HC Deb 22 February 2000 vol 344 cc926-7W
Laura Moffatt

To ask the Secretary of State for the Environment, Transport and the Regions (1) if a public sector comparator was used as a benchmark against which the judgment to proceed with a public/private partnership option for NATS was made in line with the recommendations in technical note 5-The Objectives of a PPP; [110551]

(2) how he will ensure that an appropriate level of risk will be transferred in the proposed NATS public/private partnership to guarantee value for money for public funds; [110550]

(3) what economic appraisal techniques were used fully to evaluate the key commercial risks of the public/private partnership for NATS to ensure value for money for public funds. [110549]

Mr. Mullin

As set out on page 3 of the Treasury Taskforce Private Finance Guidance (Technical Note No. 5), the Government will ensure a proper competition is held to identify a private sector strategic partner. The Government, along with their financial advisers, have also carried out a proper assessment of the economic and commercial risks, including on proceeds and for major projects such as the New En-Route Centre and the New Scottish Centre. This assessment included both qualitative and quantitative techniques such as risk-adjusted discounted cash flow analysis.

The Government have also undertaken a comprehensive assessment of benefits offered to NATS, its customers and the public sector compared to retention of NATS in the public sector. In making this assessment, the Government considered a wide range of factors, including qualitative factors such as its objectives for the PPP to improve NATS efficiency and project management abilities. The Government concluded that only a private sector solution, by providing commercial disciplines and access to private sector project management skills, would offer the right combination of benefits to NATS, its customers and the public sector.

A full analysis was made of how the risks could be best allocated between public and private sectors to ensure that the risks are borne where they are best managed and also to deliver value for money. In the case of the NATS PPP, the risk transfer will be commensurate with the transfer of control to the private sector. Following receipt of tenders from bidders, a final assessment will be made to ensure value for money and a proper transfer of risk.