3.9 The Contributions Agency estimated that, including these rents to Treasury, the cost of continuing in existing accommodation was £346 million compared to a cost for the deal signed with Newcastle Estate Partnership of £241 million. This analysis confirmed to them that the deal was within probable budgetary allocations. They recognised, however, that for the purposes of considering value for money, the rent payments to the Treasury were irrelevant, since they were an internal cost to government with no impact on the taxpayer. They found that excluding these payments, the Private Finance deal (at £241 million) is £51 million, or 27%, more expensive than remaining in existing accommodation (£190 million). Figure 14 shows the results of this exercise.
| Figure 14 |
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The Agency's comparison of the cost of the Do | |||||||||||
Minimum Option with the deal signed with Newcastle Estate Partnership | The Agency's appraisals show that the deal costs more than remaining in existing accommodation if internal rent payable to the Treasury is excluded from the calculation. | ||||||||||
| Estimated cost of remaining in existing accommodation (including rent payable to the Treasury) | Estimated cost of remaining in existing accommodation (excluding rent payable to the Treasury) | Estimated cost of the private finance deal signed with NEP | ||||||||
| (£ millions in present value) | (£ millions in present value) | (£ millions in present value) | ||||||||
| 346 | 190 | 241 | ||||||||
Source: The National Audit Office | Note: These figures exclude the market value of the existing estate based on alternative use, ie the opportunity cost of continuing to occupy it. This item is common to both options and does not therefore alter the relationship between them. It also excludes the residual value of the estate at the end of the deal which would reduce the cost of the do minimum option relative to the Private Finance option because DSS, not NEP, would own the estate. This value is uncertain, but, after discounting for 30 years, should not be large. | ||||||||||