Sadly, this is an all too familiar tale of the type which pervades almost every branch of government finance.
Simplistically, ministries are told "Thou shalt not spend more that £x next year" Adding up the list of evisting commitments and new pet projects produces a figure greater than £x. Even after trimming back the existing commitments and killing off the frothier new pet projects, the answer is still greater than £x . Much grinding of teeth and sucking of gums.
Step forward the ever helpful service providers / contractors, who you had been in discussions with about how to reduce costs to meet the £x challenge. I say old boy, we could help you out of the jam: what if we were to take on the obligation, and charge it back to you in convenient annual instalments spread over the next Y years. Make the annual charge as small as you want, and we will just add a few years on to the contract. Oh, just a small point, we may need a little flexibility in terms of delivery and deliverables, but that shouldnt be a problem, should it?
Insert the name of the government ministry of your choice...... And ask yourself how many Ministers, officials, and officers made them selves look good by kicking the can down the road in this way.
As the years went by, it became not unlike a drug addiction; the first few experiences seemed uplifting and not harmful....the rest we know.
To the thread starters original point, yes, it would have been cheaper to borrow the money, but government borrowing is a separate function, and was already reaching very high levels.