Today, as Ken Livingstone goes to the High Court seeking a judicial review of the Government's Public Private Partnership (PPP) scheme for the London Underground, Ministers should perhaps reflect on the possibility that he is trying to do them a favour. For if the Government is determined to stake its reputation on public service delivery, it could scarcely have chosen a worse way to go about it in the capital.
The Government's PPP ideas are widely seen as expensive, unworkable and potentially unsafe. Under current plans, train operations will remain in public hands while infrastructure maintenance is parceled out in three segments to private consortia on 30-year contracts. There is no experience of such a system working, nor is the belief that it will produce efficient management supported by any independent study. For a glimpse of how this will work in practice we only have to look at the chaos the same arbitrary division between operations and maintenance has brought to our national rail network. We've seen the future and it doesn't work.
The levers that London Underground will have at its disposal to ensure joined-up management are weak because the private consortia have demanded maximum discretion in setting their priorities to reduce costs and increase profits. Their public service objectives will be contained in the terms of their 30-year contracts, leaving little scope for flexibility in response to changing circumstances and a feast of possibilities for the consortia to exploit loopholes. Disputes will be settled by a complex and uncertain arbitration mechanism. The Government, which came to power on a promise to introduce an integrated transport policy, now seems determined to engineer the fragmentation of one of its key elements.
The Government's claim that PPP offers the best value for money should be taken with a pinch of salt. As the recent report of the Institute for Public Policy Research's Commission on Public Private Partnerships makes clear, the scheme was chosen to get investment in the Tube off the Treasury's balance sheet and for no other reason. The report was scathing about its ability to deliver the improved efficiency needed to offset the higher cost of private finance. Other forms of PPP that might have retained unified management and delivered better results were dismissed out of hand.
One of these was proposed by Bob Kiley, the man who turned round New York's failing metro system by using its assets to attract private investment. Between a respected public official with a proven record of improving urban transit systems and a Government with a proven record of presiding over the deterioration of public transport, there should have been no contest. Yet it is high-handedness, rather than humility, that has characterised the Government's treatment of Bob Kiley. Tony Blair talks a good game on the need to improve public services. But when confronted with someone who has actually done it, his response, in stages, has been to string him along, undermine him, sack him and then gag him.
Mr Kiley is not alone. Almost no one other than the Treasury and the preferred bidders seems to think the Government's plans are a good idea. A wide majority of Londoners, almost every London MP, the Greater London Assembly, three quarters of London businesses and two thirds of industry experts oppose the scheme.
The real significance of the PPP debacle is what it reveals about some of the central weaknesses of New Labour. First there is the style of the Prime Minister himself. In May, when Bob Kiley met Tony Blair, he came away with a mandate to negotiate a new structure and the belief that his concerns had been taken seriously. Two months later he was sacked. It is one of Tony Blair's least admirable qualities that he tends to leave everyone he speaks to with the impression that he's agreed with them, even when he hasn't. There is, in fact, no real contradiction between Bob Kiley's version of events ("Trust me, Bob. I feel your pain.") and the eventual outcome ("Yes, Gordon. You're right, Gordon."). It is clear to anyone who has worked inside this Government that the Prime Minister will always pursue the line of least resistance, which almost invariably means doing whatever his Chancellor wants.
Then there is New Labour's spectacular lack of judgement when it comes to dealing with the private sector. There is surely something perverse in that fact that it has taken a transport expert from the citadel of American capitalism to explain to a British Labour government the limitations of private sector involvement in the delivery of public services. New Labour's response to the charge that Old Labour was anti-business has been to invert the dogma, "public good, private bad". This has manifested itself in a naive faith in the omnipotence of market forces and a fawning attitude to private wealth. The result has been a string of errors from Ecclestone to the Hindujas.
The third weakness is the shallowness of New Labour's commitment to the decentralisation of power and its inability to deal with the past. The most obvious solution to the problem of the Tube would have been to vest proper power and accountability in the Greater London Authority. This would have allowed Ken Livingstone to proceed with a scheme of his choice, raising the necessary revenue through bonds, higher road pricing or additional taxation as he saw fit and being held to account for it by Londoners. The current system, where the GLA is given responsibility without power, is an affront to democracy. New Labour's fixation with the past precluded the right answer. If they couldn't stop Red Ken becoming Mayor, they were determined to stop him exercising the powers he enjoyed at the GLC. The result is a form of governance for London designed to give the impression of decentralisation while retaining power in Whitehall.
A successful outcome to Ken Livingstone's legal challenge would be a victory for common sense and offer hope to the people of London that they might finally get the Tube system they want and deserve. More than that, it could force New Labour to address some of the inner weaknesses that have already made this Government rather unlovable.
The author was special adviser to Robin Cook from 1994 to 2001Reuse content