McDonnell vows to bring “wasteful” PFI deals back into public hands

John McDonnell today signalled another decisive shift away from the New Labour era when he vowed to end the “scandal” of private finance initiative (PFI) contracts.

McDonnell said a Jeremy Corbyn-led government would bring the deals back “in-house” in an announcement that will send tremors through several corporates.

The shadow chancellor did not say whether the contracts – which were initiated by John Major and used widely under Tony Blair – would be bought out or written off.

The PFI agreements helped accelerate the building of dozens of schools and hospitals but were dogged by accusations of a poor return for taxpayers.

Today, however, McDonnell quoted figures which he said showed money flowing out of the public sector and into private hands.

He also said many of the private sector beneficiaries of PFI were based off shore.

“The scandal of the private finance initiative has resulted in huge long-term costs for taxpayers while providing enormous profits for some companies.

“Over the next few decades, nearly £200bn is scheduled to be paid out of public sector budgets in PFI deals. In the NHS alone, £831m in pre-tax profits have been made over the past six years.

“Jeremy Corbyn has made it clear that under his leadership, Labour will sign no new PFI deals. Never again will this waste of taxpayer money be used to subsidise the profits of shareholders, often based in offshore tax havens.

“I can tell you today that when we go into government. We’ll bring these contracts and staff back in-house.”

McDonnell has committed Labour to:

• signing no new PFI deals;
• looking to bring existing contracts “back in-house” and to develop alternative public sector models for funding infrastructure;
• reviewing all PFI contracts and, if necessary, taking over outstanding contracts and bringing them back in-house while “ensuring” there is no loss in the services provided by the NHS or other public sector organisations.

Read John McDonnell’s speech in full.