The Hidden Danger in Ending PPP on the Tube

The acquisition of Tube Lines by Transport for London effectively ended the PPP experiment on the Tube. There are potentially many advantages to the end of the deal, but has it left the Tube more exposed now to cutbacks on desperately needed upgrades.

PPP is dead. That’s the headline from TfL’s purchase of Tube Lines completed at the end of last month. PPP’s had a pretty ill-starred existence and many people will be happy to see the back of it. In many ways its demise has been a long time coming. Metronet, the biggest of the PPP contractors, managed to survive over 4 years before falling into administration. The most visible evidence of their failure was in their station upgrade programme that was significantly behind schedule and even further over budget. They never even got to many of the big ticket items they were charged with upgrading, like the re-signalling of the sub-surface lines and they left the Victoria line half done.

Tube Lines looked to be making a better go of it until recently. Station upgrades were being completed on time and within budget and the Jubilee Line upgrade was broadly on track. But then things started going wrong. Quality issues on the new signalling system for the Jubilee line pushed the date out past the point required in the PPP contract, opening up Tube Lines to paying significant liquidated damages. The TfL board minutes show a project going from bad, to worse, to pretty disastrous. At the same time the problems on the Jubilee line were pushing out upgrade work on the Northern line. This combined with a poor outcome from the PPP Arbiter’s Periodic Review meant the end wasn’t entirely unexpected. TfL’s offer to buy the company was probably a blessed relief in some respects for Tube Lines shareholders.

So is the removal of PPP wholly good news? Well there plenty of it in there. TfL thinks its made significant reductions in back office costs as a result of combining Metronet into London Underground. Alone this has saved £570M up to 2017/18. They also have greater flexibility in how they spend and when they do it. No doubt there are similar savings to be made when Tube Lines are

Amongst the good news there’s a danger though I think. Under PPP there was a legal and contractual commitment on the part of Tube Lines to complete the work to upgrade the tube, and a corresponding requirement on Government to pay for it. That’s gone now. Now was that anyway a cast iron guarantee, well no. A change in the law (with maybe a compensation payment) and anything can happen. But at the very least there was a framework in place to ensure the work happened. Now the only thing standing between the Tube and cuts at the behest of the Conservative-led coalition is … Boris Johnson. Still sitting comfortably?

The Tube is the prime target for cost-cutting as Crossrail is mostly funded from other sources, as London Reconnections shows here there is little scope to cut the Central Government contribution much of which has already been spent.

On the whole most people will be glad to see the back of PPP. As a Labour supporter its difficult to see it as one of our finest moments. But there could be some pain in store as well as a result of its passing. More reason than ever to have someone in City Hall that can advocate the case for London and why doing nothing on the Tube is not an option.

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