Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of witnesses (Questions 380 - 399)



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.


  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——


  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?


  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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