Lessons from America

I'm hot foot off the plane from New York, and it's official, Bob Kiley, London's new Transport Commissioner, heralded by Ken Livingstone as the Saviour of the Western World, does not walk on water. But he comes pretty close. Four members of the Greater London Assembly went to New York to discover the truth about bonds, safety, service and about Bob Kiley. Whoever I talked to over there, whether it was the user groups, the transport operators, the authorities, the politicians, the unions or the academics - they universally agreed that Kiley was a good thing. It's no mean feat to be praised by such a wide range of people. It is clear that under his reign at the Metropolitan Transportation Authority (MTA) ? which runs transport in New York ? the disastrous state of the subway was turned around. However, not all the praise heaped on him is quite true. Two common myths have grown up over here. One is that under him not a single day of industrial action took place. The other is that he was virtually single-handedly responsible for the idea of issuing bonds to raise capital. These turned out to be only true-ish. In speaking to The Transport Workers Union of America, it was clear that a great deal of the explanation for there being no strikes during the changes that took place was more to do with the State's punitive laws against strikes than to Kiley himself. For example, the leaders of such a strike could lose their homes and for every day's strike action, an employee would lose two days pay. However, in talking about working with Kiley, the unions gave great credit to him as someone who was absolutely fair. He was someone they could do business with. This is a skill that will undoubtedly be needed in the months ahead. On bonds themselves - long a Liberal Democrat policy ? it was in fact Kiley's predecessor at MTA, who initiated the first bond issue. Kiley did, though, subsequently use bonds to great effect. It also became clear to me during the trip that he had real talent in two further key areas. Firstly, as a 'manager'. Universally, the key players acknowledged his skills in this area. Secondly, they referred to his ability to spend money well. Together with Kiley's ability to get on and do business with all players, it is these skills that have given him such a formidable reputation and that will be absolutely vital in the transformation of our crumbling Tube into a world-class system. In terms of finance, raising funding for capital transport programs through bond issues in New York, and throughout the USA for that matter, is clearly as simple as falling off a log over there. They cannot understand why we don't. That is how you raise money in the States outside of taxes. End of story. It is also, incidentally, how they also do things in France. As recently as late January, a bonds issue was used to raise money for the French railway system. Looking at the French railways, the New York subway and then the mess that passes for public transport in Britain, it looks like they've got something right doesn't it? The Americans I talked to just couldn't see a problem with bonds and clearly think we are mad over here not to use them. The people in New York who have used bonds to fund everything from the renovation of Grand Central to the new airport transit link are convinced they are a sensible way of funding projects - and they have the practical experience to back this up. Bonds for our Tube would make sense in every way, with value for money and leaving the Tube with a unified management structure. There is a problem, however, for the Treasury. If Ken gets to raise finance through bonds for the tube, what else might he be able to fund this way? And what if other public bodies started to raise money in this way. If bond issue becomes a way of financing big projects, the Treasury loses some control over what happens or does not happen. And if the Treasury begins to lose fiscal control, ultimately that means a loss of political control. Therein lies the rub. Even on financial grounds, Labour's case for its privatisation plans for the Tube is very weak. However, there is also the matter of safety. Labour's PPP would split operations from infrastructure. The history of this on our railways is hardly a happy one. On the tube, we would get chaos just like when every road gets dug up at the same time and the traffic comes to a halt. But, what happens when one of the companies misses its deadlines or something goes wrong? Who takes the blame and who pays the other companies for delays and costs? The fights will be fierce, with endless delays and a bonanza for the lawyers, who will be paid large sums that would be better spent on improving the Tube. Some of my best friends are lawyers and management consultants, but should we really be spending quite so much money on them rather than on the Tube itself? The need for unified management lies at the heart of the difficulties currently straining relationships in the so-called renegotiations between Kiley and the Government. The PPP funding mechanism means that control will not be unified by definition. There certainly would be a structure in which liability is clear. We would know who has to pay compensation if something goes wrong. But by then it's too late. What London needs is a structure that prevents things going wrong in the first place rather than a structure that defines who pays compensation when it has gone wrong. What I heard in New York from the operators and the authorities was that they felt that it made no sense and indeed was dangerous if you don't have unified management. Transport remains unified and in the public sector in New York under the MTA New York City Transit. The Boston academics who briefed us at the Centre for Transportation Studies at MIT (Massachusetts Institute of Technology) took a look at these issues not only across America, but across the world, where both privatisation and public sector transport systems have had varying degrees of failure or success. They cited a case where 7 tube lines were sold to 7 separate consortia. Whilst this overcame the problems of splitting infrastructure from operations as each line was taken over in its entirety, the seven could not agree on pricing, interchange or co-ordinate when closure for repair was needed. Guess who lost out? From the examples they gave us, it was clear that what succeeded in the short-term often gave way to long-term service decline and ultimate requirement to change once again. Outside of the safety issue, the safeguard against failure was good management and active and sound fiscal control. So ? with a bond issue and a unified structure, what do New Yorkers get bangs for bucks? Not everything in the New York tube garden is lovely. The basic fabric of their subway system is physically quite brutal. They laugh at the idea that we have upholstery on our seats and Rosemary Scanlon, author of London / New York - an economic study of the two cities ? said, 'our system will never be as pretty as yours'. She's right. All their rolling stock, old and new, is far more utilitarian than ours is. In fact it makes ours look not only pretty but also comfortable by comparison. This isn't a thought I had previously associated with the Northern Line ? pretty and comfortable!