Supplementary Memorandum by the Royal
Borough of Kensington and Chelsea (LU 09A)
This supplementary memorandum is submitted to
the sub-committee, with additional information concerning a major
information campaign recently started by London Underground relating
to investment in the system. It relates to most of the terms of
reference of the inquiry by the Transport Sub-Committee into London
The Council is concerned that in the past two
or three weeks London Underground appear to have embarked on a
major information campaign to put across various aspects of the
PPP proposals (without anywhere referring to the PPP by name),
including the rationale for the approach, the various benefits
of the proposals, and reassurances about safety and ownership
(that control of the Underground will stay in public hands). We
are aware that the campaign has included information packs to
key decision makers, with leaflets, a "mouse mat", newspaper
adverts, posters and radio.
The concerns about the campaign relate to the
question of what is its purpose, and to the accuracy of a number
of the statements that are being put across, in particular that
London Underground have secured the money to carry out a renewal
programme spending £13 billion over the next 15 years.
Commenting more specifically on each of the
six posters produced by London Underground:
There is no reference to the PPP in this poster,
which replaces the previous "Publicly Run, Privately Built"
slogan from an earlier poster. "Shadow" running of the
PPP structure over the past one and a half years has coincided
with a further deterioration of the system and provides no reassurance
about the partnership being promoted.
The implication is that £13 billion has
been secured for improvements over the next 15 years which is
not the case. The Government has agreed to underwrite the PPP
if it goes ahead, at £750 million per year for the next seven
and a half years, but the PPP still has to pass the value for
money test for contracts to be signed. At no time have the "infracos"
ever had to commit themselves to a capital investment plan.
The message being put across is that the Underground
is not being privatised (again there is no reference to the PPP);
yet the reality is that its entire fixed infrastructure is effectively
being transferred to the private sector on long leases.
The report by Parsons Brinckershoff on the Underground's
Code of Standards concluded that it was "inappropriate and
inadequate" to serve as an effective management control mechanism
to protect the public interest in performance based PPP contracts
with privately owned "Infracos".
There is concern that whilst TfL would
be responsible for safety, it would be up to the "Infracos"
to decide how to do the work, so long as it is safe. Furthermore
if, during the contract, TfL perceives a weakness in safety,
which is not a legal requirement of the PPP agreement, the scope
for legal problems is huge.
In the Council's view the whole process for
setting up the PPP and possible delays to the PPP procurement
process as a result of the collapse of Railtrack, have added significantly
to delays in improving the Underground. The PPP contracts were
originally intended to have been signed in April 2000 (just before
the election for Mayor for London), but are now not likely to
be signed until April 2002, if at all. Furthermore, during the
period of the "shadow running" of the "Infracos"
over the past 18 months, the performance of the system seems to
have deteriorated significantly, adding to the Council's concerns
about the ability of the PPP to deliver service improvements.
Less congestion is one of the supposed benefits
of the PPP, yet neither London Underground nor the Government
has ever defined how and when improvements will be achieved. The
"Infracos" are not required to itemise the improvements
they will undertake. Furthermore, the Council is concerned that
a number of major Underground improvements that it would like
to see would be outside the PPP remit and so would have to be
funded separately. Given the high cost of the PPP such funding
could well be difficult to secure, delaying much needed improvements
such as congestion relief at High Street Kensington Station.
Transportation and Road Safety Group
Transportation and Highways Department
30 October 2001