After one year of the unpopular and controversial public private partnership (PPP) on the underground the contractors in charge of upgrading the network have been shamed by London Underground chief Tim O’Toole for poor performance - while raking in profits of two million pounds a week.
According to O’Toole the conglomerates are using only 30 per cent of available time for engineering work, not spending enough on plant and equipment, and cutting costs to boost profits. “The standard practice,” he says, “is to cut costs. I’m saying this is not the way to do things now.”
Their contracts were forced through despite bitter opposition from Ken Livingstone, Bob Kiley (head of Transport for London (TfL)), and transport experts. They suggested the funding the tube upgrade through a public bond issue on the New York subway model.
Instead, two conglomerates of multinational companies known as ‘infracos’ were awarded plum contracts contracts worth £15.7 billion over 30 years to modernise tracks, stations and tunnels – a virtually risk-free deal guaranteeing decades profits at public expense. The contracts were so complex that lawyers and consultants fees came to £455 million.
According to Bob Kiley, “the Government's PPP is not the right way to manage the maintenance and renewal of the Tube. As they stand, the PPP contracts do not address the improvements to the Underground that TfL and the public demand. No matter how effectively we work we face severe limitations on what we can achieve given our limited resources.
“We need to reverse the effects of decades of neglect on London's transport, as well as respond to the projected employment and population increase over the next decade - and this simply requires higher levels of investment than the funds we currently receive through fare revenues and government grant.
“So far, however, the Government has been unable to give us any assurances of further assistance.”
In other words, the people in charge of transport on behalf of Londoners are at the mercy of a motley collection of huge corporations to New Labour prefers to throw billions in public investments.
It is now cheaper for the contractors to keep underground lines shut when work overruns than to pay penalties for imposing speed limits – a fact millions of Londoners are well aware of on Monday mornings!
There are also serious concerns for passenger safety. Maintenance on both surface rail and the underground is now contracted and repeatedly sub-contracted out to dozens of small fly-by-night companies with abysmal safety standards. TV documentaries have shown appalling examples of shoddy work by these ‘sub-sub-sub-contractors’.
The reality is that the contractors ran rings around the government when the contracts were negotiated. Transport expert and member of the TfL board Stephen Glaister said the government expected “a partnership in which we were all going to be best friends. We said ‘You’ve got to be joking.’ It was completely naïve.”
While Blair and Brown had already committed themselves to PPP come what may, the conglomerates brought in crack negotiating teams who walked away with ‘silly’ contracts.
Behind this lies New Labour’s devotion to PPP contracts - the truth behind Blair’s ‘Third Way’ – which have plagued public transport, local government, education and the NHS. Con-men like Blair and Brown are aiding and abetting international capital in the greatest rip-off of all time, the mass privatisation of every area of public life.