2.17 The key question for the Department was whether it would be better value to fund the Link through a voted loan to LCR (funded ultimately through general Gilt issuance) or through an issue of corporate bonds by LCR, backed by a Government guarantee but not involving additional public borrowing. The Department considered that a guarantee was justified because:
a) the concept of the Link as a flagship Public Private Partnership would be maintained as there would still be private money and private sector disciplines in the project;
b) the use of gilts would risk signalling to other bidders for Public Private Partnership projects the Government's readiness to assume financing risk; and
c) the guarantee would keep the project off the public sector balance sheet, thereby avoiding any risk that direct public funding would contribute to a potential breach of international obligations concerning the UK debt to gross domestic product ratio or lead to adverse market perceptions of the management of the UK economy.
2.18 Unlike an additional issue of Gilts, the GGBs would not be classified as public borrowing if there was a very low likelihood that the guarantee would ever be called. Following consultations with the Office for National Statistics, the Government guarantee of LCR bonds was classified as a contingent liability rather than borrowing. This decision was based on the fact that, given the independent Eurostar UK forecasts provided by Booze- Allen & Hamilton, there was no reasonable operating scenario in which the guarantee of LCR's bonds would be called, provided the access charge loan facility was made available to LCR when required.