§ Mr. Matthew TaylorTo ask the Secretary of State for Social Security what clawback mechanisms exist under private finance initiative contracts within his Department in respect of contingencies other than refinancing; and if he will place copies of each private finance initiative contract in the Library. [130262]
§ Mr. Rooker[holding answer 13 July 2000]: The PRIME (Private Sector Resource Initiative for Management of the Estate) contract has numerous clawback mechanisms where gains, profits and savings are shared between the Department and Trillium, the PRIME contractor.
The Department receives: one quarter of savings from the deferral or avoidance of maintenance over a three year period but does not share in higher than planned costs; half of the utility cost savings achieved against an annual target set by a joint Departmental/Trillium liaison committee; half the savings from contribution in lieu of rates (business rates from 1 April 2000) negotiated by Trillium and 90 per cent. in following years until a further saving is made, when the base CILOR year is reset; 20 per cent. of savings derived from changes in contractor's service methods; 50 per cent. of savings in landlord's service charges on rented properties; 50 per cent. of development proceeds from disposed properties, after deduction of a fixed developer's profit, costs and the value that Trillium had agreed for the property with the Department. The Department may seek to recover a share of any windfall gain arising during the first five years of the contract, after either a sale of the rights of more than half of the net cashflow of the project or the flotation of more than 25 per cent. of Trillium. The Department may also seek to recover a share of any windfall profits arising during the first five years of the contract, where the net cashflow to Trillium's owners exceeds a predetermined level compared with the original expectation.
Treasury Taskforce Policy Statement No. 5 (Provision of Information to Parliament) sets out best practice in relation to Departments' obligations to disclose information to Parliament. This approach has been agreed with the National Audit Office. The Department has not found it necessary to deposit additional information in the Library.
§ Mr. Matthew TaylorTo ask the Secretary of State for Social Security what the net present cost is of each project undertaken in his Department under the private finance initiative; what the value is of their public sector comparators in(a) pre-risk and (b) risk-adjusted terms; what risks have been identified as having been transferred; and if he will place information on other relevant costs for each private finance initiative project in the Library. [130248]
§ Mr. Rooker[holding answer 13 July 2000]: The cost of the PRIME (Private Sector Resource Initiative for Management of the Estate) deal over the 20 year life of the contract is £2.008 billion (using the Government's real discount rate of 6 per cent.). This is £560 million less than the cost of continuing public sector provision. The bidding process established that the gap between the cost of the public sector comparator and the bids from all three consortia were such that the pricing of risk transfer was 41W not a factor in demonstrating value for money to the taxpayer in this instance. Other relevant costs on PRIME may be found in the National Audit Office report "The PRIME Project: The Transfer of the Social Security estate to the private sector HC370 Session 1998–99" which was presented to the House of Commons and subsequently published on 23 April 1999. The NAO report also identified some 16 areas of risk as having been transferred to Trillium, the PRIME contractor.