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Private Finance Initiative

Volume 406: debated on Thursday 12 June 2003

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8.

What the current total is of PFI debt guaranteed by the Treasury; and what the mechanism is for reflecting this in the national accounts. [118664]

PFI debt is not normally guaranteed by the Treasury. A letter of comfort has, however, been issued in relation to the debt issued by London Underground. A guarantee is in place in relation to the bonds issued for the public-private partnership development of the channel tunnel rail ink. Contingent liabilities for both have been laid before the House.

Many people will be surprised that the total PFI figure is not larger, but is that not because the Government exclude from their PFI calculations the debt of Network Rail and London Underground? Can the Chief Secretary tell the House what the total PFI figure would be if it included the debt of Network Rail, as the National Audit Office says it should?

I can tell the hon. Gentleman exactly: £28.9 billion. All our PFI deals are subject to audit by the NAO or the appropriate audit body. The rules for accounting for PFI are drawn up by the independent Accounting Standards Board, not by the Government. We have a record of transparency and accountability that far exceeds the record of the previous Administration.

Will the Chief Secretary confirm that total Government PFI liabilities have risen some 17 per cent. to £109 billion, and that those gross liabilities, payable over 25 years, are now equivalent to 12.5 per cent. of GDP or, if discounted at 5 per cent.—a high level in today's interest rate environment to 9 per cent. of GDP? On the figures that he has just given, does the right hon. Gentleman accept that if one adds to those the liabilities guaranteed by the Strategic Rail Authority, the figure is 15.5 per cent. of GDP, or 12 per cent. of GDP, which the Government have off balance sheet, resulting from PFI and PPP liabilities? [Interruption.] The Chancellor, who is chattering to himself, has not commented that no other EU country has off balance sheet PFI or PPP liabilities of that size. Do the Government propose to harmonise or reduce their PFI liabilities as part of their convergence agenda?

The hon. Gentleman made rather a mess of that one. He makes precisely the opposite point from that made by his hon. Friend the Member for Bexhill and Battle (Gregory Barker). The figures are as I gave them to the hon. Member for Bexhill and Battle. The rules that we use to account for PFI are no different from the accounting treatment used by the previous Government. If anything, the accounting standards have become stricter since 1997 because of our adoption of FRS 5. The only figure that the hon. Member for Arundel and South Downs (Mr. Flight) need bear in mind is the 20 per cent. cut in public services—which are currently being improved by PFI—that would be imposed were he ever to gain the stewardship of our economy.