Whether it will confirm that the discounting of the tolls collected on the Skye Bridge at double the rate of inflation will mean that the l…

The contract signed in 1991, properly separates discounting and inflation. It provides that toll revenue collected each year is adjusted to 1991 prices using the actual change in the Retail Price Index and is discounted at 6% in real terms. Discounting is necessary so that the costs and benefits of a project are assessed on a constant basis. Six per cent is the Government's standard rate of discount (serving as both a cost of capital and a rate of time preference for expenditure).The concession will end when the sum of £23.64 million (in 1991 prices, discounted as detailed above) has been collected in tolls, or after 27 years, whichever is sooner. Based on current usage the concession is expected to end between 2009 and 2013. The actual end date depends on income generated by future traffic levels.