Examination of witnesses (Questions 380
- 399)
WEDNESDAY 1 JULY 1998
MR JOHN
BALLARD, MR
CHRIS BREARLEY
and MR DAVID
ROWLANDS
Mr Bennett
380. But, surely, as far as the reserve
price, I can understand why you should not reveal the range, but
there must be a price that was put in when all this discussion
was taking place as to whether as a policy it was worthwhile or
not; now surely that piece of information, at least, you could
reveal to us?
(Mr Rowlands) Can I try to help.
Chairman
381. Yes, Mr Rowlands, I am sure any contribution
will be gratefully received.
(Mr Rowlands) I think the thought that the sale
of the 51 per cent equity stake in NATS would help to underpin
investment in transport flows from the Chancellor's original EFSR
Statement, where he spoke not only of NATS but also of a number
of other bodies.
382. And the Mint and the Tote, and one
or two other extraneous things?
(Mr Rowlands) The Commonwealth Development Corporation,
and so on. The problem is, if you like, trying to prove what would
have happened if that had not been the case. I think we are all
quite clear, and certainly the Deputy Prime Minister is quite
clear, that the transport provision, when it is announced later
this month by the Chancellor in his Comprehensive Spending Review
statement, will be higher than it would otherwise have been. For
that purpose, to directly answer your question, there was a figure
shared between the Treasury and the Department as to what might
be realisable from the 51 per cent sale of NATS, though, as Mr
Ballard says, for commercially confidential reasons, we do not
want to announce that because it paints us into a corner, in terms
of any prospective buyer. What we did agree with the Treasury
was that, if the proceeds from the partial sale of NATS were less
than the sort of number we had been talking to each other about,
that was the Treasury's risk, they did not take the money back
from Transport if the number was rather smaller than the one we
had been thinking about.
383. So if you were generally incompetent
salesmen they would not actually blame you?
(Mr Rowlands) They would always blame us if we
were generally incompetent, as will the National Audit Office,
in due course.
Mr Bennett
384. I just really was concerned. I can
understand why you cannot tell us the range, but I still cannot
understand why you cannot tell us the bottom line figure?
(Mr Rowlands) It was a single figure we talked
to the Treasury about, so we were not talking about a range; and
you cannot pick out from what will be three years' numbers, as
part of the Comprehensive Expenditure Review, what particularly
is attributable to NATS. If NATS is sold, the receipts will be
received, I guess, in a single financial year, the year in which
the 51 per cent sale is made, though the underpinning, if you
like, of the whole Transport settlement spreads across three years,
in a sense.
385. But there must be a figure that you
believe it is not worth going ahead with this, as a policy; what
is that figure?
(Mr Rowlands) I do not think I can answer that
question. From the Department's point of view, since we have reached
an understanding with the Treasury, if I can be slightly cynical,
if we are just looking at proceeds, in one sense you can say,
since the Treasury has accepted if we get less than the sort of
number we have been talking about, that is their risk, it is not
a risk that worries us, although in terms of value for money for
the taxpayer, clearly, we have other concerns.
386. So it is a figure that the Treasury
knows but you do not know?
(Mr Rowlands) It is a figure that we know and
they know——
Chairman
387. But we are not going to know?
(Mr Rowlands) Because we do not want to tell potential
purchasers what sort of sum of money we have got in mind.
Mr Donohoe
388. But was there not, from the previous
administration, I am asking you this in all honesty, a figure
put in the Red Book for the sale of NATS?
(Mr Rowlands) I think, from memory, a figure was
put in the Red Book, and I think, from memory, it was £500
million for a 100 per cent sale; you will conclude from that that
51 per cent would be around £250 million. All I would say
is that the sort of number we were talking to the Treasury about
was not two million miles away from that.
Mr Donohoe: Can I
just say to you that, in these circumstances, it seems strange
that you are not in a position to be able to give us, today, a
figure, if the Government of that administration was able to put
it within the Red Book. Why; what is the difference?
Chairman
389. Mr Rowlands has given us an indication.
(Mr Rowlands) I have tried to be helpful. Can
we reflect on that and if we want to say to you more we will do.
Chairman: Yes; because
Mr Rowlands has given us an indication, which even the most stupid
of us can probably pick up.
Mr O'Brien
390. Can I go back to the question of the
Highways Agency, and could you tell me, in the current year, 1998-99,
how much they will be spending on the national roads network and
how much will they be spending on maintaining the existing system?
Would I be fair in saying there is a capital and a revenue input
there, and, if there is, could you tell me both the charges?
(Mr Brearley) I will give you some figures, if
I may. There is a figure, in Figure 8.a, on page 62 of the Report,
for 1998-99 National Roads, £1,349,000,000, (one billion,
349 million) as a grand total.
391. That is capital, is it?
(Mr Brearley) No, that is both capital and current.
392. How much of that then would be revenue?
(Mr Brearley) Can I split it down, first of all,
into maintenance, which is about £650 million of that total,
of which itself about £285 million is capital maintenance
and £175 million is routine current account maintenance,
so to speak. Something like £150 million is for the renewal
of bridges, which is capital expenditure, really, and then there
is about £40 million which is things like the electricity
for the street-lights, other equivalent expenditure, which is
current expenditure, pretty largely, so it splits into both; and
that is all maintenance that I have been talking about there.
And then there is something of the order of £562 million
for road infrastructure improvements, of which, that is all capital
except the £114 million which is PFI payments for the DBFO
schemes of the kind we were referring to earlier, inside that.
And, finally, to get the total, there is about £140 million
which is, as the Highways Agency say, making better use of the
network, which is really small, capital expenditure, small schemes,
junction improvements, and so on.
393. How much of that is spent on expanding
the motorway system?
(Mr Brearley) I suppose, it is the infrastructure
improvements, the larger road schemes, which are making the greatest
contribution to that, which, ignoring the PFI payments, is of
the order of £440 million this year, though, in fact, quite
a bit of the `making better use' sum, which is junction improvements
and lane improvements, small things of this kind, it is increasing
the capacity of the network but not in sort of dramatic, one-off
ways.
394. The £114 million that is spent
through the PFI, that is all expanding the motorway, there is
no maintenance in that, is there?
(Mr Brearley) Those are the payments for the DBFO
schemes and the routes that were involved in those, so the sums
of money are remunerating the contractors, basically, both for
the capital expenditure they have undertaken and the ongoing operating
costs that they have got.
395. Who is responsible for maintaining
the roads built by PFI?
(Mr Brearley) The contractor.
396. They are; so it comes out of this?
(Mr Brearley) Yes.
397. What are those figures as a proportion
of the total budget for highways and how does this compare with
the previous two or three years?
(Mr Brearley) The £114 million compares with
a total of about £1,350 million, as I say, so we are talking
about something like 8 per cent. So that is that level of comparison.
And this sum has, of course, been growing quite considerably in
recent years, it was almost nothing at all only a few years ago,
as more DBFO schemes have come on board.
398. But what is the total out of the Department's
budget?
(Mr Brearley) The Department's budget, John, is?
(Mr Ballard) The total budget for the Department
is about £12.5 billion in 1998-99.
399. And that is including the grants to
local authorities, too, is it?
(Mr Brearley) No, actually, it is not; so it is
about 1 per cent anyway of the grand Department's budget, to split
it in that way.
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