§ Harry CohenTo ask the Chancellor of the Exchequer whether capital expenditure on London Underground by means of(a) private sector companies and (b) bond funding raised by London Underground falls within the general Government financial deficit; whether such capital expenditure is included in the public sector borrowing requirement; and if he will make a statement. [34901]
§ Mr. Andrew SmithCapital expenditure by London Underground Ltd. (LUL), financed by its own borrowing, would increase public sector net borrowing. It would not increase general Government net borrowing because LUL is a public corporation: these are outside general Government but inside the public sector.
In accordance with generally accepted accounting practice, capital invested in London Underground (LUL) by the private sector would not count as public expenditure, and would not be included in the public sector net borrowing, if LUL's accountants and auditors judged that the assets should be off LUL's balance sheet. If the accountants judged it was on balance sheet then it would count as public expenditure and be included in public sector net borrowing. The PPP saves £2 billion of public money over the first 15 years of the contracts, in comparison to funding the same projects through conventional public investment. The plans will mean £16 billion of investment over the next 15 years.