Transport Committee 02/10: Tube Lines, TfL and the Arbiter Appear

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Yesterday saw Dean Finch, Richard Parry and Chris Bolt (The heads of Tube Lines, London Underground and the PPP Arbiter respectively) in a rare shared public appearance. The three were present at the London Assembly’s Transport Committee meeting to answer questions about the current PPP contract and the ongoing issues associated with it.

In many ways, the meeting served largely to clarify the Arbiter’s December draft report for the Committee, and thus covered points that have been raised on this site already. It did, however, begin to give an insight into the upcoming Northern Line works, and provided an interesting view into the relationship between the two parties.

The Northern Line Upgrades and Closures

On the subject of Northern Line closures, Finch indicated that Tube Lines had originally requested 40 weekends and 12 months of early closures from Sundays to Fridays (10pm onwards). That, Finch said, had now changed:

It wouldn’t be sensible or possible to use engineering hours philosophy for the Morden Branch so we’ve moved to weekend closures for that. So we are now in a position where we think we need 82 weekends of closures plus engineering hours.

Where we are on engineering hours, we’ve got something like 16 months that we’re talking about from Sunday night to Thursday night starting at 23:30 – half past eleven in the evening.

I should say that as far as I’m concerned the position is not finalised, the internal teams working on this at at London Underground, at Tube Lines, at Thales – our [Signals] contractor – are due to report back to me in a week or so’s time and that will present a position that I would then be looking to discuss with Richard [Parry] and to consult more widely on that. It would also be our intention to get an independent assessment of whether the closures we’d asked for were fair and reasonable.

The committee queried whether a different approach to closures had been considered in light of the Jubilee Line experience. To which Finch responded that this was being done, and that they were pushing Thales (the signalling contractor) to undertake more off-site testing as well.

If we were to take the same methodology towards closures as we did on the Jubilee Line, for example, we would need something like over 140 weekends of closures, so from moving from over 140 weekends of closures down to 40.

The Committee pointed out that 82 closures over 18 months would seem to suggest a closure almost every weekend, to which Finch responded that, in his view, it would more likely be over a 21 month period.

Richard Parry’s disagreement with Finch’s assessment of the reasonableness of these closures was very apparent:

We are very concerned at the extent of the closure programme. We do think its unnecessarily disruptive, not just due to the number but also due to the scale of closures being talked about.

He would later add to this:

We are going to see the same failed approach taken on the Jubilee Line brought over to the Northern.

Building on this, the Committee asked why the actual dates of closures were slow to enter the public domain – something that was a constant frustration for passengers. Finch indicated that this was London Underground’s responsibility and that 22 dates had already been confirmed and could be communicated, but Parry indicated that this was a frustrating situation for LU, due to the lack of confirmation from Tube Lines on specific dates:

If I come out and tell the public and businesses something that’s still in a fluid state because Tube Lines haven’t resolved what they’re final position is, I run the risk of giving people information that I very quickly, or maybe not, have to reverse. We have to get clarity and there has to be, in my view, a much less disruptive programme. We do think – and we’ve obviously reviewed the experience of others, the material in your report – we do think that it is possible to have a less disruptive programme and that is what I’m still urging tube lines to do. But we have to get out and communicate what’s in front of us.

He also claimed that Finch’s suggestion that 22 dates had been confirmed was disingenuous – it referred to dates to which contractually there was no issue, but that Tube Lines had indicated to London Underground that they were to be considered under review.

The Committee also enquired as to whether compensation for these closures would be given to Season Ticket holders. Richard Parry indicated that this would not be the case, as several weeks’ notice was always given, alternative transport arranged and above all else it would not be in the financial interests of London.

Throughout the meeting it was clear that Parry was frustrated both with the amount of closures being requested by Tube Lines and also with what he saw as a failure of the PPP Contract to give the avoidance of closures sufficient importance. The PPP contract, he said, failed to see closures as a “precious resource” and something that should be avoided at all cost:

[Tube Lines] are pushing to increase the amount of access for their second, 7.5 year period. They are looking to double the amount of closures that they are permitted to have under the PPP from that which they had during the first half of the PPP. I struggle to see how that is something we can contemplate. I struggle to see why it is necessary.

If extra closures were required beyond those in the contract, then Chris Bolt, the Arbiter, suggested that a new model for them might be needed:

If Tube Lines needs more. Then a mechanism perhaps of Tube Lines paying for that extra access – which would allow for London Underground to provide alternative transport and/or compensation – might be the best way forward.

Finishing Dates

During the meeting, the Committee asked Finch to clarify when the Jubilee Line upgrades were likely to be completed. He expressed the belief that they would be completed by October, or earlier if things went well. The impact this overrun would have on Tube Lines financially he indicated, was “substantial – to the sum of £40m – £50m.”

He would also later comment:

It’s late. I regret the fact that its late. But since I’ve been here I’ve been doing everything I can to bring it back on time and I think we’ve made progress in that regard.

With regards to whether a similar overrun could be expected on the Northern Line, Finch comented:

That’s chicken and egg. It depends on how we agree the final picture of the closure programme and so on. If we can drive our contractor to a more efficient method of installing and offsite simulation then we may be able to get to the 2012 date. At this stage though I can’t comment.

Financing the Upgrades

One area on which discussion naturally occured, was that of the £4.4bn price tag Chris Bolt had provisionally attached to the work – above what TfL had indicated they expected to pay, and well below Tube Lines’ determination.

Asked to whether Tube Lines could deliver at that price, Finch responded:

Tube Lines will deliver everything it can do to deliver within the extent of that determination. To the extent that it can’t, well then it will explore the extraordinary review measures within the contract.

“What odds,” Murad Qureshi then asked, “are you going to give me that Tube Lines won’t go into the extraordinary review process with all the implications of that?”

Finch couldn’t say:

We will test the market and the market will come back with what it comes back with. To the extent that it agrees with Chris there won’t be an extraordinary review and to the extent that it doesn’t there will be one.

The Committee then asked Richard Parry whether he felt London Underground could afford the £4.4bn figure. Parry indicated that LU still felt there was grounds for the price to be lower, but that if they had to meet that figure then they’d have to thoroughly investigate how they would do so. He refused, however, to accept that further changes to the scope of the upgrades was a possible option:

To go any further [in descoping] will be a devastating blow to London. It will lose very, very, significant benefits to the upgrade.

The whole concept of the PPP was to deliver this core scope to upgrade the tube, to deliver a step grade in transportation so that we get the world class service this city deserves and I do not think its right at this point to step away from that. However that’s my view and there’ll be a discussion at the TfL board tomorrow. [3rd Feb]

He also indicated that a fare rise was not something London Underground would consider (or had the powers to do) and that he strongly believed that Central Government – as the creators of the PPP – had a strong role to play in helping resolve any finance issues.

Chris Bolt felt it was important to reiterate that the increased cost of the contract was not based on the failures of Tube Lines so far, but on a natural increase in the theoretical cost of the upgrade work. He did, however, feel that there had been some serious failings when the PPP costs had first been established:

What we’re seeing is an increase in cost in the second review period not because the scope has increased – it hasn’t its gone the other way – but because the costings for the second review period and beyond, in my view – and reflected in the 4.4 draft direction – were significantly underestimated at the time this contract was entered into.

The Relationship between Tube Lines and London Underground

Understandably, with both Parry and Finch in the room, the issue of the relationship between their respective organisations came under considerable discussion. Both admitted it was a complex relationship.

As Finch commented:

I think there is a full spectrum between excellent collaboration – as is witnessed on the day-to-day operation of the railway, I think it works as well as anywhere I’ve seen works in my experience – to outright hostility. And I guess that’s the way it is.

Tube Lines and London Underground are both guilty of playing out our disagreements in public which is a waste of both our times.

Parry broadly agreed with this assessment but said that he felt a “claim culture” existed within Tube Lines that had, and continued to have, a massively negative impact on their relationship:

I do think you have to very much acknowledge at the same time that there this a lot of adversarial behaviour, and I would attribute that – if I’m to speak honestly – to the nature and way that Tube Lines have approached their claims etc.

It is very difficult to have an entirely constructive working relationship with someone who is constantly trying to throw claims at you. Who has a department of 43 people whose job is to generate claims against you.

He continued by saying that although Finch himself may not be of this mindset:

The organisation [Finch] heads has very a different flavour, and that flavour is seeking to pin blame on London Underground, any way it can, for events in the past which actually makes the relationship extremely difficult to conduct in a collaborative way.

Finch believed this was an unfair assessment to say that those 43 people were dedicated to finding “blame”:

They are 43 analytical people, including possibly a couple of lawyers, who are there to ensure that Tube Lines gets paid for the work its done and given that – although we don’t seem to be able to agree quite on the figure – given that Tube Lines has received about 100m for work that either wasn’t in the original contract and for work that it was entitled to, I think that probably it demonstrates to you why Tube Lines needs that number of people.

Parry’s frustration at the claim culture he felt existed, however, was undiminished:

Whatever Dean’s argument for having some resource is, and clearly any big contract has legal resource etc, my argument is we’re seeing an awful lot of wasted effort go into generating claims when actually that effort and that money should be going into delivering improved service for the future.

Parry was also visibily frustrated over the recent £327m claim by Tube Lines against London Underground – a claim that was wholly rejected. This, he felt, was the perfect example of resource being mistargeted at claims rather than “real work”:

My engineers were on trial in that exercise for things they allegedly said and did five years ago. You can imagine how disruptive that is when your top signalling people – who you want to be putting their shoulder to the wheel to get the Jubilee Line over the finishing line, and whats more deliver the Victoria Line upgrade, to deliver the Sub-Surface Line Upgrade, and all the other projects that London Underground is directly responsible for – are dragged into a process whereby spurious claims are being brought.

You don’t defend a £327m claim in your spare time.

These comments tied in with a theme that Parry had begun earlier in the discussions – that although he was keen to see the relationship with Tube Lines improve, the very nature of the PPP contract meant London Underground had to maintain a relatively firm position on issues relating to timescales and the delivery of projects:

My job is to hold this contract to account, and without getting too
carried away Tube Lines is – in effect – a private monopoly. It’s two shareholders have a thirty year contract to take a lot of money from fare payers and tax payers.

Now I’m not saying there’s anything wrong with private companies working to make profits – of course that’s what the whole economy depends on – but it needs a very strong client to hold such bodies to account and actually that is my job – to make sure that no money is spent, other than wisely, in pursuit of an improved underground. That when they are late in delivery – as they have been on the Jubilee Line – that we very firmly hold them to account for that, and I will not make an apology for fulfilling that role.

London depends on such a strong client to hold such bodies to account.

Overall, therefore, although the meeting added little to the overall understanding of the current situation, it did represent an interesting opportunity to see the relationship “behind the press releases” as can be seen from the various quotes above.

Finally, with Finch shortly to move on to National Express, it was interesting to get his personal assessment of the £4.4bn costing figure – an assessment he may not have given were he to continue in the Tube Lines role much longer:

I believe the 4.4bn figure Chris has come up with is a blinding deal for the taxpayer and represents exceedingly good value for money.

Written by John Bull