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Gordon Brown's £30 billion Public Private Partnership to refurbish the Tube has wasted vast amounts of public money and could collapse, says the managing director of London Underground.
In an exclusive interview with the Standard, Tim O'Toole, who is leaving at the end of the month, also warned Londoners that while major improvements are on the way, including "fabulous new air conditioned trains for the Metropolitan, Circle and District lines," in the short term disruptions are likely to get worse as new signalling systems are introduced.
O'Toole, an American who joined London Underground six years ago after a career on freight railways in the US, warned that the future of PPP was in doubt unless the remaining contractor, Tube Lines, could deliver the Jubilee Line resignalling project on time at the end of this year.
PPP, a highly complex scheme devised by the Treasury and consultants PriceWaterhouseCoopers as a way to bring funding into the London Underground, has already partly collapsed following the demise in 2007 of Metronet, the company responsible for maintenance of two-thirds the system.
The Tube Lines contract comes up for renegotiation in 2010 and its future hangs in the balance because there is a gap of around £2 billion between the amount available to pay for the work up to 2017 and the company's assessment of how much it needs.
For Tube Lines to survive, O'Toole says, it must "present a sensible commercial face that makes sense to stakeholders, such as us and the Government".
He attacks the core idea of the PPP, pushed through by Mr Brown as Chancellor despite widespread opposition in an effort to reduce the cost of refurbishing the Underground by using private companies. While London Underground remains responsible for train operations, the maintenance of the track and the rolling stock is undertaken privately. "So many things about the PPP were wrong," says O'Toole. "Separating the track from the infrastructure was wrong.
"The theory was that these private companies would come in and introduce all this innovation but fundamentally we have not had the level of innovation that justifies the extra cost of the PPP."
The private companies, he says, have played safe and not introduced risky new technology but rather have milked the system for what they can get. The collapse of Metronet was "inevitable".
Worse, because of the way that the contracts were structured, Londoners have been paying far more for the refurbishment of the Underground than would have been necessary otherwise: "The PPP was designed to prevent us having proper oversight of the work. Under the PPP, we could not even withhold payment to the contractors as you could under normal contracts." He said TfL had gone to court to try to force Metronet to take "corrective action" over work at stations but the company had successfully appealed.
O'Toole was an unlikely choice for the job of running one of the biggest metro systems in the world, having previously worked for American freight railways. He was headhunted when he was out of a job after his company, Conrail, had been taken over. While at first he did not take the idea of running London Underground very seriously, he accepted after meeting Bob Kiley, the American who was then Transport Commissioner, and Ken Livingstone, then the Mayor.
O'Toole is hugely popular among London Underground staff: you only have to travel on the Tube with him to see that the staff both recognise and respect him, as they all greet him. He was fortunate that due to the delay in handing over the Underground to Transport for London, he spent his first five months in London touring the system meeting staff and passengers. Some of his innovations, such as having boards with information on every line at each station are a result of that experience.
He is proudest of the way that he has managed to engage with the 13,000 staff (with another 7,000 having arrived recently from Metronet) and, though he does not say it, that has enabled him to go over the heads of the troublesome trade unions. Since his arrival, with one minor exception, there have been no strikes, despite the innumerable threats.
He says that the secret is to ensure that he keeps communicating with his staff, which makes confrontation harder.O'Toole's surprise departure comes at a difficult time for the Tube, with major resignalling projects being implemented and the Tube Lines contract being renegotiated.
There is no doubt, as he repeats several times, that he regrets having to go. He has been living in a different country from his wife for six years and is returning to the US because she did not want to settle here. The whole interview is suffused with expressions of regret. He says that with new signalling systems coming on stream and the new trains on the sub-surface lines, Londoners will finally start noticing substantial improvements. However, first there will be even more weekend closures as a result of the upgrading."The way the PPP was structured, it encouraged these closures," says O'Toole. "In Madrid, they overlay a new signalling system and can turn it on and off during testing."
In the future, though, he envisages that things could be done differently, especially when the Piccadilly Line is resignalled in the mid 2010s. "The Piccadilly is London's artery at weekends with Harrods, football, the airport and the West End. There must be an alternative way of doing it."
That will certainly be a relief to Londoners - but all this will have to happen without O'Toole.
O'Toole's finest hour: getting the Tube working after the 7/7 bombings
It was the terrible events of 7 July in 2005 that brought Mr O'Toole to the attention of Londoners and earned him the CBE, a rare honour for a foreigner.
It was not only the calming effect of Mr O'Toole's press conferences in the immediate aftermath of the bombing that was so impressive but also the way he ensured a near full Tube service was running the next morning.
Shuttle services were set up to avoid the bombed stations and the whole system was fully functioning within four weeks.
He says: "Within an hour and a half of the incident, we divided the management into thirds. We had one group to continue to deal with the immediate response, there was a second group who worked on an operating plan to restore services immediately and there was a third group to bring these three sites back."
That was in sharp contrast to the derailment at Chancery Lane just before Mr O'Toole's arrival, which resulted in the closure of the line for several months.
Mr O'Toole realised that restoring the service was not only important for London - and indeed the whole country in terms of its economy - but also that it reduced the risk of further terrorist attacks.
"I like to think that the job we did made us a less likely target because if they could be shown to succeed in shutting us down they would keep on returning.," he said."
Reader views (14)
While I agree that the PP has not been a success, the usual traveling public moans about not seeing anything are not fair as a lot of hard work has been undertaken and delivered in a lot of areas. One only has to look out the window from where I live to see some of the improvements that have come across... but as per ususal the typical British Public expects everything over night... its not that easy to redo an archaic system in a very short time and like building works, ages go by doing the foundation work before the builidng rises from nowhere in a quick amount of time.
I guesss its a case of, we the traveling public dont see past the train we are trying to through ourselves onto at Peak time and moan about the shoddy service and its overcrowding when in most cases these same people are always dgetting to the station at the last minute possible to get to work.
Yes, I can see the but we don't get paid to start early... however iyou still get paid for arriving 20 mins late... perhaps we should all look at ourselves first and realise the impact our actions have on the tube system as well.
- Paul Ackit, London
I have an idea. All that public money we are wasting on the Olympics, let's divert it to something more needy - public transport!
- Cally G, Essex, UK
PPP was a complete disaster and TFL, LUL and the govt were warned by the hated RMT as well as city experts who all saw the public purse waiting to be milked from its cash by the greedy contractors that are still bieng used by the underground, what have they deliverd? virtually nothing and the cash has gone.
Boris will not sort this out by confrontation and war with the unions, both the RMT and LUL/TFL need to sit down , stop fighting , and find common ground and a common cause to save jobs and to rebuild the underground in a spirit of co-operation from both sides.
- Brian, Wiltshire
"wasted vast amounts of public money and could collapse" like the rest of the PP/PFI robberies, sorry, schemes. Feed rich suits at everyone elses expense. IMF logic.
- Mark, London
the Scottish Government is trying to dump the PPF projects that it has been saddled with by the former Lib/Lab coalition we were saddled with. because it is a minority government the Tory/Lib Dems and the Labour party have all tried to resist this move and leave our great grandchildren to pay off this debt.
- Ron Oliver, Edinburgh Scotland
Is anyone surprised to find another £multi billion hole out there, how many more will be found before Browns mob are booted out at the next election?
- Mike, London England
The phrase "Everyone told you so, Mr Brown" come to mind.
- Adam, Harrow, UK
Yes, PPP was the Clown's idea, how's the incompetent worm going to squirm his way out of this one? Blame the USA for it?
With responsibility comes accountability, what punishment should be meted out on him? At the least, his pension etc should be taken from him and paid towards the cost.
- Ralph, GB
I bet Gordon Brown gets blamed for this somehow
- Keith Price, Luton, England
Once again Gordon Brown has demonstrated what an appalling decision maker he is when spending the country's money. The nation opposed this scheme years back and predictably its going to fail - first the PM sold our gold reserves at ridiculous prices and now has destined our crumbling transportation system to ruin, he just wasted our money. I cant imagine we'll get an apology either eh Gordon?
- Marcus Newman, London
The basic problem is that Brown having millions on consultants came up with a contract that gave the contractors everything they wanted and although the whole point of PFI was to put the risk onto the Private Sector he ensured that it was Londoners to pick up the tab. I expect an apology to London but not in my lifetime.
- Dave, London England
Another legacy from the odious Brown!
- Chris, Brighton, England.
Remind "PPP" when you get to the ballot box. Brown is trying desperately to disassociate himself from PPP, and hoping that voters have their usual short memories. Billions and billions wasted on the PPP, and it all comes back on the man who pushed it through despite massive opposition from those who predicted its folly and wanted funding to come from other means (such as a bond issue).
- Phil Jones, London UK
I have complete 100% faith in Boris sorting all this out.
- Kimberley, London
