FSTA, PSBR, Golden Rule
Interesting, though not exactly surprising. Remember that the Treasury's problem here is two-fold.
First, that they've not got (the political will to spend) the money on FSTA as a conventional procurement. Solution? Hire it in through PFI, which is cheap now and is off balance sheet. (Let's not tell anyone that it's much pricier in the long term.)
Second, even if the political will existed to do an old-fashioned procurement that meant that we, well, er, bought the aircraft, then they'd have to pay for them on delivery - BEagle can doubtless advise on the delivery schedule. Solution? Borrow the money over the procurement period in the form of government bonds . (Assuming that the government isn't running a surplus, which at the moment it certainly isn't).
Problem: Prudent Gordon's famous golden rule allows the State to borrow only to invest over the economic cycle - fair enough, FSTA qualifies as investment - but crucially, sets debt as a maximum proportion of GDP - not defined but about 40%. They're running into this ceiling, and therefore can't borrow more and thus can't borrow for the jets. Cue PFI, the debt isn't the government's, therefore it doesn't exist.
So, it's the Public Sector Borrowing Requirement (PSBR) and the Golden Rule that are probably scaring the Treasury - hence the mad rush for PFI.
No excuse - Gordon, tell Darling to buy the sodding jets... and whilst he's at it, make it more than 14, there's a good chap.
S41