Examination of Witnesses (Questions 80
WEDNESDAY 27 FEBRUARY 2002
80. Which is?
(Mr Blaiklock) That I think that this is a step too
far. Most of my comments, I appreciate, have been rather, you
might say, against the PPP option in this particular instance.
In my business, I am very much in favour of the use of private
sector capital to fund infastructure projects, and that is what
I have been working on for the last 20-25 years, but I think on
this particular occasion, for this particular kind of project,
which interfaces with so many other different walks of life and
industries and utilities, then this particular PPP proposal is
much more complicated than people think. I do not think we should
go into it lightly at all.
81. But it has been very expensive, has it not?
We are talking about almost £100m to do the evaluation process.
Do you think it is really any better than an informed guess?
(Mr Blaiklock) I would not want to devalue the work
that has been done, but clearly, it is a lot of money to get to
where we are today. Put it another way: I have seen, on other
occasions, when one is faced with the possibility of doing an
infastructure project with private capital, or funding it, you
might say, from the Government budget, then actually you ask bidders
to bid on two bases: one on the public basis, and one on the private
basis. You then actually do get a market feeling for what the
public option really will cost. That might have solved some of
the problems in this case which, as I understand it, they did
not follow this.
82. Ernst & Young, are you really happy
with the work that you have done; proud of it?
(Mr Middleton) Yes.
83. Do you think that it was a good process,
and that London Underground got good value for money out of the
(Mr Middleton) I cannot speak for the whole process.
I think our analysis is clear, factual, and sets out what we believe
to be the key issues in a consistent and clear way.
84. But you have identified too many areas,
have you not, where it is a matter of opinion, rather than any
factual analysis as to which is the right way to go forward?
(Mr Middleton) I think everyone who has looked at
value for money analysis, not just in the context of London Underground/PPP,
but in any area, recognises that it is a blend of factual analysis
and subjective analysis. We set that out in the report right at
the beginning. The NAO recognised that in the work that they have
done; London Underground recognise that in their Board report,
and actually you recognised it in the report that you recently
published, that it was part art, part science.
Andrew Bennett: Would you like to put a percentage
on that? What percentage is science, and what percentage is guesswork?
85. Informed guesswork.
(Mr Middleton) No, I would not.
86. Would Ernst & Young confirm that their
company are auditors to Jarvis plc (Tube Lines), and that you
are also auditors to Bombardier, Canada (Metronet)?
(Mr Neal) Yes, we can confirm that.
87. Do you gentlemen actually know, and I am
not sure I am expecting an answer to this, any part of this that
has not got some consultant that is not directly involved in some
part of some bid of this PPP? Thank you.
(Mr Blaiklock) I have no association with any of it.
Chairman: Thank you, Mr Blaiklock. As always,
you have been very clear and helpful. Thank you gentlemen.