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Stephen Glaister Give the power to the mayor

One year on, the PPP for the Underground upgrade has been seen to be a hasty and awkward compromise that is unlikely to meet many of its objectives.

It conflicts with two later policies: local democracy for London and Integrated Transport Policy encouraging the use of public transport. The doubt and confusion of parliamentarians is apparent in the late February Hansard reports on the GLA Bill Standing Committee.

It is not too late for change: there is a simple modification that may yield a quicker and certainly a better result.

Objections to the Government's present intentions arise from a grim determination to fix the PPP before handing the Underground to the new Mayor, months - or even years - after the London elections in May 2000.

So Government should declare that the PPP will be but one of a number of alternatives open to the Mayor to choose from. If the elected Mayor were to seek and obtain a mandate for the PPP in the election then it could still be implemented on the Government's own current timetable.

On the present plan the local electorate and the Mayor would have little say in a contract that seeks to tie up a centrepiece of London's transport strategy for thirty years. For the transition period control of the Tube will be disintegrated from control of the buses. There is no funding provision for fundamental increases in capacity.

The PPP creates fearsome administrative complexity and cost for little gain. Competition for passengers is not on offer. Nor is an opportunity to exploit property assets. Commitments to protect employees' terms and conditions limit the likely cost savings.

Public transport fares continue to be increased in the financial modelling, which would hardly encourage public transport use. Yet, as we estimated in our June 1998 assessment, Government has now conceded that the scheme fails to remove the liability from the Treasury's books.

Parliament is not being allowed to scrutinise the modelling that underlies the liability it is being asked to sign up to.

How could releasing unbiased information lead to a worse deal in an open competition in which the holder of the information is not a bidder?

Successful signatories would be delighted to have a thirty-year contract with a rate of return guaranteed by the independent arbiter, and many opportunities to negotiate claims.

But the private sector would hate it if, as now seems a distinct possibility, the promised value for money comparison of up to twelve detailed tenders against continued public sector provision led to no PPP contract being awarded. And what then - does the old management stay in place by default?

The proposals for regulation are half-baked. The Government's notion that a spirit of 'partnership' would prevail at periodic review of access charges defies experience. There are intrinsic overlaps with railway regulation, especially if Railtrack were to be involved. This is the stuff of full- blown, independent, network utility regulation. The suggested, bureaucratic, scheme of rate of return regulation is one the US utility regulators have been moving away from for years and where possible it has been avoided in the UK, with good reason.

Much though the Treasury may protest that the mechanism of support to be used for funding the Channel Tunnel Rail Link was a one-off, it offers a better model for the Underground.

The key is to acknowledge that some state (maybe small) financial support is necessary and then provide it in the form of long term guaranteed income streams and a degree of underwriting of debt. New York Metropolitan Transportation Authority has successfully funded over $25bn (£15.6bn) of capital reconstruction in this way. If offered to London, this mechanism would create a proper, long term, tradable debt structure and an associated capital planning process against which the Mayor and Greater London Assembly could be properly held to account.

Will the Government persevere with an ungainly, expensive and undemocratic compromise that may not deliver the goods, or have the courage of its convictions on London democracy and hand to the Mayor power, accountability and the capacity to raise finance in order to sort out the Underground?

The way out: an alternative approach to the future of the Underground by Stephen Glaister, Rosemary Scanlon and Tony Travers is published on Monday. Copies available on 0171 594 6090

Stephen Glaister is Professor of Transport and Infrastructure, Department of Civil Engineering, Imperial College, London.

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