Q151 Mrs McGuire: Right. So, has the Department, or have you as officials, taken a lesson from this, that advancing a cause on this set of figures does not stack up in terms of the scrutiny that the Public Accounts Committee, or indeed any objective analysis, would make of those figures?
Ginny Clarke: The answer to that is, "Yes, we've learnt lessons."
Q152 Mrs McGuire: In other words, would you do it differently?
Ginny Clarke: I think that we have. When we've done a lessons learnt on the whole procurement, there clearly are things that we would do differently. We've learnt every time we've done a PFI-so I do accept that-and I think that we could do it better. In all these areas, we're seeking to be more and more robust because of these challenges to recognise how we provide the evidence.
Q153 Mrs McGuire: So, will you now go back to your corporate finance people and say, "We got a grilling today on these figures that you gave us, and on the advice that you gave us that the market would somehow make life difficult for us, and you need to look at how you make your market assessments"?
Graham Dalton: What we clearly take is that the figure in there, in figure 10, for the maintenance costs over 30 years is not stated on the correct basis. That's what the NAO brought out.
Q154 Joseph Johnson: Who gave you that figure? Who's the consultant who provided that figure and this table?
Graham Dalton: This was generated by our own staff, as far as I recall.
Ginny Clarke: These figures are taken from a table that was generated by the Highways Agency, through our project.
Q155 Joseph Johnson: Right. And did you use the table in this form in your decision to go for the widening as opposed to the hard-shoulder route? Was the table presented like that in your analysis of the final decision?
Ginny Clarke: It wasn't presented quite like that, but the figures are the same. To be clear: the figures are the same because the NAO saw the report that went up. The descriptors on the right-hand side of figure 10 are taken from our words, so I can recognise the words on the right-hand side. So, yes, it is, in fact, taken from our report.
Q156 Joseph Johnson: And you derived the £193 million number. It's your number; it wasn't given to you by consultants. It's your table.
Ginny Clarke: Yes, we derived it. Yes, they're our numbers.
Q157 Mr Bacon: May I just ask about the descriptors while you're on that subject? It says what the things were for the £90 million below the line: "the Intercity Express Project, Thameslink rolling stock"-those both sound like Department for Transport issues-"and the Local Authority private finance initiative programme." Was that the entire local authority PFI programme?
Graham Dalton: That would be a local authority transport programme, which our Department administers.
Q158 Mr Bacon: So, it wasn't everything, it was for transport. What was the value of it?
Graham Dalton: I don't know offhand, but it would be the street-lighting PFIs and similar street maintenance PFIs, such as the one that's just been let in Birmingham.
Ed Humpherson: I want to make a broader observation about these calculations for the Committee. The lower half of this table considers externalities, that is to say ways in which pursuing a hard-shoulder-running option would affect a series of other projects. That's a very sensible thing to do and, generally speaking, we would support the consideration of externalities. However, we were not aware that any consideration was given to the externalities of signing the deal that was actually signed.
Without doing the analysis, we can't say what those externalities might have shown up, but it is plausible to say that signing a PFI deal with higher interest rates than those that were prevailing in the market at the time could have had a signalling effect, and you might have wanted to include those in some kind of analysis. It's important to realise the kind of analysis that this is, and what it might lead you to in looking at the PFI deal as well.
Q159 Ian Swales: On that point, in terms of this page, we can reference appendix 1. It has three pages of timeline, and we're already on page 3 in March 2008. So my question is: what real flexibilities did you have at this point? What could you have done? What could you not have done? Or were we actually on a steamroller that was simply rolling forward, and this was done in order to justify the route that was already decided?
Graham Dalton: You're exactly right. The decisions were made about where we are and not about where one might have liked to be, which is always the way in contracts.
Q160 Ian Swales: But what about where we were going?
Graham Dalton: The decision on value for money, which is the table in figure 8, was on a like-for-like basis: in buying this thing, if we bought the same thing a different way, could we get it cheaper? Right up to the signing of the contract and financial close, that is when we said that we couldn't buy it cheaper; at the most optimistic we'd buy it at the same price. This table, as you quite rightly pointed out, was saying, "If we were to buy something a bit different, which is hard-shoulder running, what would we have to do?" That was saying that we would have to terminate that procurement. What it doesn't make assessment of here are the reduced benefits that hard-shoulder running would have given and still gives, as we are doing it now. It doesn't give any assessment of the impact of delay to the contract either, and the question whether we would have then impacted on an Olympics window and would not have started the widening until Autumn 2012.