Member

Having touched on inflation, my second question is therefore: did His Majesty’s Treasury agree the terms of this contract? It is important for us to hear that, because it may have been negotiated by a couple of other ministries, which may not have been aware of the financial exposure in the contract. At Second Reading, the Minister helpfully responded to our question about the value of the contract by saying that its total cost would be £3.4 billion. This is a reference to the present-value calculation in the Explanatory Memorandum, where the Government calculate a present value of £3.4 billion. There are no economic circumstances in which that can be true, but even if you are a believer in it, remember that it is uncapped, so it is one of those hopey-hopey things. It might be worth £3.4 billion but the payments might still be much greater in the future, because we have uncapped exposure.