Plundering the Tube

Submitted by AWL on 21 January, 2014 - 6:14

As Tube unions, passenger and community groups launch the “Hands Off London Transport” campaign in the latest battle over the funding and future of the Tube, Janine Booth’s book Plundering London Underground, which documents the struggles against the introduction of the Public-Private Partnership (PPP) from 1998, and its ultimate demise, is significant and timely.

It is only three years since the demise of the Public-Private Partnership (PPP) on the Tube, which saw billions siphoned off to privateers. Yet the Tube is now facing a new funding crisis. This government, with the full backing of London’s Tory Mayor Boris Johnson, is forcing massive subsidy cuts of £9.8 billion on Transport for London and London Underground. Tube unions and passengers are gearing up to fight these cuts and make the case for a properly-funded, publicly-owned Tube.

This campaign will involve young trade unionists, students and activists who were not involved in the long anti-PPP struggle; the strikes, demonstrations and activism of that period are therefore well worth revisiting, as a source of inspiration and also to learn the lessons from that time.

Plundering London Underground is a unique analysis of that period in the Tube’s history. Booth, a Tube worker and trade unionist, was immersed in the battle to opposeprivatisation. She interviews those directly involved, both ordinary workers and company bosses, to expose the politics behind the PPP experiment and to explore the consequences for Tube workers and passengers.

From its announcement by Deputy Prime Minister John Prescott in 1998 to its collapse in 2010, the PPP was mired in controversy. First mooted as a cure for the funding ills of the Tube following decades of underinvestment, PPP, it was claimed, would allow for sustained investment in London’s Underground and at the same time bring in private sector expertise and finance.

The mantra, in accordance with the New Labour orthodoxy of that period, was that the public sector was inefficient while the private sector and its profit motive was the harbinger of efficiency and good management.

As Chancellor Gordon Brown put it, the private sector “could bring a wide range of managerial, commercial and creative skills to the provision of public services”.

But Tube unions and campaigners fought to oppose private sector involvement, refusing to accept that PPP was the “only show in town”. In autumn 1998, the RMT’s London Transport Regional Council launched the Campaign Against Tube Privatisation (CATP) “to encourage Londoners beyond its own ranks to join in opposing the Public-Private Partnership”. The campaign’s name reflected the union’s assertion that “despite Deputy Prime Minister John Prescott’s denials, the PPP was a form of privatisation.”

CATP’s support, influence, and campaigning turned round the public’s perception of the PPP from an initial lukewarm relief that London Underground would at least get some kind of long term funding, to outright opposition to PPP. Even the trade union-hating Evening Standard had to reflect the views of its readers, mainly disgruntled and fed up commuters: “In 1999 the PPP was a ‘realistic funding policy’ that would ‘improve and update London’s Tube’; in September 2000 the terms of the PPP contracts were ‘scandalous’; and by July 2001, the Standard was running an online petition against the PPP.”

Alongside the public campaigning and demonstrations there were also strikes by Tube workers, pre- and post- the imposition of the PPP — both official and unofficial. Tied by anti-trade union laws preventing the unions from calling strikes around the political nature of the PPP, the workers took strike action over safety and demands for guaranteed job protection. Tube strikes tend to be, or at least are reported to be, unpopular, but one of the strikes to stop the PPP, a 48- hour strike of RMT members in February 1999, showed that sections of the public backed the union action, “many members of the public phoned its headquarters to express support for the strike”.

Booth’s narrative also covers the contribution and role of Ken Livingstone. The Greater London Council was abolished in 1986, but the Labour government created the Greater London Authority and a directly-elected Mayor. As the political parties went through their processes of choosing candidates it was clear that the future of the Tube would be a critical factor. The Labour Party manipulated the selection of their Mayoral candidate to the extent that, though Livingstone gained 70,000 votes in the electoral college to Frank Dobson’s 20,000, Dobson was declared Labour’s candidate. Livingstone stood as an independent candidate, supported by rail unions RMT and ASLEF, and his opposition to PPP was a central plank of his campaign. As the Economist reported “Mr Livingstone’s decisive victory looked like a vote against the government’s (PPP) plan”.

But Livingstone didn’t drive home this mandate to work with the trade unions to finish off the PPP. His preferred route of legal reviews did little to kill off the privatisation. By the end of his tenure as Mayor, Livingstone was doing his own privatising, of the East London Line, and during his time had even called on Tube workers to cross picket lines.

The PPP was fully imposed in 2003 and Livingstone capitulated in a letter to Alistair Darling: “An orderly and rapid transfer of the Tube is critical for the management of these complex contracts and to improve the transport services we are providing to the millions of people who use the Tube each day”.

And the contracts were complex. As Booth points out, the draft contracts in 2001 “involved 135 separate documents, over 2,800 pages and 2 million words. One set of contracts alone filled 10 single-drawer filing cabinets”.

Private “infrastructure companies” (“infracos”) were formed to maintain and improve the Tube’s infrastructure: Metronet, with “partners” Bombardier, Thames Water plc, and Atkins plc; and TubeLines, made up of Amey plc, Bechtel Corp, and Jarvis plc.

In the first two years of the PPP, four serious derailments hospitalised passengers and called into question the infracos ability to adequately maintain trains and track. Engineering overruns regularly meant that the train service started late. In one incident in January 2005, 100,000 passengers were stranded and in 2006 engineering overruns took place 207 times during the year.

Basic but essential maintenance under PPP took a dive while at the same time the private companies dodged contractual responsibilities to get on with improving the Tube. This was because under the contracts the infracos would get huge bonuses for improving such things as train and station “ambience”, but “abatements”, the penalties for failing on maintenance and improvements, were negligible in comparison.

PPP was supposed to shift Tube funding from government subsidies to private sector finance and bring private sector “experience and drive” to infrastructure maintenance and improvements. It did neither. What it did was provide a cash cow to the private companies and directors involved in the PPP. The central government grant to LU increased 27-fold from £44.1m in 1997/98 27 to £1.218m in 2003/04. By 2005 LU had forked out £2,220.2 million to the infracos. At the same time the Directors were “awarded” obscene monies for failure. Terry Morgan, the Director of TubeLines, pocketed £552,000, while the Metronet Chief Executive trousered £325,000 in the first year of the PPP. It was the long-suffering passengers who paid these huge amounts of money to the privateers: first in taxes, secondly in fares.

The “commercial and creative skills” Gordon Brown lauded at the outset of the PPP was also brought to bear as the privateers maximised profits at the expense of “efficiency”. Both infracos were subcontracting their work to their own subsidiaries. Metronet created Trans4m, a “consortium within a consortium… a conveyor belt carrying Metronet’s income from the public purse to its private owners’ pockets.” Not only was this corrupt, it was also inefficient, as a former Metronet worker said:

“My colleagues and I witnessed the placement of multi-million pound contracts with Balfour Beatty Construction Ltd (BBCL) sub-contractors, who were not fit to be scrap dealers, let alone competent premises refurbishment contractors. BBCL managed works went on average approximately 2.5 times over the original budget with all the costs fully reimbursed through Trans4m/Metronet…”

By the middle of 2007 the PPP was unravelling. A series of even more high profile failures by Metronet, culminating in another derailment, this time at Bethnal Green Tube station, brought to a head the fact that the company was floundering. LU, despite repeated attempts to use the contracts and even the courts, were powerless to force Metronet to improve. In May 2007 Metronet admitted it “could no longer meet its financial obligations”, while RMT stressed the firm had “collapsed under the weight of its own inefficiency”.

As the powerful Transport Select Committee noted, Metronet’s collapse“fatally damages the government’s assumption that that the involvement of the private sector will always result in efficient and innovative approaches to contracts”. Metronet went into administration in the autumn of 2007 and finally transferred back to London Underground in 2008.

The cost of the failure was incalculable. Transport for London was liable for 95% of Metronet’s debts and had to front £900 million to administrators Ernst and Young LLP.

The government also gave £1.7 billion to Metronet’s lenders as part of the TfL funding settlement. At the same time “there was money wasted: TfL paid £1.2 billion for station renovations that Metronet had not carried out”. TubeLines went the same way, with even Mayor Boris Johnson at the end describing PPP as “larceny” and “demented”, and was brought back into London Underground in 2010.

All those who campaigned and joined the demonstrations, and the Tube workers who struck against privatisation, were proved right. The argument that private sector involvement in the railway is necessarily good has been derailed.

In Plundering London Underground’s final chapter, “A socialist alternative”, Booth argues that “London Underground needs public ownership and adequate funding [which] would allow stability, and that stability would promote effective working and improvements”. More than that, Booth makes the case that it is time to move away from standard government control with its top-down uncertainty.

Londoners need “working class-class control through a Workers’ and Passengers’ Plan, [which] would be a transformational and transitional policy for London Underground: it would see enormous improvements to the Tube, with consequential benefits to society as a whole, while posing a model for a socialist urban transport policy.”

To those campaigning to defend TfL and the Tube from Tory cuts, Plundering London Underground gives an alternative vision on the type of funding and model for London Underground. It also hammers home the campaigners were proved right but lost the battle over PPP.

For those stepping up to join the fight for London’s transport system it will not be enough to be right: this time we have to win.

• “Hands Off London Transport” campaign

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.