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Note 9: Finance costs and income

£ million 2009 2008
a  Finance costs    
On bank loans* 34 36
On finance leases 75 70
On hire purchase arrangements 22 31
On other loans* 38 39
Interest expense 169 176
Unwinding of discounting on provisions** 12 10
Capitalised interest (4) (15)
Change in fair value of cross currency swaps 5 4
  182 175

* Total interest expense for financial liabilities not at fair value through the income statement is £72 million (2008: £75 million).

** Unwinding of discount on the competition investigation provision and restoration and handback provisions (note 30).

Interest costs on progress payments are capitalised at a rate based on London Interbank Offered Rate (LIBOR) plus 0.5 per cent to reflect the average cost of borrowing to the Group unless specific borrowings are used to meet the payments in which case the actual rate is used.

£ million 2009 2008
b  Finance income    
Bank interest receivable (total interest income for financial assets not at fair value through the income statement) 95 111
  95 111

c  Financing income and expense relating to pensions
Net financing (expense)/income relating to pensions (34) 70
Amortisation of actuarial gains on pensions 17  
  (17) 70

d  Retranslation charges on currency borrowings
59 11

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