The Government’s Tube PPP scheme, which controversially saw private consortia brought in to maintain and upgrade the London Underground network, has today been slammed as “flawed” by MPs on the House of Commons Transport Select Committee.
MPs also branded as “unacceptable” disruptions to passengers on the Jubilee line.
Ahead of the Tube’s transfer to Transport for London and the Mayor of London, Ministers pushed through controversial plans to hive off Tube maintenance to private contractors despite voters in the 2000 Mayoral elections overwhelmingly backing candidates opposed to the scheme.
Ministerial assurances that the scheme would “transfer risk” to the private sector were disproven when the taxpayer was forced to bail out Metronet which collapsed in July 2007 after shareholders withdrew their support from the company.
In June 2009 a report published by the National Audit Office into the firm’s collapse blamed “poor corporate governance and leadership” for the failure.
In February 2008 the Government, which had previously refused to compensate Londoners for the collapse of the company, performed a u-turn when it announced a £1.7bn “grant” to pay off creditors.
In a report published today, the Transport Select Committee describes the PPP scheme as “flawed” and says that “20 months following the demise of Metronet, the Government is no nearer being able to demonstrate that the PPP provides value for money for the taxpayer.”
In a statement issued on Friday, Mayor of London Boris Johnson welcomed the report which he described as “the latest in a litany of damning verdicts on the PPP”.
The Mayor and TfL are currently in dispute with Ministers and remaining PPP contractor Tube Lines over the costs of upgrade work. Earlier this month the independent PPP Arbiter Chris Bolt ruled TfL should pay Tube Lines £4.46bn, almost half a billion more than TfL says the work should cost and more than £2bn less than Tube Lines originally wanted.
Ministers have so far declined to make good this latest shortfall despite calls from the Mayor to ensure Londoners are not penalised by higher fares to cover the extra costs.
Speaking on Friday the Mayor said: “This is a system that has wasted hundreds of millions of pounds of public money, yet the Government continues to wash its hands of the mess it has created.”
“It is the dysfunctional contract that is at the root of this, and the Government must urgently review the PPP to ensure that Londoners get the vital upgrades they were promised, in full, on time and in a way that represents value for money.”
In a statement issued after Bolt’s ruling the Mayor and TfL said they believed the Arbiter had “gone beyond his powers” and were considering all “options including legal remedies”.
However, despite his objections to the PPP scheme and his opposition to the arbitration outcome the Mayor has previously suggested a system of arbitration should apply to disputes between TfL and London boroughs over funding of the Freedom Pass. At present the Mayor can exercise his ‘reserve powers’ to determine the final level of funding, a power he has offered to give away in preference of a “constructive” relationship with the boroughs.
Although TfL and the Mayor have sought to portray the report as vindication of their opposition to the PPP scheme, MPs expressed concern at “the increasingly antagonistic relationship, stoked by the Mayor (of London, Boris Johnson), between Transport for London, and LU on one side, and Tube Lines on the other” and warned the system would only work “if all parties work in co-operation and in a spirit of goodwill”.
In a further blow to the Mayor and TfL the Committee reports that although London Underground has “succeeded in cutting costs and improving performance” on lines it inherited from Metronet LU’s work “is up to one third more expensive than similar work undertaken by Tube Lines.”
In its conclusions the Committee praises Tube Lines for instances of “exemplary” work but notes that “the upgrade to the Jubilee line has marred its overall record badly. In the light of this project which, on current estimates, will be delivered 10 months late, the PPP has so far failed to prove that it is capable of delivering consistent value for money.”
“On the other hand, there is not sufficient evidence available to demonstrate whether London Underground is providing value for money in its work on the former Metronet lines. We reiterate our previous recommendations that the Government should prioritise transparency and accountability to taxpayers and passengers by extending the PPP Arbiter’s powers for the collection of data across the entire underground network—LU managed lines as well as those managed by Tube Lines.”
Responding to today’s report Sharon Grant, Chair of passenger watchdog London TravelWatch, said passengers “do not care who does the work on the tube and are completely uninterested in the contract wrangling. However, they do care about the disruption, particularly on the Jubilee Line, and they do care that the tube network is maintained and developed for the future.
“Passengers feel they have been failed by decision-makers at every level. It really is a case of a plague on both your houses. It needs to be sorted once and for all.”
London Assembly Member and Liberal Democrat Transport spokesperson Caroline Pidgeon called for “urgent discussions involving all parties” to take place “immediately after the General Election” to agree how future upgrades should be funded.
