§ Mr. Brightasked the Minister for Trade whether he has completed his consideration of a suggestion put forward by the chairman of the British Airports Authority for the involvement of private sector funds in the authority's future investment programme; and what are his conclusions.
§ Mr. SproatI can now report that following my discussions with the chairman of the BAA, Mr. Norman Payne, I have asked him to set up a small working group, on which my Department and Treasury will be represented, to pursue urgently a detailed study of two options for the involvement of private sector funds in the authority's capital investment programme. These would include:
- (a) A general performance bond, geared to overall profits or;
- (b)Raising equity finance through a subsidiary company participating in the authority's concession income on a royalty basis.
The working group's main concern in considering these alternatives will be to determine whether a satisfactory scheme can be constructed which would meet the BAA's requirements and the Treasury's guidelines which were endorsed by the NEDC in October last year. Briefly, any arrangement would have to be under conditions of fair competition with private sector borrowers for available finance, and no greater degree of security for investors from Government guarantees. There would also be a need to demonstrate that benefits in terms of increased efficiency and profit from additional private sector investment would be commensurate with the cost of raising risk capital.