Letter to Sir Andrew Turnbull, Secretary
of the Cabinet Office from Sir John Kingman, Chairman, Statistics
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
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
25 November 2002
4 The response to this letter will be published as
part of the evidence of HC 154, Session 2002-03. Back