PPP in the dock

RMT news – Tube maintenance T HE privatisation of London’s Tube mainte- nance and infrastructure contracts has led to enor- mous costs for the taxpayer, a report from MPs has revealed. The House of Commons Public Accounts Committee report agreed that there were cheaper ways of introducing the Public Private Partnership (PPP) deal for maintaining and upgrading London Underground. The committee’s chairman Edward Leigh said that it has cost the public purse nearly £1 billion to set up and finance the deals in this way. “The PPP deals are inherently complex, given the approach taken, and have led to enormous costs for the taxpayer. “The set-up costs to the public sector include LU’s costs of £180 million and the payment of £275 million of bidders’ costs”, he said. He went on to point out that lenders are well protected but still see enough uncertainty in the deals to charge £450 million more for the financing than it would cost to repay government loans for the same amount of borrowing. Under PPP, two private infrastructure companies – Metronet and Tube Lines – are now responsible for maintaining and upgrading the Underground. The committee’s report said that a bond financing scheme would have been cheaper than the PPP financing costs – the option favoured by Transport for London MPs also said the two infras- tructure companies were chosen as preferred bidders in May 2001, although financial deals were not finally concluded for Tube Lines until December 2002 and for Metronet in March 2003. The report revealed that the bidders were therefore in a position of some negotiating strength for over a year. Transport committee The House of Commons Transport Committee also said that PPP had been a costly exercise not justified by any benefits. They also found that on most London Underground lines the privateers had been unable to meet train availability benchmarks which were lower than those which had been met previously. The Committee said that because of this failure they had no confidence in the ability of the Infracos to meet more demanding targets in the future. On health and safety the Committee drew particular attention to the White City derailment. The report explained that the derailment appears to have been caused because measures put in place following the Camden Town derailment “had not been adequately communicated or explained to individuals within the Metronet BCV Central Line track team”. Alongside these serious concerns caused by private sector fragmentation the Committee also noted that post PPP there has been an increase in the number of incidents which could lead to accidents. RMT submitted written evidence to the committee’s inquiry which was critical of the massive profits that the private sector has made in the first year of operations – in 2003/04 the Infracos banked pre-tax profits of almost £100 million. RMT evidence also pointed END PPP RIP-OFF PPP has cost the taxpayer over £1 billion and is not value for money say House of Commons committees 18 RMT news – Tube maintenance Incorporating The MacPhail Lawrence Partnership. 65 Bath Street, Glasgow G2 2DD. 22 Pavement, York Y01 9UP e-mail: mail@drummond-miller.co.uk website: www.drummond-miller.co.uk > Injuries at work > Post traumatic stress disorder > Repetitive strain injury > Road traffic accidents > Vibration white finger > Criminal injuries claims Experts in Employment Law, Accident and Injury Claims > Asbestos related diseases > Unfair dismissal > Discrimination > Conveyancing - Estate Agency > Wills & Executries > Family Law Telephone 0141 332 0086 - Glasgow 01904 - 674061 - York Drummond Miller Drummond Miller ARE PLEASED TO OFFER OUR CONTINUED SUPPORT TO THE RAILWAY, MARITIME & TRANSPORT WORKERS’ TRADE UNION. Legal services helpline for Scottish & North East England members - freephone 0800 328 1014 McDonnell/John Dismore/Andrew Gerrard/Neil Cryer/John Corbyn/Jeremy Russell/Bob Hancock/Mike Cohen/Harry Cryer/Ann Taylor/David Caton/Martin Hopkins/Kelvin Cummings/John Lewis/Terry Barnes/Harry Campbell/Ronnie Clapham/Michael Jones/Nigel McNamara/Kevin Mahon/Alice Hamilton/David Price/Adam Vis/Rudi Breed/Colin Skinner/Dennis Tonge/Jenny Jones/Lynne Wareing/Robert N Drew/David Davidson/Ian Smith/Llew Cox/Tom Khabra/Piara S Marris/Rob Francis/Hywel Mitchell/Austin Dean/Janet Abbott/Diane Trickett/Jon Truswell/Paul Etherington/Bill Simpson/Alan Sedgemore/Brian Strang/Gavin Benton/Joe Olner/Bill Llwyd/Elfyn Hurst/Alan Clark/Helen Baker/Norman Coleman/Iain Bennett/Andrew F Hoey/Kate Grogan/John Cruddas/Jon Hall/Patrick McWilliam/John Rapson/Syd Cotter/Brian Wyatt/Derek Hepburn/Stephen Clarke/Tony Follett/Barbara Godsiff/Roger Holmes/Paul Donohoe/Brian H McCafferty/Chris Reid/Alan Perham/Linda Smith/Geraldine Flynn/Paul Shipley/Debra Chidgey/David Stringer/Graham Davey/Valerie Bradley/Keith Teather/Sarah Savidge/Malcolm Pollard/Kerry Naysmith/Doug Cousins/Jim LONDON UNDERGROUND PUBLIC PRIVATE PARTNERSHIP: McDonnell/John That this House welcomes the decision of Network Rail to bring all maintenance work back in-house on the national network; notes that in the Network Rail areas where maintenance contracts were first brought in-house, delays caused by infrastructure failures have fallen between 36 per cent. and 50 per cent,; further notes that Network Rail has stated that the decision will bring the benefits of a single, integrated rail maintenance operation and management structure, which will improve track safety and standards of rail maintenance; believes it is now untenable to have fragmented maintenance on the London Underground or to allow the same companies, such as Jarvis, that have been removed from maintenance contracts on the national railway to continue to profit from declining standards on the Tube; and calls on the Government urgently to authorise the renegotiation of the public private partnership contracts with a view to bringing all maintenance and renewals under the direct control of London Underground. 19 Over 80 MPs signed Early Day Motion 383 for an end to PPP rap railagainstprivatisation out that the experience of privatisation on the mainline in relation to fragmentation, increased safety fears and de-skilling was now being replicated on the Underground. The union highlighted the effects of the PPP on terms and conditions and the multi- tiered workforce particularly in regard to pensions where Tubelines has closed their final salary scheme to new entrants – a move which Metronet plans to follow. These attacks on pension provision stand in sharp contrast to the £100,000 bonus paid to the Tubelines chief executive in 2004. RMT general secretary Bob Crow said that every pound wasted on this “shameful” scheme is a pound less invested in trains. “We already knew that the privateers were taking £2 million a week out of the Tube system in profits, now we know that taxpayers have been mugged of £1 billion just to set this ludicrous scheme up. “The time has come to draw a line and bring Tube infras- tructure back into the public sector where it belongs,’’ he said.