The private sector makes £3 million a week out of the London Underground contracts, but it could not maintain a basic, and crucial, safety system. what happened? GREG TUCKER reports. ALREADY it has become clear that OUL fears have been realised. Privatisation has meant huge extra costs for the public with no significan investment m a better service and an increased risk of significant safety breaches.
For the workforce it has meant worsening 10 Stal relations, attacks on jobs, pay and conditions and more and more insecurity
In 2005, the House of Commons Transport Committee Inquiry into the pertormance of London Underground reported that it would be wrong to claim that PPP had produced no benefits for the Tube.
But, it went on, this was hardly surprising. It pointed out that central government expenditure had increased from £44 million in 1997yo lo [104o millon In <004-v> - an Increase or LL/07.
But the National Audit Office reported that there was only an improved prospect - but not the certainty - that infrastructure upgrades would be delivered. Passengers could expect only marginal improvements in the first seven and a half years of
"The terms of the contracts have allowed the new private consortia running the tube infrastructure to make massive profits, at little or no risk, with no urgency for them to carry out the much needed work to rebuild the dilapidated Underground system.
London Underground, themselves, reported that key parts of the
had improved. SCIVICC HOL Engineering over-runs and inadequate planning had hampered the TuDe. Ine only Improvements Il could point to were cleaner stations and less graffiti on trains.
Setting up PPP was hugely expensive. The government spent £109 million on external advisors to prepare the privatisation, and then gave the private sector bidders another £275 million to cover their costs.
They then gave huge annual sums to the consortia who won the contracts. In 2003-04 they made £158 million operating turnover of £1.1 billion - a margin of
These huge gains are in part achieved because the privateers negotiated with the government that upgrades to increase network capacity would not be delivered until after the tirst periodic review, seven and a half years into the PPP. However at that time the scope, price and funding arrangements could be substantially renegotiated.
With the government over a barrel with little or no option but to continue with the existing contractors, it cannot be ruled out that major work will again be put on hold for sometime later in the PPP lifetime.
Even if major work were to be scheduled Transport for London has said that in its view, "detailed work plans have sometimes been either non-existent, incomplete or inconsistent rather than competent or protessional."
They conclude that, "the planning capability demonstrated this past year will not be adequate to manage the volume of work."
The government has always argued that the good deal offered to the privateers is because they will be shouldering a large financial risk. But even there the reality Is some• what different.
The National Audit Office has made clear that the risk transfer to the private sector is extremely limited.
If things do go wrong it is still the profit on a people of London who will carry the can. Lenders stand to have 95% of their £3.8 billion financial commitments returned In tne event or termination leaving them exposed to around £200 million worth of risk.
However they are able to charge interest payments on their loans with a credit rating which results in £450 million more being repaid than through direct government borrowing.
Then there is the question of safety: reproducing the infrastructure/operations split that characterised the mainline rail privatisation debacle has produced exactly the same
Lack of maintenance, confusion of responsibility and poor lines of communication have led to a series of safety problems which could have led to serious loss of life if it were not for a rearguard action by the rail
Incidents of track safety being compromised rose from 69 in 2000/1 to 149 in 2003/4. Industrial action by the RMT in 2001 forced the creation of a joint safety forum but despite this it remains hard to address network wide safety issues with so many conflicting players passing the blame between themselves.
of derailments at senes Chancery Lane, Hammersmith (twice), White City and Camden Town highlight the problem.
The report into the Chancery Lane incident showed that vital information had not been passed on from the previous 2002 Loughton derailment.
The report on the White City derailment showed that the privateer Metronet was not conversant with the official regulatory notice issued after Camden Town - measures to avoid serious incident had not been adequately relayed to track operatives.
Time and again it has taken action by the RMT to force LUL and the infrastructure consortia to sort out safety problems. This was clearly seen last autumn with the Northern Line dispute where drivers were forced to exercise their rights under Health & Safety law to refuse to work in unsafe conditions in order to force their bosses to act.
Brake safety "tripcock" devices were failing to work when tested. But instead of sorting the problem out, the various companies involved all blamed each other, whilst insisting trains should still run as if everything was normal.
The private sector makes £3 million a week out of the London Underground contracts, but it could not maintain a basic, and crucial, satety system
On the Northern Line under PPP, LUL runs the trains, Tubelines are responsible for maintaining them, but Alstom supplies the trains and actually does the work.
Alstom's PFI contract, first agreed in 1995 and with another ten years to run. allows them over two months to find and rectify any faults. The faulty "trip-cock" component is itself