§ Lord Oakeshott of Seagrove Bay
asked her Majesty's Government:
Further to the statement by Lord Macdonald of Tradeston on 27 June (HL Debs, col. 1515) that Network Rail will be consolidated into the accounts of the Strategic Rail Authority, a public body, how Network Rail's debts can be excluded from the public sector borrowing requirement. [HL5014]
§ Lord McIntosh of Haringey
The Strategic Rail Authority's accountants have advised that Network Rail should be consolidated into the accounts of the68WA Strategic Rail Authority. This judgment is based on the application of generally accepted accounting practice (GAPP). This is the system used in the UK to prepare accounts for companies and other types of bodies.
The Office for National Statistics (ONS) determined that Network Rail should be recorded as a private sector body in national accounts. ONS's judgment is based on the application of the European System of Accounts 1995 (ESA95). The rules of ESA95 are used across Europe for the preparation of national accounts, which is an integrated set of macroeconomic statistics.
Since Network Rail will be classified to the private sector, its own expenditure and borrowing will not be included in public sector statistics such as public sector net borrowing. But any payments by government to Network Rail will score in those statistics.
So the different treatments arise because accountants and statisticians have come to different judgments when applying the rules of accountancy on the one hand and a system of economic statistics on the other.