ONS denies plans to put PFI on balance sheet

26 May 05
The Office for National Statistics has denied that it intends to include Private Finance Initiative liabilities in public sector net debt, while admitting to exploring how this could be done.

27 May 2005

The Office for National Statistics has denied that it intends to include Private Finance Initiative liabilities in public sector net debt, while admitting to exploring how this could be done.

The ONS moved quickly to rebut suggestions that it was about to reclassify capital expenditure on PFI schemes as being on-balance sheet and, consequently, within the scope of the public finances.

Currently, almost 60% of the £43bn of PFI deals signed so far are deemed off-balance sheet and therefore do not appear in the public finances. Reclassification would have added billions of pounds to the government debt figures and would have threatened Chancellor Gordon Brown's ability to meet his fiscal rules.

National statistician Len Cook rushed out a statement on May 20: 'The ONS has taken no decision to change the treatment of PFI schemes in the public finances,' it said. 'If any decisions are made, advance notice of changes will be made in the usual way.'

However, Cook has confirmed the ONS recognises that 'conceptually, an element of PFI debts should be recorded within public sector debt'.

He added: 'The need to make estimates [of PFI debt] has been recognised for some time and we have been continuously expanding our ability to cover PFI activities and explore possible sources of information.'

Cook also sought to downplay the significance of including PFI debt in the public finances, insisting the capital value of projects would not be used. Instead, he said, only estimates of the 'imputed finance lease loan' element would be incorporated.

The element is based on the assumption that when assets are leased to public sector organisations, that constitutes a form of non-financial loan by the private contractor to the public body.

PFmay2005

Did you enjoy this article?

AddToAny

Top