1.8 Treasury policy to date has been that ensuring effective competition for contracts should deliver the best value for money available from the market for the assets and services required and the risks transferred. The Treasury expect that authorities and their advisers will scrutinise all financial model assumptions, but in our experience this does not involve separate in-depth scrutiny of the price of equity relative to the amount of risk transferred to the investors.
1.9 The amount of financial information investors routinely provide is limited. When bidding for a contract, the investors disclose a projected rate of return, based on their estimates of project costs and the contract price they have bid. There have, however, been no contractual requirements for equity investors to disclose their actual returns when they sell shares.
1.10 In 2007, the Treasury introduced a new standard contract clause for new contracts to allow authorities to request financial information that project companies had provided to its lenders. This could be used to monitor changes in the investors' returns. We have, however, seen little evidence that this contractual right has been used by authorities.