3.13  Central government and health sector PFIs that are on-balance sheet require both up-front Capital DEL for the entire capital value in the initial operational year and annual Resource DEL to cover the annual payments.

3.14  Projects that are off-balance sheet have no effect on Capital DEL. There is no upfront charge to the departments' budgets and the annual payments to contractors score against Resource DEL. It is thus likely to be more affordable to pursue an off-balance sheet approach, because these do not require Capital DEL.

3.15  The exact amount of Resource DEL needed will not be exactly the same between an on and off-balance sheet approach, because an on-balance sheet approach includes depreciation and capital charges but not debt repayments against Resource DEL. This will roughly balance out over the life of the contract. However, timing differences on when these elements require Resource DEL can also make on-balance sheet accounting approaches seem less affordable in the early years of the contract.