Further written evidence from the Department
for Business, Innovation and Skills
1. Do you know of the 217 projects that are going
ahead how many were contractually committed to and what was not?
Of the 22 BIS Projects 21 went ahead. (Rachel Reeve/Luciana
Berger).
The following tables detail the BIS projects not
selected for suspension or cancellation as part of HM Treasury's
review of spending commitments made between the 1 January and
the General Election which were or were not contractually committed.
CONTRACTUALLY COMMITTED
| Project Name
| £Million, |
| Airbus: A35OXWB | 340 |
| Spectrum clearance costs | 280
|
| Post Office | 180 |
| Discovery Research Ship | 75
|
| UK Online | 30 |
| GBI:Nissan | 20.7 |
| NaREC - Offshore wind turbine test site |
18.5 |
| Student Loans Company | 16.3
|
| Offshore Wind Demonstration and
Deployment
| 12.8 |
| International Space Innovation Centre | 12.5
|
| NaREC - Offshore wind blade test site | 11.5
|
| Student Loan sales programmes - cost
of advisors for feasibility study
| 0.48 |
1. The figures refer to that considered by the Treasury at the
time.
NOT CONTRACTUALLY COMMITTED
| Project Name
| £million |
| Ford Loan Guarantee | 378 |
| GM Loan Guarantee (company withdrew) | 270
|
| Broadband Universal Service Commitment
(USC)
| 200 |
| Diamond Phase III | 97.4 |
| UKCES grant letter | 77.3 |
| Offshore Wind - Support for Developing
Manufacturing Facilities
| 60 |
| Growth Capital Fund | 50 |
| Offshore Wind - Mitsubishi | 30
|
| Digital Participation | 4.0 |
2. What were the criteria that enabled other projects, the
Discovery research ship, the International
Space Innovation Centre or the student loan
sale programme to go ahead while Sheffield Forgemasters was cancelled?
(Rachel Reeves).
The decision to continue with the project to replace
the Discovery research ship was made on the basis that it was
legally committed and a top scientific priority.
The decision to allow the International Space Innovation
Centre project to go ahead was made on the basis that it was legally
committed and of strategic interest to the Government.
The decision was taken to proceed with a feasibility
study to assess the viability of monetising the student loan portfolio
in order to reduce Public Sector Net Debt. At the end of the feasibility
study, a decision will be taken on whether or not to make
further preparations for potential monetisation
options.
3. Clarification on how much of the £80million
loan would have been drawn down this FY/how much would have shown
on the balance sheet this FY. (Rachel Reeves/Margot James).
The full £80 million loan would have been drawn
down this financial year and the full amount would have been reflected
on the balance sheet. Please note that, because of the time restriction
on the availability of the SIF (all funds needed to be drawn down
by March 2011, the loan would have been drawn down to a ring-fenced
`funding account'. SFIL would then have drawn down funds over
a period of 15 months as specific investment milestones were reached.
4. Information on the discounted present value
of the loan/total debt, including any bonds (Margot James/Adrian
Bailey).
The coupon and term of the proposed loan to SFIL
was 3.5% and 14 years respectively. The coupon on 15-year UK Government
bonds is 5%.
HM Treasury's Green Book "social time preference"
discount rate is 3.5%. The undiscounted value of the interest
rate subsidy to SFIL on the basis of the repayment schedule set
out in my letter to you of 10th August is £13.24 million.
The present value of this subsidy (discounted at the social time
preference rate) is £10.86 million. Please note that this
calculation does not reflect SFIL's credit risk.
5. Extra Treasury commitment which had been incurred
through Nissan, Ford, Mitsubishi and the other BIS projects -
what was the impact on the borrowing requirement of the other
support. (Adrian Bailey).
The PSBR has been renamed the Public Sector Net Cash
Requirement (PSNCR). PSNCR reflects the full amount of any spending
or lending entered into by the Government. Future loan repayments
benefit PSNCR as and when they are received. Guarantees are treated
as contingent liabilities. They therefore are only reflected
in the PSNCR if and when they are called.
Project specific details are provided in the answer
to Q1.
31 October 2010
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