§ Mr. BaconTo ask the Chancellor of the Exchequer what the total costs involved in the Exchequer Partnership bond issue for the Treasury Building PFI deal were including total fees paid to banks, professional advisers and others, showing for each amount paid the(a) payer and (b) payee. [32214]
§ Mr. Andrew SmithThe information is as follows:
(i) Fees paid by EP up to and including financial close (May 2000), as shown in the financial model, were:
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£ million SG Financial advice to EP 1.250 SG Mezzanine underwriting 0.100 Chesterton Property/letting advice to EP 0.900 PwC Tax and accounting advice to EP 0.100 Ashurst Morris Crisp Legal advice to EP 0.800 C. E. Heath Insurance advice to EP 0.060 Marsh Bankrisk Insurance due diligence for funders 0.030 Failthfull & Gould Technical due diligence for funders 0.150 Allen & Overy Legal due diligence for funders 0.532
£ million PKF Model audit 0.070 Rating Agencies Bond rating costs 0.200 UBS Warburg Bond arrangement fee 0.799 Ambac Initial credit enhancement premium 1.845 Ambac Mezzanine arrangement fee 0.132 Total 6.968 (ii) Fees paid by HMT up to and including financial close were:
£ million GTMS Project management and technical advice 0.462 Berwin Leighton Legal advice 1.355 Dresdner Kleinwort Benson Financial advice 0.645 Cecil Denny Highton Advice on accommodation requirements 0.101 C. B. Hillier Parker Specialist property-related advice 0.013 Roger Preston & Partners Mechanical and electrical engineering advice 0.043 Willis Corroon Insurance advice 0.006 PricewaterhouseCoopers Accountancy advice 0.012 Total 2.637
§ Mr. BaconTo ask the Chancellor of the Exchequer what the total(a) refurbishment and (b) operating costs are of the Treasury building, broken down by the principal cost headings used. [32210]
§ Ruth KellyAs at financial close (5 May 2000), the total projected costs to the start of operations are:
Total Funding requirement £million Percentage Net VAT paid/(received) 0.115 0.1 Construction cost 118.659 84.2 Pre-operating costs 7.578 5.4 Senior debt service reserve 4.392 3.1 Change in law reserve 2.419 1.7 Cash 0.608 0.4 Interest and fees: 0.800 0.6 Mezzanine Debt Bond (net of interest received) 6.394 4.5 Total 140.965 100.0 The annual service costs payable to EP form part of the single Unitary Payment payable by HMT. These costs are expressed in March 1999 prices and are subject to indexation:
£000 Hard services1 1,504 Soft services2 1,930 Total services 3,434 Capital charges 10,603 Total unitary payment 14,037 1 Includes M&E systems, building fabric, fire and safety systems, security hardware. 2 Includes cleaning and waste management, security personnel, Help Desk.
§ Mr. BaconTo ask the Chancellor of the Exchequer for the 10 years prior to the Treasury Building PFI deal, how much the Treasury has paid in annual rent for the Treasury Building. [32207]
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§ Ruth KellyFigures for the years up to 1995–96 are not readily available. Figures for later years are in an answer I am giving to the hon. Member today.
§ Mr. BaconTo ask the Chancellor of the Exchequer what assumptions have been made about inflation in the Treasury Building PFI deal. [32204]
§ Ruth KellyThe base case assumption was a constant 2.5 per cent. annual increase in the RPI all items index.
§ Mr. BaconTo ask the Chancellor of the Exchequer what discount rate was used for the Treasury Building PFI deal; and, using this discount rate, what the total net present cost is of the annual unitary payments over the lifetime of the Treasury Building PFI deal. [32215]
§ Ruth KellyThe total net present cost of the annual unitary payments over the lifetime of the deal is £169.3 million, discounted at 6 per cent. in real terms and assuming 2.5 per cent. inflation.
§ Mr. BaconTo ask the Chancellor of the Exchequer under the terms of the Treasury Building PFI deal, who owns the freehold of the Treasury Building. [32212]
§ Mr. Andrew SmithThe building remains a Crown freehold throughout the term of the deal. Exchequer Partnership plc will be granted a head lease for the whole site on completion of the refurbishment of the Treasury accommodation at the west end of the summer. They will then grant the Treasury a sub-lease for our accommodation for the thirty-five year operating period. Once the eastern end is refurbished, Exchequer Partnership will grant similar sub-leases to the tenants there.
§ Mr. BaconTo ask the Chancellor of the Exchequer what the total capital sum involved in the Treasury Building PFI deal was, broken down by(a) equity and (b) the different layers of debt. [32213]
§ Ruth KellyThe information is as follows:
Sources of funding Total £million Percentage Ordinary Shares 0.500 0.4 Shareholder Loan Stock 6.425 4.5 Mezzanine Debt 6.250 4.4 Bond 127.790 90.7 Total 140.965 100.0 Note:
The equity comprises the ordinary shares and the shareholder loan stock, a total of £6.925 million, or 4.9 per cent. of the total funding.
§ Mr. BaconTo ask the Chancellor of the Exchequer what the total annual operating costs were for the Treasury Building in each of the four years prior to the Treasury building PFI deal, broken down by(a) cleaning, (b) security, (c) electricity, (d) water, (e) gas, (f) non-domestic rates, (g) basic maintenance, (h) exceptional maintenance and (i) other significant operating cost items. [32209]
§ Ruth KellyThe Treasury building is a Crown freehold so has not been subject to conventional rents. For the four years prior to the PFI deal a capital charge (an intra-Government transfer payment) has been payable on the Treasury building. The Treasury has another building— 839W Allington Towers (AT) in Victoria street—which is a leasehold building so subject to rental payments to a landlord. The intention is to surrender the Allington Towers lease when the staff there have moved into the refurbished Treasury building this summer. While the
£million 1996–97 1997–98 1998–99 1999–2000 Items included in unitary payment: Rent/capital charge 4.71 4.91 4.69 6.62 Cleaning/security/maintenance 2.1 3.03 2.62 2.21 Items not included in the unitary payment: Rates, utilities' costs, copying. furniture and fittings 3.114 2.861 2.897 2.985
§ Mr. BaconTo ask the Chancellor of the Exchequer when the Treasury Building PFI deal ends, how much at current prices he estimates the Treasury will pay in annual rent. [32208]
§ Ruth KellyAt the end of the PFI deal in 2037 ownership of the building reverts to the Treasury. We then have a choice whether to negotiate a new deal with Exchequer Partnership, or another supplier, or to take responsibility for running the building ourselves once again.
§ Mr. BaconTo ask the Chancellor of the Exchequer what he estimates the total amount of cash paid by the Treasury to Exchequer Partnership over the lifetime of the Treasury Building PFI deal would have been if the discount rate had been(a) 3.50 per cent., (b) 3.75 per cent., (c) 4.00 per cent.,(d) 4.25 per cent., (e) 4.50 per cent., (f) 4.75 per cent., (g) 5.00 per cent. and (h) 5.50 per cent. [32201]
§ Ruth KellyUnder current Treasury guidance to Departments on the carrying out of investment appraisals (the "Green Book") the discount rate to be used is 6 per cent. in real terms. Were the guidance to be changed in the future, other parts of the methodology might also vary. So simply changing one variable, in this case the discount rate, is not valid.
§ Mr. BaconTo ask the Chancellor of the Exchequer what will be the total amount of cash paid by the Treasury to Exchequer Partnership over the lifetime of the Treasury Building PFI deal assuming no inflation. [32200]
§ Ruth KellyThe Unitary Payment (UP) is set at £14.037 million per annum in March 1999 prices, to be indexed annually by the RPI. Assuming no inflation, therefore, the Treasury would pay £491.3 million over the 35 year contract term.
§ Mr. BaconTo ask the Chancellor of the Exchequer at the time of issue of the Exchequer Partnership bond for the Treasury Building PFI deal, what the total extra cash paid by the Treasury to Exchequer Partnership over the lifetime of the Treasury Building PFI deal would have been for every change of 0.1 per cent. in the bond spread. [32202]
§ Ruth KellyThe total additional payment over the lifetime of the project would have been £6.568 million per 0.1 per cent. increase in the bond spread. The NPC impact of a 0.1 per cent. increase is £1.329 million (discounted at 6 per cent. real), and the annual increase in the Unitary Payment would have been £110,00 as at 31 March 1999.
840Wrefurbishment of the west end of the Treasury building is going ahead, some two thirds of our staff remain in the east end of the building while the remaining third are housed at Allington Towers. The total costs of running the two buildings are set out in the table.
§ Mr. BaconTo ask the Chancellor of the Exchequer by how much he estimates the bond spread of the Exchequer Partnership bond issued for the Treasury Building PFI deal would have had to widen before the project had become unviable. [32203]
§ Ruth KellyThe contract with EP provided for a cap of £14.2 million on the Unitary Payment (i.e £13.981 at the time the contract was signed in August 1999) if funding was subsequently secured through the bond route. If the cap had been exceeded, then it would have been for the Treasury to decide whether a new, higher figure would still have provided good value for money.
§ Mr. BaconTo ask the Chancellor of the Exchequer using the Treasury's inflation assumptions for the Treasury Building PFI deal, what he estimates the total amount of cash paid by the Treasury to Exchequer Partnership will be over the lifetime of the Treasury Building PFI deal. [32205]
§ Ruth Kelly£838.154 million. This equates to £169.3 million in net present cost terms, discounted at 6 per cent. in real terms and assuming 2.5 per cent. inflation.
§ Mr. BaconTo ask the Chancellor of the Exchequer what he estimates the total amount of cash paid by the Treasury to Exchequer Partnership will be over the lifetime of the Treasury Building PFI deal assuming a constant inflation rate of(a) 2.00 per cent., (b) 2.25 per cent.,(c) 2.50 per cent., (d) 2.75 per cent., (e) 3.00 per cent.,(f) 4.00 per cent. and (g) 5.00 per cent. [32206]
§ Ruth KellyThese calculations have no bearing on the value for money assessment since the project appraisal is conducted in real terms.
§ Mr. BaconTo ask the Chancellor of the Exchequer what he estimates the total net present cost of the annual unitary payments by the Treasury to Exchequer Partnership over the lifetime of the Treasury Building PFI deal would have been if the discount rate had been(a) 3.50 per cent., (b) 3.75 per cent., (c) 4.00 per cent.,(d) 4.25 per cent., (e) 4.50 per cent., (f) 4.75 per cent., (g) 5.00 per cent. and (h) 5.50 per cent. [32216]
§ Ruth KellyUnder current Treasury guidance to Departments on the carrying out of investment appraisals (the "Green Book") the discount rate to be used is 6 per cent. in real terms. Were the guidance to be changed in the future, other parts of the methodology might also vary. So simply changing one variable, in this case the discount rate, is not valid.
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§ Mr. BaconTo ask the Chancellor of the Exchequer what the(a) gross and (b) net proceeds were from the Exchequer Partnership Bond issue. [32211]
§ Ruth KellyThe gross proceeds were £127.790 million and the net proceeds £123.639 million.