8. How should future payments by the Government under existing Private Finance contracts be recorded in public sector accounts? Is risk transfer an appropriate test? Should all such liabilities be included in the national debt? Should they be accounted for separately from government debt? How much does the public sector accounting treatment of capital and revenue aspects of projects matter?
8.1 It is The LIFT Council's position that the key issue on accounting for LIFT projects is that PCT partners are provided with clarity on the issue. Whilst HM Treasury finally released guidance on the implications of IFRS (International Financial Reporting Standards) for public sector resource accounting in June, the guidance was extremely technical and parts of it remain open to interpretation. Many LIFT projects were put on hold while awaiting the release of guidance and resolution of the on/off balance sheet issue. Some PCTs, uncertain about their ability to cover extra costs and so unwilling to start new projects, were unnecessarily holding up schemes which would otherwise go-ahead on the basis of local appetite and need. Even schemes which had robust financial plans and which were not affected by the IFRS issue were put on hold due to this cloud of uncertainty which has still not been fully resolved. This was further compounded by the fact that the Department of Health now has further work to do in applying the guidance and that PCTs' capital allocations are not likely to be confirmed until 2010.