4.19 One of the principles of PFI is that the private sector bears the financial consequences of the risks transferred to it. In this deal SBS will do so as NS&I and the Treasury are adamant they will not increase the unitary charge. As the contract progresses, the unitary charge reduces. In the first three years, the unitary charge was set to cover SBS's investment in the business transformation programme at some £100 million a year. In the fourth year, the unitary charge fell to £72 million and will reduce further over the contract term as shown earlier in Figure 3.
4.20 Siemens AG agreed to guarantee SBS's obligations under the contract. The parent company's liability was set at up to £250 million by NS&I and this places the onus on SBS to improve its loss making position.