86. Critics, such as Unison, argued risk transfer in PFI projects is "often illusory". They added: "Failed PFI contracts, on too many occasions, have had to be rescued by the public sector meeting additional costs" (p 258).
87. However, Mr Metter argued risk has still been transferred because when the Government has to rescue a project the private sector has already been hit hard: "By the time you get to that point, the equity will have lost their money, the debt will have lost their money, the contractors will probably have lost their money, the insurers will probably have lost their money and then you get to the point where the Government stand in. For the most part business risks are transferred very, very successfully" (Q 469).
88. The PPP Forum lists the National Physical Laboratory, Cornwall Schools project, Dudley Hospital and Croydon Tramlink as projects where the private sector lost millions of pounds which shows, it argues, that risk was transferred (p 219).
89. Mr Adrian Ewer of John Laing relayed his experience of building the National Physical Laboratory. He said: "We lost £60 million on the construction and we basically lost our equity as well and the private sector in total lost over £100 million on that project" (Q 470).
90. Mr Ewer argued the private sector lost out due to risk transfer while the public sector was largely protected and ended up with high quality laboratories at a good price. He said: "We kept pouring money into this black hole. At the end of the day also the public sector has an excellent asset which delivers 98 per cent of what the scientists required and paid a lot less for it than it would have paid if we had known what we were trying to build in the first place" (Q 470).
91. But the NAO were less positive about the laboratories meeting the needs of the public sector side, overseen in this case by the former Department of Trade and Industry: "The contract protected the taxpayer effectively from the wasted costs of construction and the termination was value for money. But the project did not achieve the DTI's aims" (p 89).