81. We also had the decision that we were going to operate within the previous expenditure totals as decided by the last Government. That is true, is it not?
(Mr Glicksman) Yes, that is correct.
82. There was a big hole in the expenditure or the income for the Department which necessitated raising moneys in order to fill the hole?
(Mr Glicksman) I am not sure I would describe it as a hole.
83. A lack of 500 million?
(Mr Glicksman) There was a requirement to reconcile the public expenditure plans that were inherited with the Government's plans.
84. That meant that there had to be an attempt to raise the money somehow, did it not?
(Mr Glicksman) It meant that some way needed to be found to reconcile the two plans, yes.
85. Which is the same as what I have just said, is it not? The only way that those plans could be reconciled was by gaining a capital receipt.
(Mr Glicksman) A capital receipt would have enabled the plans to be reconciled, yes.
86. Ms Lomax, I know you were not there but would a not for profit solution have gained the capital receipt?
(Ms Lomax) I think so, yes. We could have got receipts for a not for profit company. That is made clear in the NAO Report on page 16.
87. When, in NAVCANADA, that option was looked at, it appears that that was discounted because it would not have taken any subsequent investment off the Government's books which is the Treasury rule.
(Ms Lomax) What it says here-and I have not seen anything to contradict it-is that the Department thought it would be difficult to ensure that NAVCANADA's particular structure would be classified as in the private sector so avoiding inclusion in public sector borrowing.
88. And yet we have seen from subsequent events we have a structure that is reasonably similar to some extent because the current arrangements are that there will not be any dividends paid. You said at the very beginning that, given hindsight, which is always useful to have, the arguments between having a PPP and a not for profit solution are now more finely balanced than they were. Is it the case that the Treasury rules should be looked at because they often lead you to making a particular decision which you might not have made had the Treasury rules been slightly different?
(Ms Lomax) It is not for me to comment on the Treasury rules but I think there were other reasons.
89. Mr Glicksman?
(Mr Glicksman) The rules are not the Treasury's. The classification rules are from the Office of National Statistics and the international rules the Office of National Statistics uses in deciding on the classification of public bodies.
90. We sign up to them for accountancy purposes? (Mr Glicksman) For classification for the national
accounts, yes, and statistical purposes in the case of the Office for National Statistics. The NAO report does not state that a not for profit solution would have been classified in the public sector.