8.1 This guidance sets out the principles which apply when assets are included in PPP deals.
8.2 In 2003 HM Treasury published an update of the Green Book. Amongst other changes, the discount rate used in public sector investment appraisal was reduced from 6% to 3.5%. The NHS capital cost charge rate is now aligned with the new discount rate. Consequently, all worked examples in this guidance note assume 3.5% discount and cost of capital charge rates. Readers should check that these working assumption are still valid prior to compiling their own estimates.
8.3 The guidance is consistent with the approach outlined in Treasury Technical Note No.1 Revised (July 1999) and the current NHSScotland Capital Accounting Manual (March 2004). In particular, attention should be given to the following sections where the guidance has been updated:
• Clarification of the value for money test to be applied where surplus land is injected into schemes (para 31);
• The valuation of buildings included in PPP Schemes for refurbishment (para 59);
• Assets donated by third parties in exchange for a reduction in annual unitary payments borne by bodies (paras 63 to 67);
• accounting for residual interests (paras 68 to 80); and
• taxation (para 83).
8.4 The guidance addresses the following issues:
• the overriding principles governing the inclusion of land and buildings in PPP deals (paras 5 to 11);
• the criteria for judging whether or not to include land in a PPP deal (paras 12 to 13);
• the sale of surplus NHS land to the private sector for subsequent sale in exchange for a reduction in annual unitary payments (paras 14 to 49);
• land or buildings leased to the private sector (paras 50 to 62);
• the use of assets donated by third parties to effect a reduction in annual unitary payments (paras 63 - 67);
• accounting for residual interests (paras 68 to 81); and
• tax and other issues (paras 82 to 85).
8.5 The Treasury has announced, that the central government bodies will adopt International Financial Reporting Standards for the financial year 2009/10. The precise changes required to the NHS Accounting rules are still being confirmed. NHS Bodies should therefore seek to confirm appropriate accounting treatment with their financial advisors and auditors.