§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer what is the current interest rate differential between publicly provided capital for the national health service education and British Rail and capital raised through his private finance initiative.
§ Sir George Young
For appraisal purposes, the pre-tax cost of capital for central Government activities is normally taken as 6 per cent. in real terms, or its nominal equivalent. For nationalised industries, financial objectives are specified in terms of a required rate of return of 8 per cent. in real terms. The cost of capital raised for projects under the private finance initiative will depend on the creditworthiness of the body concerned and the types of financing which best fit the project.