§ Lord Tebbitasked Her Majesty's Government:
Further to the Written Answer by the Lord Warner on 13 July (WA 140), whether sums committed by public/private partnership schemes to provide facilities within the National Health Service are included in the Government's statement of public expenditure. [HL3897]
§ Lord WarnerNational Health Service accountants and their independent auditors take the decision on the accounting treatment of private finance initiative deals as either financing or operating leases. This decision is made by applying independently set generally accepted accounting practice standards and subject to independent audit. National accounts, upon which the fiscal rules are judged, follow the accounting treatment.
The total capital value of assets acquired by the NHS under balance sheet PFI deals (a type of finance lease) is included in public sector net investment and public sector net borrowing.
Where the asset is provided under an operating lease then the capital value is not included in measures of public spending. This is because the asset is not judged as being on the NHS balance sheet.
The effect on current expenditure is the same for PFI deals whether they are on or off balance sheet. The value of the estimated future unitary charge payments for the next 25 years for all the Government's PFI projects, irrespective of their balance sheet treatment, are recorded in table C19 of the Financial Secretary's Budget Report.