The dispute broke out on March 27 when Sir Brian Bender, the DTI's permanent secretary, and Hugo Robson, the director of the DTI's shareholder executive, were questioned about the use of a "discount rate" in assessing the cost to BE of dealing with its waste liabilities. Helen Goodman and other MPs on the PAC asked why the DTI had not used the normal discount rate set out for public bodies in the Treasury's green book.

Sir Brian and Mr Robson could not explain this. If the green book had been followed the cost of the liabilities would have been far higher than the £5.3bn figure used by the DTI. The level of liabilities was assessed in February this year at £5.3bn, but the DTI had since admitted that the figure was calculated using a historic discount rate of 3.5%. Yet the Treasury green book that governs such public sector liabilities says 3.5% rate should only be used for the first 30 years with 3% and 2.5% being used over a longer period. This would increase the costs of waste disposal. BE’s liabilities run beyond 80 years. Asked about this, Sir Brian apologised for not coming up with an answer. Sir Brian had already admitted that the £5.3bn liabilities - up £1bn on the last estimate - could rise even higher.

Guardian 18th April 2006
Uncorrected Oral Evidence to the Public Accounts Committee 27th March 2006