Question

To ask The Senior Deputy Speaker what is the cashflow time series of each costed proposal for the Restoration and Renewal programme and the discount rate and inflation rate assumed for each, including the timing and budgeted costing of major investments during the outlined time series.

The Restoration and Renewal (R&R) Client Board’s recent report, Delivering restoration and renewal of the Palace of Westminster: the costed proposals (HC Paper 1576), sets out the costs for the four delivery options in several different ways, for example total programme costs, average annual costs and net present cost (page 121). The report is available at https://committees.parliament.uk/publications/51442/documents/285576/default/.

The timing and budgeted costing of major investments on the R&R Programme is best illustrated through the estimated spend profiles for each delivery option. The table below shows the estimated proportion of total Programme costs (excluding inflation and VAT, including opportunities), as set out in page 121 of the R&R Client Board’s report, in each 10 year period for the four R&R delivery options. These proportions are based on the shortest estimated programme schedules (P50) set out in the report (P50 is a confidence that the estimate will not be exceeded 50% of the time).

Table: Estimate percentage of total R&R programme spend in 10 year tranches to programme completion (P50, excluding inflation and VAT, including opportunities)

The R&R Client Board’s costed proposals report also presents total programme costs including inflation. Inflation is calculated using the estimated spend profiles in the table above and the inflation rates used are based on the Bank of England’s Monetary Policy Report (November 2024):

• 2024/25: 2.25%

• 2025/26: 2.75%

• 2026/27: 2.25%

• 2027/28: 1.75%

• 2028/29 onwards: 2% (flat rate)

The R&R Client Board’s report also presents net present costs for each delivery option based on discounted cashflow analysis. To ensure comparability, the net present cost is calculated over the same time horizon - 100 years – for all the delivery options. The cashflows used to calculate the net present cost for each option include: (a) the total programme costs set out in the report (including risk and optimism bias and opportunities but excluding inflation) which are consistent with the spend profiles in the table above; and (b) the annual estimated operational and lifecycle cost savings once the R&R Programme is concluded (an average of circa £45m per annum).

The net present cost has been calculated using discount rates in real terms in line with HM Treasury’s Green Book Guidance: 3.5% for years 1 to 30; 3% for years 31 to 75; and 2.5% for years 76 to 100.