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

Examination of Witness (Questions 554-559)




  554. Secretary of State, I apologise for keeping you waiting. It is always in the best theatrical traditions to make your star only appear on cue, so I hope you will forgive us. May I ask you to identify yourself for the record, not that we could not make a guess at who you are.
  (Mr Byers) For the convenience of the Committee, I am Stephen Byers, the Secretary of State for Transport, Local Government and The Regions.

  555. Did you want to make a few opening remarks, Secretary of State?
  (Mr Byers) If I could, Chairman, just a few opening comments in relation to the inquiry which the Select Committee is presently conducting. I would hope that we could all agree that London Underground is not performing as we would like it. The main reason for this is really decades of chronic under-investment. Amongst other difficulties, in the last full year of 2000-01 we have seen 5.3 per cent of trains cancelled, that has been the highest level for four years and an increase of over half on the previous year, the number of train delays of 15 minutes or more was 12 per cent higher than four years previously, and nearly eight per cent of customers buying tickets had to wait for more than three minutes before they could do so. Put simply, the tube does not provide the quality of service that London needs and I, as Secretary of State, want to change that. The problems that passengers experience on a daily basis are a reflection of this historic under-investment. It is essential to secure large scale and sustained funding for the renewal and maintenance of the infrastructure, but I am convinced that it is equally important to change the way maintenance and investment projects are planned and executed otherwise there is a serious risk that new funds will not deliver the improvements that we want to see. I do believe that the Government's modernisation plans are the best way forward. I think there are three main reasons for this. The first is that the plans will secure, at long last, the long-term stable funding that the London Underground needs. It will enable £13 billion of investment and maintenance over the first 15 years of the programme. That is the equivalent of about £4,200 for every household in London. Secondly, there will be fewer delays caused by equipment failures and passengers will notice real improvements in services. The contracts being negotiated are clear about the quality of the overall system that the London Underground needs to run to offer a first class service. The infrastructure companies will have every incentive to deliver a high quality system because they will be paid by results and that, in the end, is what counts. I am not in the business of micro management of the infrastructure companies' work. The performance management system is thorough but, contrary to recent reports, is perfectly workable. The shadow running of these arrangements has been under way for two years and is working well. The third and final reason is that under these plans London Underground will remain in the public sector operating the trains, the tracks, signals and stations, as a public service accountable to the people of London, and this is in no way a privatisation. If I could conclude, Chairman, by just saying a few brief words about value for money and safety, which I know are important to the Committee. As far as value for money is concerned, I understand that the competitions are progressing well. London Underground are finalising the negotiations on the contract terms, ensuring the best possible deal for the public sector. The long stated aim is to conclude the competitions and begin the modernisation and investment at around the end of this financial year. When they receive the final bids London Underground will make their value for money evaluation. Now, of course, I cannot today predict the outcome of this evaluation but I want to give a guarantee to this Committee that the plans will only go ahead if they offer better value for money than the alternatives.

  To advise me on this I have commissioned Ernst and Young to carry out an independent review of value for money and in particular the robustness of London Underground's evaluation. I have also been considering whether, as would normally be the case, to publish after my decision the recommendations and the report from Ernst and Young. I have decided in this particular case to publish Ernst and Young's advice to me in January before a final decision is taken. This will be published at around the same time that London Underground makes its own evaluation publicly available and formally consults the Mayor and Transport for London on the proposed arrangements. It is my intention that Ernst and Young's review for me should be made available to help inform the consultation process itself. It is only after consultation that final decisions will then be taken on value for money. Finally, on safety, this has to be of course the highest priority. There must be no compromise on the safety of passengers and indeed of railway staff themselves. As we have heard, the Health and Safety Executive has this week decided a satisfactory case for safety has been made by London Underground, but that is not the final part of the double safety lock we have put in place. The next stage is for the Health and Safety Executive to consider for acceptance safety issues related to the transfer of the infrastructure companies to the private sector. Our plans will not go ahead unless the Health and Safety Executive is content that there is no reason why these plans will lead to lower safety standards. Indeed, I am determined to ensure safety standards are not just maintained but actually improved. Private investors, as I think you may have heard earlier this afternoon, and the Government are ready to commit serious money to renewing the London Underground. These plans are the best and the quickest way to ensure the money we want to invest delivers better services, and I am confident that this is the way to deliver a tube system which is fit for the 21st century.

  556. That all sounds very encouraging, Secretary of State, and it is nice to know all is well in the garden. Do you accept the evidence which has been presented to this Committee, which I am sure you have been studying, which we have received both from the National Audit Office and from others, that it is extremely difficult to judge value for money unless the parameters in which such decisions are to be made are very clear? It would appear even people like Ernst and Young would normally say that a lot of those parameters are subjective judgments. Is that your view?
  (Mr Byers) It is. I think that is the very nature of the public sector comparator, for better or worse a judgment will have to be taken. In this particular case the judgment will have to be taken by London Underground and indeed by myself as Secretary of State. It is one of the reasons why I will be particularly grateful for the views, no doubt, of the Select Committee during the consultation period, because when one has to make a decision like this it is very often helpful to have the views of your Select Committee.

  557. You are by nature a flatterer, Secretary of State.
  (Mr Byers) Not always, as you know, Mrs Dunwoody, but on this occasion it makes a lot of sense both in the self-interests of the Secretary of State to have the views of the Select Committee and also to have an effective consultation, because you are absolutely right it will be a subjective judgment. Far better, I think, that we use the consultation period with the advice I will be receiving from Ernst and Young so people can see what that independent advice is saying, we can have a debate about it, we can discuss it, we can look at the issues which have been raised and then eventually I will have to arrive at a decision, but it will be a decision informed by the views of a whole variety of other people and not just by myself.

  558. You would give us in this period in January access to all the assessments which have been made on which you would base that judgment?
  (Mr Byers) I am saying this afternoon—

  559. "We" being the House of Commons, may I say, not the royal we.
  (Mr Byers) I would not have taken it any other way, Mrs Dunwoody. The Ernst and Young report I will certainly be more than happy to make available to the Committee as soon as we can publish it, which should be really two or three days after I receive it myself, which will be 10 or 14 January or thereabouts. There will also be the report from Pricewaterhouse Coopers which London Underground will be receiving, and I certainly hope they will make that public. I think it would be sensible for them to do so. It is a decision for London Underground but I will certainly use my best endeavours to make sure they do publish that. Also we should as far as we can within the boundaries of commercial confidentiality publish the details of the contracts so we can all have a proper detailed look at really the whole of these issues because it is a major decision. We are going to be spending £13 billion over 15 years in London Underground and I want people to know that this is not coming out because of some political dogma, it is actually being done because it is the best thing to do.

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