2.8 In 1999, LCR issued £2,650 million of GGBs to finance construction of Section 1 and fund concurrent losses from Eurostar UK. Two years later, when LCR was gearing up for the construction of Section 2, the Department started a review into alternatives to LCR raising, in line with its financial plan, an additional £1,100 million of debt through the second tranche of GGBs. The Department's principal alternative was a voted loan to LCR. The loan would not have required the issue of a project specific gilt. Rather, money would have been made available from the receipts of general gilt issuance or other sources available to the Treasury. The Department decided against this route because it was of the view that funding Section 2 through a voted loan would have been seen by the wider market as a Government bail out. The Department wanted to avoid the market developing the mindset that the Government would be willing to provide continued and open ended support when projects get into difficulties.
2.9 In 2002, the Department concluded that such policy considerations favoured private finance. The Department also held the view that, unlike an additional issue of gilts, the GGBs would not be classified as public borrowing because there was a very low likelihood that the guarantee would ever be called. Following Treasury consultations with the Office for National Statistics, the latter confirmed that the GGBs would be classified in the National Accounts and Public Sector Finances as a contingent liability rather than Government borrowing.