195. As I was saying, everybody seems to be wanting to get their fingers into this very lucrative deal because 19 bidders were very interested. If it was not such a good deal for them, why were they interested in it?
(Sir Andrew Turnbull) There was a lot of interest in it, the result of which the unitary payment as a result of this competition reduced by £974,000. That is how we exploited their interest in this deal.
196. One point which springs to mind, and I have just been talking to Mr Bacon on the way back from voting, is this 35 year pay-back period. I do not know whether it is against the law, perhaps it is, I do not know, but presumably the Treasury are the best people in the world to be in a position to pay back this very quickly. Why does it have to be over 35 years? If you do public sector work, why does it take 35 years to pay it back?
(Sir Andrew Turnbull) Because what we were buying was serviced accommodation, we wanted to know we had a place to live.
197. Why not pay it back more quickly?
(Sir Andrew Turnbull) Why should we pay it back more quickly?
198. Because it costs less.
(Sir Andrew Turnbull) I am not sure it would if you pay it back quickly.
199. If I have a mortgage and take it out over 25 or 30 years and then pay it off in 20 years, I pay a lot less than if I paid it off over 35 years.
(Sir Andrew Turnbull) It depends how you pay it back. Here you have a project-
200. Come on! Come on! Answer the question. "It depends how you pay it back" is not a sensible answer. If I borrow £50,000 over 35 years but then pay it back over 25 years I pay it back for a lot less than if I had taken 35 years.
(Sir Andrew Turnbull) In cash terms, yes, but not-
201. I am talking about cash.
(Sir Andrew Turnbull) We are doing this on a discounted-
202. What we are here for is to see if the taxpayer gets a good deal, and the taxpayer could get a much better deal than I think this has given them. We could save money for the taxpayer. We could save them millions of pounds.
(Sir Andrew Turnbull) I am not going to agree with you.
203. We could not save them money?
(Sir Andrew Turnbull) We have compared a refurbishment which gave us a right of occupation for 35 years-and we assume there will be a Treasury in 35 years-and what that cost us by this route compared to if we had done it as a public sector project.
204. As I say, everybody seems to have a good deal except the taxpayers. Let's go on to paragraph 1.14, this has been mentioned before, and I picked this out and so has everybody else. Societe Generale was appointed by the partnership to run the funding competition. Mr Stewart used to work for them, did he not?
(Mr Stewart) I did.
205. They got a hell of a good deal as well. They got a £100,000 sum in compensation if somebody got a better deal than them. That is great, is it not?
(Sir Andrew Turnbull) I have explained that twice already.
206. You have but at the end of the day try giving a justification. Justify it, because I do not think you have justified it. Here is a deal where you say, "If somebody can come up with a better deal than that, we will give you £100,000 in compensation." Did you declare an interest at the time, Mr Stewart?
(Sir Andrew Turnbull) What we got was the assurance that there would be in place at least one mezzanine level debt provider against the possibility that the senior debt providers did not want to provide the mezzanine level debt as well.
207. Nobody is liable here. They are all doing very well. Paragraph 2.29 on page 23, I was surprised when I read this particular paragraph and I will quote it here. It .".. should include all forms of financing to ensure that the best type of funding is being considered by contractors and their financiers." That implies that is not already done and I would have thought it should automatically be done. It does not matter what deal is being done, it should not just be thought about now.
(Sir Andrew Turnbull) I do not think it is doing that. It is a statement of good and best practice. I do not think it is implying it has never been done and people have not cared at all what the funding cost was and how it was-
208. So why does the report say that? Why does the report suggest that it has not been done? I got the impression it would not be said in the report if the-
(Sir Andrew Turnbull) It is suggesting (a) you should do it but (b) with a degree of rigour and how you can do it better. I do not think it is suggesting no one has ever done this in the past.
Mr Steinberg: Okay. Thank you.