Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Supplementary memorandum by the Department for Transport (NAT 2C)


  At the above hearing we undertook to provide the Committee with information on the cost of external advisers employed by the Department in relation to the NATS PPP, and the cost of any ongoing advice.

  The Department's lead advisers, the investment bankers Credit Suisse First Boston, were appointed in October 1998. To date the Department has paid them fees totalling £9.9 million. We expect to incur a further £0.8 million before terminating their contract in the autumn.

  The legal advisers are Slaughter and May, who commenced work on the project in November 1998. Expenditure on their fees to date totals £6.7 million. We estimate that we will spend a further £0.2 million on their services.

  In addition, there were a number of minor consultancies where advice was provided on accounting and property matters and a range of technical issues. The total expenditure on these contracts was £2.9 million. No further costs are expected to be incurred under this heading.

  Under the Civil Aviation Act 1982 the Civil Aviation Authority is entitled to recharge the Department for services Ministers have requested. These provisions enabled the CAA and NATS to reclaim expenditure that was attributable to the PPP process—principally costs for professional advisers, and for splitting accommodation and services between the two bodies. Costs repaid to the CAA totalled £5.7 million, and to NATS £17.5 million. In addition, costs amounting to £2.8 million have been paid to the Civil Aviation Authority Pension Scheme for the costs of splitting the scheme as a result of the PPP. A further £2 million expenditure is anticipated under these arrangements.

  In summary, the Department has incurred costs totalling £45.5 million to date, including some costs incurred since completion of the PPP. It expects to incur a further £3 million in helping to secure long-term financial stability for NATS.

David Jamieson

Parliamentary Under Secretary of State

1 July 2002

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