Q171 Stephen Barclay: Presumably some of those won't go ahead.
Andrew Hudson: If they're good value for money, they will go ahead; if not, they won't. As Charles Lloyd says, through the period that we've been talking about, some were sent back for further work.
Q172 Stephen Barclay: It's just that on the reports I've seen today, and we take the Air Tanker one, there was a pressing defence need for it to go ahead, so a different valuation discount was applied. The waste one was a regulatory and legal requirement, not to mention a political requirement, driving that, and therefore value for money figures, dare I say it, surprisingly were made to fit in order for that to go ahead. It's very difficult to see which PFI deals have been turned down.
Q173 Ian Swales: What proportion are turned down for good? They disappear because they're not good value for money? What proportion?
Andrew Hudson: I think the best evidence that I'm aware of is that, of the 35 that went ahead, six, I think, were sent back to be looked at again and were then able to renegotiate or redo the deals such that it did turn out to be one that the Project Review Group felt able to support.
Q174 Stephen Barclay: They went ahead with TIFU to renegotiate on them-
Ian Swales: What changed on those six? What changed?
Stephen Barclay: It didn't go to the comparison and then say "We're going to fund it in a different way". What happened was it just went back, but it still went ahead as a PFI deal.
Charles Lloyd: Some go ahead as PFI deals; some don't go ahead at all. Andrew Hudson is exactly right that of the deals that came to us we sent six back, for a range of reasons. I think it's important to remember that most of these deals come to us at a fairly late stage in their evolution. They've been thought about a lot by the authority, they've put a team together, a business case and so on. Many of the deals never get to that point, and we don't see the deals, obviously, which don't get to us. They don't get to us because they are not value for money, because they are not affordable, so we don't have data on that set of transactions.
Andy Rose: There are two other recent developments. One is, in the Spending Review it was announced that funding would not be available for certain PFI schemes, and also there is a change in the PFI credit regime, whereas now Departments have to look at their spending in the round, they are not having the allocation of funding for PFI credit. I think there have been profound changes in making sure there is a level playing field when these Departments look at their particular PFI budget.
Chair: I'd like to just draw us to a close. Richard, then Ed wanted a quick one and then that's it.
Q175 Mr Bacon: Three quick questions; if perhaps you could give quick answers, because I know the Chair does want to finish this. There's an intriguing sentence in paragraph 3.8 of the NAO's report, which talks about how once in operation, many of the risks that you have during the construction phase fall away, "Making possible an approach that coordinates the right to refinance by a number of public authorities." Is that saying, or have you thought about, the possibility of, once they are all in operation, bundling up a whole load of different projects together, which would also make it more attractive to a long-term institutional investor like an insurance company, offering something larger to a larger investor? Perhaps even through one entity that ends up having the legal right to receive the annual unitary charge payments, and then passes them on? Has that been considered yet?
Andy Rose: The answer is yes.
Q176 Mr Bacon: And once you've done that, of course, then you could securitise it, which is my note.
Andy Rose: Obviously yes, but I think it's important to understand that these PFI deals individually are relationships between private sector borrowers and their banks, where it (the public sector) has a very important stake because it's paying the bill. Very often the shareholding in each of these individual deals is different and complex, and therefore I think the ability for Government to mandate a portfolio refinancing is actually very difficult.
Q177 Mr Bacon: I wasn't talking about mandating.
Andy Rose: What I think we can do, and to take the advice and recommendation of the NAO, is be more proactive, and that's part of the work we're-
Q178 Mr Bacon: And you could steer large bundles together to meet large bundles of potential institutional investors. That would then recycle and enable the banks to free up a whole load of capital.
Andy Rose: And sell the portfolio of loans on. Absolutely. That is a dialogue we intend to have. Driving the private sector on how to refinance and when, in its relationships with its banks, creates enormous complexities, but the aspiration I absolutely accept and we will be more proactive.
Q179 Mr Bacon: Second quick question, which I'm sure Mr Hudson knows the answer to. The last time I asked this question, the answer was about £5 billion, I think. What is the total value of the annual unitary charge payments that are being made in the current year, for all projects?
Andrew Hudson: It is estimated at £8.555 billion in 2010-11.
Q180 Mr Bacon: If you roll that forward by however many years you would need to for each of the contracts, however long it runs for, what's the total value in cash terms and in net present value terms?
Andrew Hudson: This is the exchange you had with my predecessor.