Contingent liability: Northern Powerhouse rail accommodation
Letter of comfort provided by the Department for Transport regarding leasing office accommodation for Transport for the North.
I have today (5 November 2019) laid before Parliament a departmental minute describing a contingent liability raised as a result of a letter of comfort provided to Transport for the North.
Unfortunately, due to the need to secure value for money it is not possible to allow the required 14 days’ notice prior to the liability going live. A delay until after the general election on 12 December or until January when Parliament returns following Christmas recess is likely to result in higher costs.
The letter of comfort provided by the department is in respect of a lease for office accommodation for Transport for the North. The accommodation is to support TfN’s work on the Northern Powerhouse Rail Programme and involves a taking 7-year lease of which 5 years remain (with no break clauses). TfN is concerned that if it no longer requires the space, it will not be able to cover any remaining commitments related to the lease from its core funding. The cost of the lease is £183,000 per annum and the maximum exposure, taking account of committed funding to April 2021 is £505,000. TfN propose to cover these costs from NPR development funding. This is currently confirmed to 2021/22. TfN will actively seek to sublet the space if it is not required for their operations.
The Treasury approved this liability. I have also informed the Chairs of the Transport Select Committee and the Public Accounts Committee.