Public Services Management: Short-term funds go down the tube: Dragging an antique system into the 1990s requires years of commitment to modernisation. Cathy Aitchison has a look underground

IF London Underground could rebuild from scratch, the system would undoubtedly be planned very differently. Newer undergrounds in cities such as Hong Hong and Tokyo run trains through roomy tunnels on gently curving track and give passengers long boarding platforms that can handle trains carrying up to 2,500 people at a time - unlike London's maze of narrow twisting tunnels and often clumsy interchanges.

The Northern Line, with its ancient island platforms, needs thorough refurbishment, as does the Metropolitan Line, which has serious deterioration of track. 'When the Monopolies and Mergers Commission reported in 1991 on investment in London Underground, they adopted the view that there had been many years of underinvestment,' said David Bayliss, London Transport's planning director.

'Much of the basic infrastructure is degrading and there are serious problems deep in the tunnels, bridges, embankments and so on.'

Given this existing structure, London Underground set itself the task of turning the system into a financially self- sufficient 'Decently Modern Metro' within 10 years.

After a disappointing autumn settlement with the government in 1992 which was 30 per cent lower than expected, the Underground produced a discussion document, 'Making Vision Into Reality', outlining how its aims could be achieved with an investment of about pounds 900m a year. Although at first most of this would come from government, LU projected that, with increased efficiency and operating surplus from the network, the amount of public money needed would decrease until, by 2004, the system would be self-financing.

The 1993 settlement of pounds 900m, which included pounds 527m specifically 'ring-fenced' for the new Jubilee Line extension and advancing CrossRail through Parliament, was again somewhat less than had been hoped: the final core investment figure, including a guaranteed pounds 75m from the sale of London Buses, is pounds 450m, which has meant delaying the start of several long-term projects.

'Any business is faced with a degree of variability. Even in the private sector you may have to tighten your belt. But we've got something far worse than that,' said Alan Watkins, chairman of London Underground. 'There is this annuality of the Government review . . . To get value for money you need it to be committed on a multi-year basis. It makes you very hesitant to commit to a very big project like the Northern Line.'

With around 100 trains and 36 miles of track, modernisation of the Northern Line will be a five-year programme, which, once committed, would then have to continue regardless of the amount in the annual settlement. At the time of the 1992 settlement, around 60 per cent of the expected figure was already committed on long-term projects, including Central Line modernisation.

'It's not just a question of chipping 30 per cent off everything you're doing,' said Dr Watkins. A better situation, he argues, would be to have money committed further in advance. 'Ideally, we'd be looking for five years. But you could perhaps say that Year 1 was firm, Year 2 was plus or minus 5 per cent, Year 3 plus or minus 10 per cent, and so on until Year 5 was plus or minus 20 per cent. That would certainly be an improvement. One way or another, we are going to have to explore a variety of ways in which we may access money, other than this traditional review once a year by government as to what it thinks is appropriate.'

Discussions on alternative funding are taking place within London Transport, the government and private sector. One of the difficulties of interesting the private sector in investment for refurbishment is that much of the benefit derived from the underground is 'captured away from the fare box' - delivering intangible benefits such as less congested roads and quicker access to the centre of London for the workforce.

'If you miss the rush hour, you have essentially halved your duty for the day,' said Managing Director Dennis Tunnicliffe, who encourages his team to think in terms of getting London to work and back.

A hypothecated tax, dedicated specifically to the underground, could be introduced if ways were found of measuring such benefits.

In Paris, whose nineteenth century system is perhaps the closest parallel to London's, modernisation began in the 1970s, funded in part by 'versements transports' - taxes on employers with companies located in the Paris area paying up to 2.5 per cent.

'They recognised that they had to have consistent funding,' said Mr Bayliss. 'There was a fairly strong consensus between Paris and the government about what needed to be done . . . The only chance of getting such a tax in London would be a clear promise from the Government that it would be applied to improving public transport in London.'

In the meantime, London Underground has been trying to improve cost effectiveness, putting into operation its 1991 Company Plan. It now uses private companies to clean trains and depots, and an in-house team tendered for and won the train maintenance contract on the Bakerloo line. But although these measures may help to increase cost effectiveness, they do not address the central problem of refurbishment needs.

Kathryn Johnson of the Capital Transport Campaign is wary of increasing privatisation.

'Transport is so fundamental to everything that everybody wants to do. I think that makes the case for clear Government control - and clear planning for development of the transport system, funded by the public purse.'

The underground is running better than it has done for years, pointed out Rufus Barnes of the London Regional Passengers' Committee, but he added that this better service conceals from passengers how much still needs to be done.

'If people could see that the service had been deteriorating over the years, and they were having a horrendous time . . . It would then be easier to build up passenger support - a body of concern.'

The power failure on the Central Line in November may have served to bring some of the hidden problems into the public eye.

'We realise that there are calls in different directions - to modernise as well as to expand the system,' said Mr Barnes. 'But we would like to see the Government recognise the financial demands of the underground . . . that if the deficiencies are not addressed, then we could find parts of it brought to a halt.'

(Photograph omitted)