TUBE BOSSES MUST USE EMERGENCY POWERS TO FIX UNDERGROUND WOES

12.01.00am BST (GMT +0100) Wed 12th Oct 2005

Ahead of the emergency debate at the London Assembly later today (Wednesday) examining the recent delays on the Northern Line due to faulty secondary braking equipment, the London Assembly Liberal Democrats have today called for London Underground to use 'emergency step in' powers to take over maintenance of the Tube when faults compromise passenger safety.

While welcoming the move by London Underground to issue an 'emergency direction' to fix the problems on the Northern Line, the Liberal Democrats will question whether the move was robust enough to prevent further delays to passenger journeys.

Under the PPP contracts, London Underground can serve an 'emergency step in' notice to a PPP company if 'LUL reasonably determines that it is necessary for reasons of health and safety…to take steps to remedy any matter…', which includes taking maintenance temporarily in house to fix the problem.

The London Assembly Liberal Democrats believe that the 'emergency step in powers' should be applied now.

London Assembly Liberal Democrat transport spokesperson, Geoff Pope, said:-

"Enough is enough on the Northern Line. Passengers using this crumbling misery line are at the mercy of a poor PFI deal and a PPP contract that has not delivered. The state of the line has been raised time and again with the companies who maintain it, yet things have only gone from bad to worse.

"When passenger safety is compromised on a Tube line, immediate action must be taken including bringing maintenance back in house to fix the problem.

"London Underground should exercise its step in rights and take control of the repairs whenever passenger safety is put at risk."

ENDS

Notes to editor:

The emergency motion will be discussed at the full meeting of the London Assembly from around noon on Wednesday 12th October 2005 at City Hall.

Details of the PPP contract clause which gives London Underground (LUL) the ability to exercise its 'emergency step in' powers can be found below:-

PPP Contracts

PART F: REMEDIES FOR POOR PERFORMANCE

F. The general purpose of this Part is:

(a) to establish an appropriate and escalating range of remedies available to LUL so that it is able to react in a manner which is reasonably proportionate to the nature and/or consequences of any failure by Infraco to adequately perform its obligations under the Contract; and

(b) to establish a regime whereby LUL may give directions to Infraco for reasons of health and safety or security and to step-in where necessary to perform Infraco's activities to the extent and for the period necessary to ensure such directions are complied with but always protecting Infraco against increases in costs or risk to the extent it is not in default under the Transaction Documents.

Failure to Comply with Obligations

22.1 If Infraco breaches any of its obligations under the Contract (including breach of Schedule 2.1 (Service Outputs), but subject to paragraph 7 (Limit of LUL Remedies) of Schedule 2.1 (Service Outputs) including the proviso thereto) or any of the other Transaction Documents to which both LUL and Infraco are parties, LUL may additionally and at its option (but without prejudice to LUL's right to exercise any other remedy it may have pursuant to the Contract) do any one or more of the following which is reasonably proportionate to the default in question:

(a) impose Service Points pursuant to the Performance Measurement Code (save in respect of breaches of Schedule 3.2 (Reasonable Life Expectancy, Condition Benchmarks and Residual Life Benchmarks) for which a payment withholding has occurred under paragraph 6.2(b) thereof);

(b) issue a Corrective Action Notice (specifying the nature of the default and containing the time period within which the breach is to be remedied being such period as LUL reasonably considers would be sufficient for an efficient and economic Infraco, using Good Industry Practice and giving high priority to remedying the breach, to do so), provided that a Corrective Action Notice does not constitute a notice given by LUL by reference to clause 41 (Mandatory Sale) but shall not restrict or prevent LUL from serving any notice under clause 40 (Warning Notices and Default Notices) or from issuing a subsequent or other Corrective Action Notice; and

(c) commence regular monitoring (whether by inspection, audit or otherwise) or, where already monitored regularly, increase the level of its monitoring of Infraco's performance of any relevant obligation unless and until such time as Infraco demonstrates, to LUL's reasonable satisfaction, that it is capable of performing and will perform such obligation as the same is required by the Contract. Infraco shall compensate LUL for all reasonable costs that are incurred by LUL in carrying out such monitoring, provided that LUL acts reasonably and in a manner which is proportionate to the relevant breach.

22.1A For the purposes of clause 22.1 and without prejudice to the ability of LUL to issue Corrective Action Notices as set out in paragraph 7 (Limit of LUL Remedies) of Schedule 2.1 (Service Outputs), it will be reasonably proportionate to the default in question to issue a Corrective Action Notice in respect of events also giving rise to a failure enumerated in paragraph 7 (Limit of LUL Remedies) of Schedule 2.1 (Service Outputs) if such events (taken together with any other failure):

(a) demonstrate that such failure is not an isolated event but rather represents a pattern of behaviour which has or is reasonably likely to give rise to a material breach of any Infraco Obligation; or

(b) represent a persistent failure of Infraco to meet any particular Infraco Obligation.

22.2 In the event that Infraco's ability to remedy the circumstances during the remedial period is affected by a Delay Event:

(a) Infraco shall give written notice to LUL (except in cases of emergency when shorter, oral notice may be given but which shall be confirmed in writing as soon as reasonably practicable thereafter) as soon as reasonably practicable after:

(i) Infraco becomes aware of the occurrence of a Delay Event; or

(ii) Infraco can foresee a Delay Event occurring;

(b) any notice given pursuant to sub-clause (a) above shall not, in any event, be given later than twenty four hours after Infraco becomes aware of the occurrence of such a Delay Event. In either case, such notice shall state the likelihood and probable extent of the delay;

(c) Infraco shall use, and continue to use, its best endeavours to avoid or reduce the effects or likely effects of any Delay Event on its ability to comply with the Corrective Action Notice within the period of time that LUL specified; and

(d) where a Delay Event has been notified to LUL in accordance with this clause 22.2, Infraco shall be entitled to an extension of such period by the amount of time that would be required by an efficient and economic Infraco utilising Good Industry Practice and using its best endeavours to avoid or reduce the effects or likely effects of the Delay Event, to comply with the Corrective Action Notice.

LUL Step-in Rights

Entitlement to exercise Step-in Rights

23.1 Subject to clause 23.2 and without prejudice to any other right or remedy of LUL, if Infraco has failed to comply with a Corrective Action Notice within the periods set out therein LUL may at any time thereafter, provided Infraco is then continuing to fail to comply with the Corrective Action Notice, issue a further notice to Infraco (a Step-in Notice) in the form attached at Schedule 5.17B (Form of Step-in Notice) informing Infraco that LUL will, from such date as shall be specified in the Step-in Notice, exercise its rights to step-in under this clause (Step-in Rights) and LUL may at its option:

(a) take steps itself; or

(b) appoint any other Infraco or a third party to take steps,

to remedy the matters designated in the Corrective Action Notice together with all things reasonably ancillary to the matters detailed in the Corrective Action Notice. Any Step-in Notice issued in accordance with this clause 23.1 shall state the reason that LUL is exercising its rights, the action LUL wishes to take, the date on which LUL will exercise its rights and the likely duration for which the Step-in Rights will be exercised. All activities carried on by LUL or on its behalf shall be carried on in accordance with Good Industry Practice and, subject to clause 23.5 (Step-out Notice), for such period(s) as LUL shall decide. For the avoidance of doubt, notwithstanding any step-in by LUL, amounts payable by LUL to Infraco under the Contract shall continue to be calculated and paid in accordance with the provisions of clause 18 (Payment Provisions).

Emergency Step-in and direction

23.2 Without prejudice to LUL's rights under the LUL Safety Case or Standards, if LUL reasonably determines that it is necessary for reasons of health and safety or security (being in the nature of criminal acts and any acts or events requiring the intervention of the police, emergency services or other Authorised Third Parties or similar matters) to take steps to remedy any matter, whether or not this is as a result of Infraco's failure to comply with any of its obligations under the Transaction Documents, then:

(a) a director of LUL or his duly authorised nominee (whose authority is notified in writing to Infraco in accordance with paragraph 1.2 (Appointment and Organisational Information) of Schedule 5.1 (Contract Management)) may issue to Infraco a notice of instruction (the Notice of Instruction) in the form attached at Schedule 5.17A (Form of Notice of Instruction (Emergency Direction)) or verbally (giving the relevant information that would have been in a Notice of Instruction) if it is not reasonably practicable to so issue a Notice of Instruction (provided that if not in writing then a Notice of Instruction shall be issued to the Contract Manager for Infraco within 24 hours). Following a Notice of Instruction or verbal notice, but subject to clause 23.2B, Infraco shall as soon as practicable comply therewith and Infraco shall continue to comply unless it is instructed otherwise by the director or his duly authorised nominee; or

(b) where such steps need to be taken:

(i) as a matter of urgency; or

(ii) in a non-urgent situation where LUL has reasonable grounds for considering that Infraco does not have the resources or capabilities to take such steps itself or is unwilling to do so in the timescales LUL reasonably requires,

LUL may exercise its right to step-in by giving to Infraco an Emergency Step-in Notice in the form attached at Schedule 5.17C (Form of Emergency Step-in Notice) where steps need to be taken pursuant to clause 23.2(b)(i) or by giving to Infraco a Step-in Notice in the form attached at Schedule 5.17B (Form of Step-in Notice) where steps need to be taken pursuant to clause 23.2(b)(ii), as the case may be, signed by a director of LUL or his duly authorised nominee (whose authority is notified in writing to Infraco in accordance with paragraph 1.2 (Appointment and Organisational Information) of Schedule 5.1 (Contract Management)) (notwithstanding that a Corrective Action Notice has not been issued). If it is not reasonably practicable to give an Emergency Step-in Notice prior to stepping-in pursuant to clause 23.2(b)(i); LUL may exercise its rights to step-in provided that an Emergency Step-in Notice shall be issued to Infraco within 24 hours.

23.2A If the exercise by LUL of its right to direct or to step-in under clause 23.2 is not directly attributable to a failure by Infraco to comply with any of its obligations under the Transaction Documents, Infraco shall not be obliged to compensate LUL in the manner contemplated in clauses 23.3 and 23.4 and clauses 16.7 (LUL Breach) and 20 (Delays) shall apply to the same extent as they would have applied had LUL's acts in pursuance of its rights under clause 23.2 been acts that constituted an LUL Breach.

23.2B Infraco shall not be obliged to comply with a Notice of Instruction given pursuant to clause 23.2(a) above to the extent that it forthwith demonstrates to LUL that compliance with the provisions of the Notice of Instruction would necessarily give rise to a breach by Infraco of any Law, the LUL Safety Case, the Infraco Statutory Safety Case (if applicable) or the Infraco Safety Case. In such circumstance, Infraco shall in any event comply with the Notice of Instruction as closely as is possible without committing such a breach.

23.2C If rights of step-in are exercised pursuant to clause 23.2 then clause 23.1 shall apply to such step-in subject to the following provisions:

(a) the purpose of the step-in shall be to take those steps reasonably required to remedy any matter which gave rise to the step-in envisaged by clause 23.2 together with such things as are reasonably ancillary to those steps (and, to avoid doubt, LUL will provide Infraco with reasonable information about the steps it is taking and which it anticipates taking while its step-in continues); and

(b) clause 23.5 shall not apply in respect of any such step-in and LUL will step out as soon as reasonably practicable after the earlier of:

(i) the steps to be taken by LUL referred to in clause 23.2C(a) have been taken;

(ii) the event giving rise to the step-in has come to an end; or

(iii) if the event is continuing, Infraco has demonstrated to LUL's satisfaction its ability and preparedness to assume control of the matters giving rise to the exercise of the Step-in Rights,

and, in each case, any reasonable hand back requirements LUL may have, have been complied with. If circumstances justifying the step-in continue to prevail but LUL considers that it wishes to take further steps which it would otherwise be entitled to take pursuant to clause 23.2 (Emergency Step-in and Direction) but which are not covered by the original Step-In Notice then LUL may give a supplementary Step-In Notice specifying the further steps it is to take.

23.2D As soon as reasonably practicable after exercise of rights of step-in pursuant to clause 23.2(b) has commenced LUL shall inform Infraco of the reasonable hand back requirements referred to in clause 23.2C(b). Where Infraco is not otherwise required by the Transaction Documents to meet such requirements, Infraco shall specify the terms, including terms as to payment, upon which it is willing to meet such requirements which terms, in the absence of agreement between the parties shall be such as are determined pursuant to the Dispute Resolution Agreement to be reasonable in all the circumstances. In the event of Dispute as to the terms on which Infraco is to undertake any such measures, Infraco shall implement the measures for appropriate recompense after the Dispute has been resolved.

23.2E For the avoidance of doubt, LUL shall be entitled to exercise its rights under clauses 23.2, 23.2A, 23.2B, 23.2C and 23.2D notwithstanding that there is a Dispute as to whether LUL was entitled to exercise such rights. If it is subsequently agreed by LUL and Infraco or determined in accordance with the Dispute Resolution Agreement that LUL was not entitled to exercise such rights, the provisions of clause 23.9 (Improper Step-in) shall apply.

Compensation by Infraco

23.3 Infraco shall compensate LUL for all reasonable costs incurred by LUL in respect of activities which Infraco should have performed to meet its obligations (including but not limited to reasonably allocated overheads or other internal costs) that are incurred by LUL or any other party appointed under clause 23.1(b) in taking any action in accordance with this clause 23 pursuant to a Step-in Notice. Where reimbursement of LUL costs includes the costs of any third party appointed under clause 23.1(b) such third party costs may include a reasonable profit element.