§ Mr. Chris SmithTo ask the Chancellor of the Exchequer what is the impact on the public sector borrowing requirement(a) in the current year and (b) in subsequent years, of a letter of comfort provided to financial institutions by the Secretary of State for Health underwriting outstanding liabilities of a private finance initiative hospital project in the event of the demise of the hospital trust undertaking it. [11253]
§ Mr. WaldegraveNo letter of comfort has been issued in support of private finance initiative hospital projects. A letter of explanation has been provided which gives details of the Secretary of State's responsibilities in respect of trusts that run into financial difficulties. If a trust is dissolved, the NHS (Residual Liabilities) Act 1996 provides for the transfer of the trust's residual liabilities to another health body or to the Secretary of State for Health.
The public sector borrowing requirement measures the public sector's net cash transactions with the rest of the economy. As such, contingent liabilities have no effect on the PSBR.