Select Committee on Treasury Minutes of Evidence


Letter to Sir Andrew Turnbull, Secretary of the Cabinet Office from Sir John Kingman, Chairman, Statistics Commission[4]

NETWORK RAIL

  I am writing to you following Len Cook's letter to me of 18 November.

  While this letter was constructive it leaves a number of points outstanding, some of which we understand may not be for him. We believe however that they are for someone in government and hope that you can arrange for them to be addressed.

  As you know, the Statistics Commission has been concerned for some time about the need for greater transparency over Network Rail. We believe that Parliament and the public should have access to clear, simple and consistent information.

  The difference between handling of Network Rail in the government accounts and in the National Accounts is important. This is not just because of the large sums of money potentially involved in this case but also because of its significance in establishing a precedent for the future. Our questions here are about the specific issue of Network Rail but we expect other issues of this kind to arise in the future. In modern society the boundaries between the public and private sectors are complex and the rules and criteria, which served in simpler times, may not now be sufficient to provide the full picture.

  Since I wrote to Len Cook on 26 July the Commission has seen and discussed Sir John Bourn and Len Cook's joint statement of 24 October and welcomes the definitive description there of the different approaches taken by NAO and ONS and of the different criteria used.

  More information on our specific questions is also available now. As we understand it the Public Sector Classifications Committee ruling is no longer conditional on assumed future events, but could still be affected by future changes.

  Len Cook's letter of 18 November indicates that some further information relevant to the scale of government guarantees and the likelihood of their being called on will be published in December 2002 though we are not sure how complete it will be. In the meantime we understand these could be up to £21 billion. Correspondence between our respective secretariats has confirmed that ONS still intends to estimate imputed subsidies in the National Accounts to represent the favourable borrowing terms received by Network Rail as a result of the government backing of their borrowing arrangements; but this is being pursued in a European context and details will not be determined until next year. It is also apparent that the press notices issued by ONS in July, which stated that the government guarantees are unlikely to be called on, were based on a misinterpretation of the Department for Transport accountant's advice. We accept ONS assurance that this was not a factor in determining how government support for Network Rail should be treated in the National Accounts but are concerned that these statements remain on the record, corrected only by implication in a note to our secretariat. Our understanding of all these issues is, however, based on pulling together material from a variety of sources, with the risks of misinterpretation that brings in such a complex area. We need a single, clear, comprehensive statement to clarify and confirm these points.

  More important than any of these specific points, we are concerned that there is still neither a public overall reconciliation of the impact of the two different treatments nor a transparent statement of when and why one rather than the other should be used.

  I should emphasise that we had already looked very carefully at the way ONS has applied the international conventions. We concluded that it had done an honest and rigorous job within these rules and with the information it had available. We note also that in the longer term the move towards Whole of Government Accounts should help to provide a consolidated picture, allowing summary information about liabilities, including contingent liabilities, to be published in a regular and accessible way. We hope this opportunity will be taken.

  But in the meantime the government must provide a clear statement of the position and the risks to the taxpayer. I would be grateful for your assistance in taking this forward.

  I am copying this letter to Len Cook and Sir John Bourn.

25 November 2002




4   The response to this letter will be published as part of the evidence of HC 154, Session 2002-03. Back


 
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