Examination of Witnesses (Questions 40
WEDNESDAY 21 NOVEMBER 2001
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
(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.
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
(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.
46. Is that because you have not been doing
(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
Helen Jackson: Could you identify them?
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.
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
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
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
(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
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.