking about. It is not a solution to an equation, where you can say is this figure bigger than that figure, it is partly a financial assessment and partly, as the NAO said, a subjective assessment of wider factors.

  42. And you have now worked on that for a year, and you have clarified the situation so that you know how you are going to make this assessment?
  (Mr Poulter) Yes.

  43. And you are quite clear that you will give that information to Mr Smith, in a form which will mean that he can assess all these different factors?
  (Mr Poulter) Yes. I should just be quite clear, it is not just me but the team, yes.

  44. I used the `you' collectively, Mr Poulter.
  (Mr Poulter) Forgive me.

  Chairman: Forgive me.

Helen Jackson

  45. Can I put just one other, short supplementary to the questioning you were proposing at the beginning, Mrs Dunwoody, about the costs of determining fault, and suggest that the more a complex operation, such as the London Underground, is broken up into different operations, and I accept you will have a private company managing the escalators and one managing the tickets and one managing this and one managing that, the more the `not me, guv' mentality enters in, and the cross-cutting of blame can take a very long time to work out. Have you, as London Underground, costed exactly, built into your costs, that problem? We, as elected representatives, know that it is usually us that get the blame anyway.
  (Mr Smith) Chairman, in any large organisation, and the Underground is large, it employs 20,000 people, or so, if all four parts of it are included, there is a complexity which means that we have to have costs built into the business anyway, which manage the silos and what are called the interfaces between its different parts. It is therefore inevitable that businesses carry these costs. We have operated for the last two years in four distinct segments, the London Underground operation company, and three infrastructure companies, which are wholly owned by London Underground. We have, therefore, I think, built into our operating structures the ways in which we should do this, and we are trying to identify the ways we ought to improve the working that we have. It is in order to shadow the contract.

Chairman

  46. Is that because you have not been doing very well?
  (Mr Smith) We have been doing very well in some places and not well in others.

  47. Worse than they were before?
  (Mr Smith) In some places, yes, and in some places not.

  Helen Jackson: Could you identify them?

Chairman

  48. Do you want to tell us which is which?
  (Mr Smith) If this goes line-specific, the Northern Line is very much better and the District Line is very much worse, for a whole variety of reasons.

  49. Anything else?
  (Mr Smith) Generally speaking, the Bakerloo, Central and Victoria are improving and better, the Metropolitan, Circle and Hammersmith and City are not.

  50. Can I drag anything else out of you, Mr Smith, while we are doing the list?
  (Mr Smith) You would like me to talk about the Piccadilly Line, which is pretty well operating as it did before.

Mr O'Brien

  51. To follow that up, Mr Smith, having regard to the fact that the PPP will deliver the finances, which will come first, a good network, so that people can travel in safety and with accuracy on times, or modernisation of stations; which do you require?
  (Mr Smith) I understand the basis of the question. The network is safe today, I should emphasise, but the PPP delivers both improved reliability and station improvements. Part of the problem in presenting the PPP has been that improvements in reliability of assets, such as track or train, signals, tunnels, and so on, is hidden in the performance contract, whereas we have had to specify the years in which we have expected the station improvements to take place. But it is not true to suggest, as has been suggested elsewhere, that stations take priority over the other assets. The infrastructure companies are rewarded primarily on improving the train service.

  52. So the number one priority then is to bring into line the lines that you have just suggested are performing under the standard; is that the correct procedure that will be followed, on your instructions?
  (Mr Smith) What will happen is that, the way the contract is structured, the infrastructure providers will be incentivised initially to improve what they call the availability of the network, and they will therefore improve both the maintenance and renewal of those parts of the network which will generate the most revenues for them, and that will give us the most benefit for our passengers. That is the way this thing is structured.

  53. If we could move on a little further then. Included in the PPP would be to increase the performance of all the lines, to bring up the poor performance into something like we have at the present time, but the whole aspect is to increase the performance of all the network, to help with the increase in passenger demand and the services; what is the priority there then, Mr Smith?
  (Mr Smith) If I just could explain. First of all, the priority is to improve the reliability across the whole network, and then there are things we call `line upgrades', which improve, in the contract it is called, the `capability', and there are line upgrades which are specified throughout the succeeding years of the contract; initially, the Jubilee, followed by the Victoria and then others.

  54. But that will be the number one priority over and above the modernisation of the stations then, will it?
  (Mr Smith) The stations will be simultaneously, in some instances, modernised as well. We have got to recognise, with station work, that access to stations, generally speaking, is easier than access to track.

  55. Can I make it then this way; which is the priority, Mr Smith?
  (Mr Smith) The priority is the train service, but the ease of access will be to stations, so you will see both being done.

  56. And when will we expect to have the achievement of the 7.5 per cent increase, that has been suggested, in the performance; what is the timetable?
  (Mr Smith) It will take some considerable time to do that.

  57. What is that, 10, 15, 20 years?
  (Mr Smith) And that will depend upon the efficiency and performance of the infrastructure companies.

  58. What is London Underground setting as their target then?
  (Mr Smith) I think I should ask Mr Callaghan here, if I may, Chairman, just to give more detail on the performance structure and our plans.
  (Mr Callaghan) Roughly speaking, in the first seven and a half years of the contract, we would expect the number of faults attributable to asset failures to reduce by about 30 per cent.

Chairman

  59. To fall?
  (Mr Callaghan) To fall, the number of faults; so there will be fewer breakdowns of the assets, and therefore the reliability of the service will increase.


 
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