Q119 Chairman: Ms Matheson, Mr Grice and Professor Whittington, welcome. If I can please ask you to speak reasonably slowly and clearly that will be helpful both for the webcast and for the shorthand writer. I do not know whether any of you would like to make an opening statement or whether you would like to move straight into questions.
Ms Matheson: Maybe I can just say a few words, thank you. I just wanted to say thank you for the opportunity to explain and discuss the statistical treatment of PFI projects both in the national accounts and in other official statistics. A key part of what we do is to follow international standards governing statistical accounts-the UN system of national accounts and the European system of accounts-and we have got a legal basis for compliance with those. Statistical guidance and accounting guidance has, up until now, been similar in the relevant respects, so we have been able to use the audited accounts of public bodies to use in the national accounts. The introduction of the new International Financial Reporting Standards this year may have some impact but public bodies are still being required to produce accounts on the old basis as well, so we can continue to fulfil our legal obligations. Finally, of course, our obligations go beyond that, and we are conscious of the need to meet public needs for transparency of statistical information. So we have work under way looking at the presentation of additional information-for example, on public sector liabilities. It is a complex area but we are publishing and have already published a series of articles to help us and our users understand the issues, and we would be very happy to try and explain that today.
Q120 Chairman: Just before we move on to the accounting and statistics side, can I ask you one general question, which is to ask you what you see as the defining characteristics of private finance projects?
Ms Matheson: Can I start, just from the statistical point of view, because that is what I can talk about? Following the international standards that I referred to, it is about risk, and the assessment of where the risk lies. Is it with the public sector or the private sector partner in the arrangement? The European system of accounts and the international standards are quite clear about that. So, as far as we are concerned, we take the audited accounts which themselves have assessed where risk lies. Where the bulk of the risk is judged by the professional accountants to be in the public sector then they are on the public sector balance sheet; where it is in the private sector then they are not. So that is the defining characteristic in terms of how we, as statisticians, interpret the accounting rules.