B12 Two major transport transactions, the Channel Tunnel Rail Link and the London Underground Limited PPP, are sufficiently significant in size to require a separate account of their treatment. LUL and CTRL are reported in the Financial Statement and Budget Report 2003 in the following way:
• the annual capital investment being undertaken by London and Continental Railways on the CTRL is included in the departmental estimate of capital spending by the private sector under the Department for Transport;
• the total capital value of the first 15 years of infrastructure investment under the Tube Lines London Underground contract is reported in financial year 2003-04. The expected unitary charge service payments to be made under the contract are reported in the estimates of future revenue payments under PFI contracts; and
• the total capital value of the first 15 years of infrastructure investment under the Metronet London Underground contracts is reported as part of the Department for Transport's estimated aggregate capital value of projects at preferred bidder stage in 2003-04. (These contracts have now been signed.)
B13 The data on the PFI programme differs from that represented in the Financial Statement and Budget Report due to the different treatment of CTRL and LUL. Specifically:
• capital investment undertaken by London and Continental Railways on the CTRL is not included in the data, as the investment does not occur under a PFI contract. CTRL is not a PFI because the Government has no fixed contractual liability for set values of future service payments to the private sector, but instead guarantees CTRL bonds. The risk transfer involved in the project is therefore different in kind to a PFI contract, utilizing a different transfer mechanism;
• the PFI contracts for the modernisation and maintenance of London Underground are included in the data. Under the Tubelines and Metronet contracts, the Government has incurred fixed price service payment liabilities into the future (with the contracts reviewed every seven and a half years) in return for a guaranteed level of service. It has transferred risk in the same way as in other PFI contracts;
• to maintain an approach consistent with previous reporting, LUL PFI contracts are reported at their value estimated over a 15-year period in the year in which they were signed (as the contracts are reviewed periodically, the actual capital investment undertaken may vary); and
• to improve transparency in the figures, the proportion of capital investment represented by the London Underground contracts is indicated in data for the capital value of signed PFI contracts.