7.4 The interest rate on which the price to be charged by the preferred bidder is based should be stated in the FBC. The NHSScotland body should also be aware of how this assumption affects price in the preferred bidder's financial model for the scheme. There should be an agreed protocol on how any interest rate fluctuations will affect price and the effect of these changes should be transparent within this model. It should be clear that any favourable movements in interest rates or RPI swap rates, if applicable, prior to financial close will be fully reflected in a lower price to the NHSScotland body.
7.5 To allow for possible changes in interest rates that may lead to an increase in price up to financial close, the price of the scheme on which Scottish Government support is based in the FBC should include an interest rate buffer. This buffer should be 0.25% above the relevant interest rate ruling at the time of FBC approval. The relevant interest rate is most likely to be that used for the proposed hedging strategy.
7.6 The FBC should also include sensitivity analysis of the effect of an increase or decrease in interest rates of each 0.25% and 0.5% change over that assumed in the FBC.
7.7 The purpose of the buffer is to provide some certainty in the last weeks before financial close. Interest rates can move against the NHSScotland body by up to 0.25%, yet the NHSScotland body will still be able to progress the contract. NHS bodies should note, however, that neither they nor the SGHD can guarantee that contracts will be approved if interest rates move against the NHSScotland body by more than 0.25%. NHS bodies in this position must consult the SGHD.