Tube Lines expresses disappointment as LU calls in Arbiter

London Underground maintenance firm Tube Lines has expressed disappointment at a decision by London Underground to call in the PPP Arbiter over improvement costs.

The company, which maintains the Jubilee, Northern and Piccadilly lines, says it has been working hard to agree a price with LU for the works, a claim backed up by a statement from LU which concedes the two parties “have made good progress on determining this future work programme and in reducing some of their costs”.

Despite this apparently harmonious working relationship LU maintains “Tube Lines’ costs remain unacceptably high in some areas” and has asked the PPP arbiter “to set a fair price for the works”.

A statement issued by PPP Arbiter Chris Bolt confirmed that “significant progress” had been made between LU and Tube Lines but said “there is still a big gap between them”.

London Underground’s Interim Managing Director Richard Parry said “improvements must be delivered at a price which is clear value for money and acceptable to us, the Mayor, Government and passengers.”

Parry set out two “key challenges” for the firm; “First, to deliver promised improvements on time. Second, they must deliver the improvements in a way that is economic and efficient, ensuring value for money for London’s fare payers and taxpayers.”

A spokesperson for Tube Lines told MayorWatch the firm had made “a very good offer that will bring the cost of work down to a level that they can afford whilst still being able to deliver the performance and upgrades that the underground needs.”

“Many of the savings already agreed were included in the proposals detailed in the Path to Affordability document we issued to LU back in June and there are further savings opportunities we have tabled that we believe warrant further consideration by LU. These would, if agreed, narrow the gap to negligible levels and enable us to continue to get on with doing a good job while delivering good value for the tax payer, good value for the fare payer and good value for London. It is disappointing then that they should ask the Arbiter to intervene when an affordable solution is there for the taking.”

“It will now be some months before either Tube Lines or London Underground will be informed by the Arbiter of his recommendations of the cost. We would have preferred for there to have been proper consideration of our proposal before involving the Arbiter.”

In a statement issued after receipt of LU’s referral Mr Bolt said: “Tube Lines’ formal submission to London Underground in June proposed costs of £6.8 billion over the next 7½ years, although it identified possible savings to bring this figure down to just over £5 billion. London Underground and Tube Lines have made significant progress in agreeing opportunities to reduce costs, but there is still a big gap between them. My role is now to determine a fair price for London Underground to pay for the maintenance, renewal and upgrading of the Jubilee, Northern and Piccadilly lines over the period to 2017.”

Bolt will publish a draft decision before Christmas with a final ruling following in early 2010.

About the PPP Arbiter
The remit of the PPP Arbiter is set out in the Greater London Authority Act and is supplemented by contractual provisions included within the PPP Agreements. Under the terms of the GLA Act, the Arbiter may give directions on matters specified in the PPP Agreements or guidance on any matter relating to a PPP Agreement, when requested to do so by a PPP Party. Directions given by the Arbiter modify the contract unless both Parties agree to set the direction aside.