The property private finance initiative (PFI) projects are treated as “on balance sheet”. Capital expenditure related to PFI projects is charged in full against the National Offender Management Service (NOMS) capital budget at the time the asset is ready for use. In addition, the NOMS estimate of costs of construction due to the contractor is also recognised on the NOMS balance sheet as a liability. Ongoing payments to contractors are then used to reduce the liability over time and therefore are not recorded against the NOMS budget, as all capital expenditure is recorded in full when the asset is ready for use.
The NOMS resource budget, which includes prison and probation service property budgets, includes an allowance for depreciation on the asset value and cost of capital charge on the asset value and the liability value.