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


Memorandum by the Royal Borough of Kensington and Chelsea (LU 09)

  The Royal Borough welcomes the opportunity to submit this memorandum to the Committee for the inquiry by its Transport Sub-Committee into London Underground. It is an officer submission reflecting the views of the Council.

  The terms of reference appear to be comprehensive and the distinction between the conditions under which the Government should sign the contracts and how to ensure that implementation maximises the benefits and minimises the disadvantages of the PPP is helpful. Our comments on the particular terms of reference are as follows:

1.  THE DESIRABILITY OF AN INDEPENDENT AUDIT PRIOR TO SIGNING THE CONTRACTS TO ENSURE VALUE FOR MONEY

  Comment: Such an audit is considered essential but does not go far enough. The Council has written to the National Audit Office (NAO) asking that their proposed review of the outcome of the PPP negotiations be brought forward to before the final contracts with the "Infracos" are signed. It is understood that the NAO will shortly make a decision on whether to bring forward the part of this work that relates to the value for money of the PPP—essentially updating their December 2000 report on the financial analysis of the PPP. This is welcome, given what appears to be the rising level of Government financial support needed for the scheme and the danger that this will drain national resources from other parts of TfL spending, including that on the Underground not related to the PPP contracts and resources allocated to the London boroughs via TfL.

  However, in their December 2000 report, the NAO also stressed that London Underground should continue to assess a range of factors in addition to the 'public sector comparator' used to test value for money, namely:

    —  The strategic risks and benefits of the PPP

    —  The proposed contractual framework and incentive regime

    —  How well a long term partnering relationship between all the parties can be established

    —  Which option will best ensure effective risk management

    —  Safety

  The Council is concerned that when faced with criticism of the value for money of the PPP, London Underground (LU) tend to hide behind these other factors. It is, therefore, essential that the NAO should bring forward these wider aspects as part of their proposed review of the outcome of the PPP negotiations is order that an independent audit is carried out into these aspects prior to signing the contracts. This could possibly form part of the Sub-Committee's inquiry, which could potentially cover these matters fully within its terms of reference.

2.  HOW MUCH INFORMATION ABOUT THE PRECISE NATURE OF THE CONTRACTS SHOULD BE MADE PUBLIC BEFORE THEY ARE SIGNED

  Comment: The Council would like to have a comprehensive picture of the actual physical improvements to the system that are written into the contracts. The open letter of 17 April 2001 from Keith Hill, which included two documents "What The PPP Will Deliver" and "The Offer To Londoners", as well as a subsequent DTLR Factsheet, dated 24 July, headed "Some Common Misconceptions About The Future Of The London Underground" are not at all comprehensive. It is understood that 'LU will set the strategic priorities for investment' but the Council is uncertain what exactly this means—how much discretion is being given to Infracos in deciding between improved maintenance regimes or new investment in meeting defined "outputs"? The Council has been concerned about the performance of the Circle and District Lines for some time and it has long been accepted that the renewal of its signalling is long overdue. Yet the document "What The PPP Will Deliver" only refers to an increase in the capacity of the District Line of 11.8 per cent by 2019 by the latest, with no indication of how this is intended to be achieved.

3.  THE ALLOCATION OF RISK BETWEEN THE PUBLIC AND PRIVATE SECTORS

  Comment: The Council's main concern relates to the risk taken on by the public sector and whether this might lead to the problem referred to earlier, of additional costs on the Government draining national resources from other parts of TfL (and consequently borough) spending. This problem was reflected in the Jubilee Line cost overruns, drawing resources from other areas of LU spending.

4.  THE OPPORTUNITIES TO ADJUST THE CONTRACTS AFTER THEY HAVE BEEN SIGNED; AND THE ROLE OF ARBITRATION IN THE EVENT OF DISPUTE OVER THE CONTRACTS

  Comment: This would appear to be essential given the worries that have been expressed about the scheme and the fact that it is untested. It would give some comfort to those concerned about these matters. The DTLR factsheet `Some Common Misunderstandings About The Future Of The Underground' refers to all the PPP deals being open to NAO scrutiny and to the Public Accounts Committee. If neither of them scrutinise the outcome of the negotiations before contracts are signed it is particularly important that the contracts can be adjusted after they are signed, given their long duration.

5.  REGULATION FOLLOWING THE SIGNING OF THE CONTRACTS AND THE EXPECTED RELATIONSHIP BETWEEN TFL AND THE INFRASTRUCTURE COMPANIES, AND HOW TO ENSURE PROPER ACCOUNTABILITY FOR THE UNDERGROUND SYSTEM

  Comment: Following a meeting with London Underground it would appear that the Council's concerns relating to safety and the monitoring of performance may have been resolved—in particular the proposed `fault attribution process' seems to have merit. Other concerns about the working arrangements remain relating to the split in responsibility between track and train.

6.  SETTING AND ENFORCING PERFORMANCE TARGETS FOR LONDON UNDERGROUND

  Comment: The Council is concerned that the performance indicators that it receives from LU should be disaggregated by line, including branches of the District Line. At present there is very little useful information that is provided on separate services such as the Circle and Hammersmith and City Lines.

  The Council has also been unhappy at the way information on the performance of the Underground has increasingly been aggregated which has the effect of masking some of the serious problems that exist on the system (eg the chronic state of the District Line's signalling). Specific and separate information on track, train and signalling performance is an essential part of any performance monitoring package for the Boroughs.

7.  INCREASING CAPACITY WITHIN THE EXISTING NETWORK, EXTENDING THE NETWORK AND INTEGRATION WITHIN AND BETWEEN TRANSPORT MODES IN LONDON

  Comment: The Council is concerned about congestion at a number of stations in the Royal Borough—in particular High Street Kensington, Sloane Square and South Kensington—and finds that very little information is available from the PPP papers that have been published by the DTLR. There appears to be no programme and a reference to `major enhancement agreements', only lists five schemes referred to in "What The PPP Will Deliver" as being already in the pipeline for the whole of London. The only scheme in the Royal Borough is at the Harrods end of Knightsbridge Station on the Piccadilly Line and this is nearly completed and not being funded through the PPP process. In respect of increasing the capacity of the network, the section "Train Service Capacity" of the document "What The PPP Will Deliver" lists a number of percentage increases in the capacity of each of the Underground lines (with the exception of the Circle Line) without saying what work this entails—the Council is very concerned that the increase in capacity of the District Line is achieved so late (11.8 per cent increase by 2019 at the latest) and is concerned at the implications of this for its re-signalling.

  In respect of extending the network, it is understood that this is outside the scope of the PPP contracts. As mentioned already, the Council would be concerned if the cost of the PPP contracts were to drain resources for such schemes.

8.  INDUSTRIAL RELATIONS

  Comment: No Comment.

9.  PASSENGER AND STAFF SAFETY

  Comment: The Council appreciates that the safety case has received a lot of attention. It has continuing concerns about the dangers posed by station and platform overcrowding.

Bill Mount

Transportation and Road Safety Group

Transportation and Highways Department

October 2001


 
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