FD interview - A fare Job

American Jay Walder has presided over the controversial introduction of London's congestion charging. Jenny Hirschkorn asks Transport for London's managing director, finance and planning, about making transport history.

Jay Walder and his family had barely been back in the US for a month following his term as visiting professor at the University of Singapore when his wife took a phone call she knew would shape their lives. Bob Kiley, who was then about to be installed as London's first commissioner for transport, rang but Walder was out.

'Did Bob Kiley get hold of you?' Susan Walder asked her husband when he got home. 'He said, if he didn't reach you in the office, would you call him over the weekend. I don't have a good feeling about this,' she pronounced, wondering whether she really should go on unpacking the boxes that still surrounded her.

Walder and Kiley had worked together at the Metropolitan Transport Authority (MTA) of New York, transforming the city's subway from one of the world's most notorious underground networks into a world-class system. Now Kiley wanted to call on the expertise that Walder had since accumulated as professor of public finance and transport at Harvard's John F Kennedy School of Government, as well as during his sojourn in Singapore.

At first, the arrangement was to be on a consultancy basis. Plans were taking shape for London's congestion charging system and Kiley knew that this was an area of particular interest to Walder. 'He said at the minimum could I come and give him some confidence that the direction London was taking would work,' Walder recalls.

Road to congestion charging

He qualifies this by explaining that London's approach was going to be different from every other road pricing scheme in the world. 'There are bridges, tunnels, highways and motorways that work on a charging mechanism, and in Singapore there is also a charge within the urban environment.

But every other system uses some kind of transponder that you have in your car that is picked up by some roadside infrastructure that charges you as you go through.'

But the sort of large, overhead gantries that this system entails would have been totally incongruous with the historic fabric of London and planning permission would never have been granted. Transport for London's solution would be the less conspicuous number plate recognition cameras that have now become a familiar addition to the capital's street furniture.

It seems likely that Kiley had calculated that, if Walder would take the bait, it was odds-on that he would become hooked beyond the short term. After all, here was the chance, says Walder, not only to work on one of the world's great transport systems but also to help establish local government in London. It is the stuff history is made of.

And so, in 2001, after a democratic vote at home, Walder and his family crossed the Atlantic so he could take up the role of TfL's managing director of finance and planning.

Slice of the Apple

How, then, does he regard London's transport system when compared with that of his native Big Apple? To understand what is going on in London, he says, you have to look back to the decision, taken following the 1997 election, to establish local government. Although many of the responsibilities that lie with the London mayor remain with central government, it was recognised that transport is a local issue and consequently Ken Livingstone has greater responsibilities in respect of transport than his New York counterpart.

The immediate and fundamental impact of the election of the mayor was that, for the first time, you now had absolutely clear accountability that rested in one individual who had campaigned on the basis that he would work on the transport system.

'I don't think you can point to any other city in the world that has the integration of transport function that we have in London. Certainly not New York, Hong Kong or Paris - three great cities in terms of transport systems.'

When Walder arrived, TfL was little more than an empty building with a nameplate on the door. An act of parliament had taken a range of predecessor organisations and functions and brought them together and the result was, for a time, a mess. 'You had the shell, but some functions were being handled 10 times over; some were not being handled at all.

'Ken went at this saying he did not want to be bound by the ideas that existed before. He wanted to bring in different thoughts, different management and he showed a willingness and appetite for risk that was perhaps different from the appetite that existed previously.'

To some extent, that was probably due to the political situation at the time, where Livingstone was outside the Labour Party. 'What this organisation rose to,' says Walder, 'was the ability to take that appetite in terms of risk and be able to make change.'

By which he means, of course, the introduction of the congestion charge, the most fundamental change in urban transportation that has taken place in a quarter of a century.

As you might expect, Walder is pretty euphoric about the congestion charge's successes: it did, after all, confound all the doom mongers who predicted disaster in the form of another bungled IT project or of gridlock on the perimeter. And he dismisses the claims that it has been detrimental to business, blaming instead the trend towards out-of-town and internet shopping.

Yet businesses large and small would take issue with this. John Lewis, in spite of its ubiquitous out-of-town presence, has been vociferous in its opposition to the scheme and has published research which claims that the congestion charge is directly responsible for an 8% drop in business.

Nevertheless, the congestion charge zone is to be doubled in size from February next year.

Bursting at the seams

One of the aims of the congestion charge is to push people out of their cars and on to public transport and here, during its five years of existence, TfL has seen a modal shift. Car use has gone down by 5% but the public transport system that has had to take the strain of increased capacity is already bursting at the seams. What comfort can Walder offer long-suffering Londoners who travel in daily indignity on an unreliable and highly priced infrastructure?

'We certainly have an underinvested system,' he admits. 'Not that long ago London had a transport system that was considered the best in the world, but successive governments of both parties took decisions that disinvested in that transport system. Unfortunately the path back from that is a long hard climb. The slope going the other way is slippery and quick.'

However protracted the plans for future improvement, Walder acknowledges the need to show incremental progress along the way. And so, since the New Year, travellers on the Jubilee Line will have benefited by longer trains which have added 17% capacity to the groaning trains and they can look forward to further increases as the signal system is fundamentally rebuilt.

'People need to see that something is happening and want it to continue.' But TfL's five-year, £10bn investment programme comes at a price for London's commuters, visitors and occasional public transport users. There will be no let up in the annual above-inflation increases that they have come to expect. 'The mayor has said that there is no option of a positive legacy for London that doesn't restore these transport assets. Given the choice of holding down fares and resigning ourselves to the same quality of infrastructure that we have today or increasing fares and raising capital and making a once in a generation shift in the quality of that infrastructure, he chose to do the latter.'

Much of the funding for the investment programme will go into the Tube network as a result of the public-private partnerships (PPP) and private finance initiative (PFI) contracts that were the source of so much angst between the mayor, TfL and the government. Livingstone, Kiley, Walder et al were fiercely opposed to the initiatives but lost their legal battle with the government to prevent the contracts going ahead.

Fait accompli

Faced with a fait accompli, Walder says TfL now has to make the most of the situation but emphasises Londoners have a right to expect higher standards than they are currently getting. A case in point is the recent fiasco when the Northern Line, the busiest line on the Tube network, faced a four-day shut-down due to problems with the braking system on what are some of the most modern trains on the system.

'It's incredibly frustrating,' Walder confesses, 'because these trains, which are less than 10 years old, are nowhere near to achieving the performance of the four-year-old trains that are running on the District Line. We need to ensure that the risks they (the contractors) signed up to take are risks they continue to take, and we need to see positive steps forward both in the short and the long term.' He wants to see that the bonuses and abatements these companies are subject to are a true reflection of their performance.

As he clearly likes to see value for money, Walder will not have been surprised at the widespread rubbing of hands that greeted the surprise early departure of the very man responsible for his presence in London, Bob Kiley. Amid reports of a 'furious row' with Ken Livingstone, with whom he always made a curious bedfellow, Kiley's resignation was announced less than one year into a new four-year contract.

His status as one of the highest paid public servants in the world, as well as his entitlement to a £2m house in Belgravia (which he continues to occupy), had long been the subject of much criticism. If Jay Walder is to be the man to take his place, which, as we go to press, seems a distinct possibility, let's hope he has a tough skin.

CV

Who: Jay Walder

When: 4 February 1959

Where: Indianapolis, Indiana, US (but moved to New York aged nine months)

Qualifications: BA in economics; masters in public policy.

Work: Various posts at New York's Metropolitan Transport Authority, ultimately becoming chief financial officer; professor at Harvard's John F Kennedy School of Government; visiting professor, National University of Singapore; managing director, finance and planning, Transport for London.

Life: Theatre, tennis, photography (he is currently learning about switching from film to digital)

TRANSPORT FOR LONDON FACTS

•    Transport for London (TfL) is responsible for London's buses, the London Underground, Docklands Light Railway (DLR) and the Croydon Tramlink. It also runs London River Services, Victoria Coach Station and London's Transport Museum, in addition to providing transport for users with reduced mobility via Dial-a-Ride.

•    As managing director, finance and planning, Jay Walder is responsible for TfL's £4.6bn annual budget. £2.6bn of this comes from revenue (including fares) and £2.2bn comes from government grants. It also receives £20m in funding from the Greater London Authority.

•    Every weekday, 6.3m journeys are made on London's buses, 3m on the Tube and a further 150,000 on DLR.

•    Oyster, TfL's smartcard system, is the largest in Europe and accounts for some 3m journeys made each weekday.

•    One of the organisation's most ambitious projects is Crossrail, a 50/50 venture with the Department for Transport, which is tasked with the development of two new routes, one linking west and east London, the other north-east and south-west London.

•    At £70m, initial revenues for the congestion charge fell short of projections by almost half. By last year, these had increased to £90m and are now making a positive contribution to revenues.

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