With the nationalisation of Land Transport in 1948 it became a part of the behemoth that was the British Transport Commission (BTC). It was a period of state control of services, but this was an interesting step as it effectively renationalised a public sector entity.

The Treasury effectively controlled the BTC. With a nation crying out for improvements to health, a need for electricity and major new house building projects; London’s infrastructure needs were perhaps a secondary concern. Money and steel were in short supply, but due to works between the wars, the Underground was in fairly good condition.

This was a blessing, as now any expense over GBP 50,000 had to be referred directly to the BTC by the new London Transport Executive (LT). With the necessarily higher investment costs of underground rail systems, the focus switched to buses. Planned extensions of the Central Line and the Northern Line were scrapped. At this time, London’s Underground was described as the best in the world. From this lofty peak, though it had already begun the decline.

By 1965, the number of cars on London’s roads had quadrupled from the 1950 figures to two million. During this period, accusations of long-term damage from low investment levels have been leveled at the network. No LT reports from this period show any planned maintenance programmes. Historians Barker and Robbins described the period as having "charcteristic features of public handling of investment projects in mid- 20th century Britain," meaning delays and irrelevant caveats.

BTC was abolished in 1963 in favour of direct ministerial control of the network. However, this didn’t benefit the budget. Records show GBP 1.1M available for improvements annually. In 1970, LT became part of the local government body, Greater London Council (GLC). However, since the New Works Programme of the 1930s, the Underground had languished through three decades of neglect. LT was in debt, and behind.

The Conservative Party GLC leader Desmond Plummer argued that the debt should be written off. Then and only then would he take the reins. Grants came in from central government, and the future was brighter than it had been for a long time. Spending was to be increased by an order of magnitude over the next 20 years to GBP 275M on essential renewal (lifts, escalators). Despite a good deal of success, ‘violent policy shifts’ were characteristic as party control of the GLC fluctuated. Annual passenger numbers had fallen below 0.5bn for the first time since the end of the war due to jobs moving out of central London, recession, and car popularity.

One for the road

In 1973 local elections changed the game. Labour won 47.4 per cent of the votes for the GLC election, 58 seats to the Conservatives’ 32. Some seats were not won again until the 1997 Labour landslide, so great was the win.

One of the key reasons given for the 1973 shift to the political left is the Conservative policy of major road building in London. Ring roads were shown to be unpopular, and the realisation made that cars should be discouraged from the city centre.

In 1981 Labour again won the GLC seat, bringing in left-wing Ken Livingstone, who still runs for election to the Mayor’s seat to the present day. There was an idea to entirely abolish fares, but in the end a 1/3 cut was imposed, and dubbed the ‘Fares Fair’ policy. Zonal fares were introduced, which allowed the birth of the travel card. Another surge in use was observed. This era saw passenger numbers increase to 6M per day (2.2bn per year).

Arguments between GLC, Government and LT saw fares fluctuate. Bromley argued that as it had not an Underground station, it should not have to pay towards the subsidy. The challenge was upheld by judges. Livingstone complained that the judgment was politically motivated, but to comply with the law, fares doubled to cover the costs. Passenger numbers dropped to 5M per day and traffic is said to have worsened. In 1982 the Balanced Plan called for a 25 per cent reduction in fares to strike a compromise. This was implemented in 1983, and effectively it reduced fares to levels when Livingstone assumed power.

London’s financial sector exploded into life in the 1980s under the new Conservative Prime Minister Margaret Thatcher. Deregulation and tax breaks heralded a new era of prosperity for central London and the City. By the mid 1980s, the decline in passenger numbers had been reversed, as central office locations soared in price and popularity, with the price per square foot at a record GBP 70 (by 1994 it was be GBP 5-10).

Thatcher abolished the GLC in 1986, and LT was taken under the wing of London Regional Transport (run by the Ministry of Transport), renationalising it. This period’s organisation brought about two extensions, for Heathrow and the Jubilee Line.

Under the Thatcher regime, contracts for peripheral functions could be let out to the private sector. For the first time, London Underground (LU) was forced to tender out its work requirements in a competitive environment. However, funding was often not enough to cover the investment required and there was interference and a short-term mindset. It was during this time that the Kings Cross Fire disaster took place. One of only two peacetime incidents to claim more than 12 lives in the entire 150-year history of the Underground (see box, right).

Accounting for loss

The inrush of funds following the Kings Cross Fire was cut back again having brought infrastructure up to the new codes, and due to the economic recession in the early 1990s. In October 1991, LU announced that it was heading for an unforeseen GBP 35M deficit, meaning that substantial cuts across a range of its activities were necessary. The Transport Committee invited LU to give evidence on 5 December 1991, but the session was hampered by a ‘lack of information’ on the Underground’s budget for the FY 1990-91. On 4 December, written evidence re-estimated the gross deficit at GBP 93M, with a net budget shortfall of GBP 52M.

The situation was seen as serious enough to warrant a full report from the Transport Committee. It was found that much of the revenue increases projected were "optimistic guesswork" with actual growth of 0.5 per cent versus four per cent predicted. However, much of the cost increase was regarded as justifiable to comply with the Fennell Report safety recommendations following the Kings Cross Fire. The report recommended the Department of Transport should allow the organisation to borrow forward on 1991/92.

While the organisation’s accounts may have taken a nose dive, ticket prices did the opposite. The recession saw journey numbers fall by 11 per cent, which was mitigated by a ticket price increase of 40 per cent. Revenues increased, as they had before 1990, but now they increased due to fare rises, rather than a swell in demand. As the decade progressed, passenger numbers shot up while fares also saw continued increases. Prices rocketed by 60 per cent from 1993-1999, well ahead of the 19 per cent inflation for the period.

Seeing out the Millennium

The Jubilee Line Extension (JLE) brings the history of the Underground to the end of the 20th century. This line was heavily influenced by pressure, and the promise of funding, from Canary Wharf developers Olympia & York (O&Y). However, planning and construction was not a smooth process. The private developers went bust, eventually only funding around five per cent (GBP 150M) of the project, and construction of the Millennial line was delivered 20 months late and GBP 1.4bn over budget, coming in November 1999 at a GBP 3.3bn cost. A close thing, as political pressure insisted the line be running in time for the ‘Millennium Experience’.

Speaking in 1999, Clifford Mumm of Bechtel, who took over JLE project management in September 1998 was lenient on his predecessor, Hugh Doherty. He pointed out that large scale projects such as the JLE are tackled by LU maybe once a lifetime, and that by the time the next one comes along, any lessons of large project delivery will have once again be forgotten. Indeed, many of the ‘old hands’ credited a lot of the civil engineering quality to Hugh Doherty’s management. His was seen as an impossible task to marry the political demands of the client, LU; its paymaster, the government; and the fact that such a demanding project just couldn’t be built in the available time and budget.

The ’80s boom was critical in the planning of the JLE. O&Y decided to build Canary Wharf if the DLR could be extended to Bank with four-minute train frequencies, and paid GBP 68M to LU for the project. The extension opened six months late, and even three years later trains were infrequent.

In 1988 as the first Canary Wharf piles were being driven, O&Y asked what would be needed for a second rail link. The Waterloo and Greenwich Railway was the result and government approved, but according to Michael Shabas, former transport vice president of O&Y, LT’s ambitions to build Crossrail were a sticking point. O&Y went directly to contractors, and bids for the scheme that would route around the city and relieve the Central Line came in at GBP 450M. Allowing a year to get parliamentary powers, and four years for construction, the organisation expected completion in 1993. On LT advice, government rejected the proposal.

The East London Rail Study was launched, external to LT, and in 1989 it reported that the preferred solution was a JLE from Green Park, via Waterloo. However by this point, O&Y struck back. It prepared analysis showing that with modern technology the scheme could be built for GBP 700M with GBP 500M recovered by fares, and a further GBP 400M in road user benefits. It told the government that no private contribution was necessary, and ‘joked’ that the government owed O&Y money for coming up with the scheme.

O&Y eventually paid GBP 150M, and auctions further east determined some of the route. Shabas concludes that the rejection of the O&Y offer was tragic, but that government now attaches great importance to early private participation.

Generation PPP

In 2003 control of the Underground was transferred to the Mayor of London, Livingstone, with the network becoming part of Transport for London (TfL). In April that year, London Underground completed transferring responsibility for care, maintenance of assets to the private sector through a PPP, one of the most complex private finance agreements in the public sector. TfL called the move an antidote to decades of underinvestment that resulted in regular asset failures; acceptance of poor performance & management to "perfect the art of apology".

The arrangement was due to run for 30 years. For the first eight years, billions of pounds would be paid to three private sector companies: Tube Lines, Metronet BCV, and Metronet SSL. The investment came with weighty expectations: the restoration and upgrade of the Underground’s assets. However, in TfL’s report at the end of the first year of the scheme, it pointed out that even with full implementation, the assets would not be restored to a state of good repair until 2025, an "unacceptable eternity".

The infrastructure companies (Infracos) delivered mixed results. In some areas, station and line upgrades were delivered under budget, but in some key areas more serious failings were observed. For example, three years in Tube Lines had failed to raise performance on the Northern ‘misery’ Line to the standard of the Jubilee and Picadilly lines. In December 2005, London Underground issued Tube Lines with a Corrective Action Notice – a serious measure – for poor performance over a two-year period. The Metronets were significantly behind on station delivery. A significant turnaround was needed. Managing director of London Underground Tim O’Toole said, "The Tube is too important for the PPP to be allowed to fail."

In July 2007 Metronet collapsed. Administrators were called in after the organisation racked up a GBP 2bn overspend. But Metronet could not be allowed to fold; it was vital to the daily operation of the Underground. In May 2008, TfL took control of Metronet to deliver its obligations.

The public was out of pocket as much as GBP 410M and the Auditor General declared the contracts left the government without effective means of protecting the taxpayer. Tube Lines seemed to be able to make ends meet, with some suggesting that its practice of subcontracting all work out, rather than keeping it in the consortium was the reason. However, this was not to last, and following shortfalls, Tube Lines was also brought in house in 2010, ending the PPP era. The Mayor, TfL, and rail unions all hailed a successful move and the potential for future savings. One clear benefit had emerged from the PPP system – the concessions cemented long term maintenance funding for London Underground as never before. With Crossrail, Crossrail 2, and the Tube improvement plans; work seems set to continue at pace