Labour will end PFI, John McDonnell pledges

Labour will end the use of PFI (Private Finance Initiative) to fund public infrastructure and bring billions of pounds worth of private contracts into the public sector, John McDonnell has said.

The shadow chancellor promised a Labour government would sign no new PFI deals, which have seen local authorities and health trusts tied to costly and inflexible decades-long contracts, and that existing schemes “will be brought in-house”.

“The scandal of the Private Finance Initiative, launched by John Major, has resulted in huge, long-term costs for tax payers, whilst handing out enormous profits for some companies,” Mr McDonnell told Labour conference delegates in Brighton. “Profits which are coming out of the budgets of our public services.

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“Over the next few decades, nearly two hundred billion 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.”

Spending on public infrastructure is devolved, with the Scottish Government claiming its Non-Profit Distributing (NPD) model has put an end to excessive earnings by private companies.

However, Scottish Labour have called for a review of all PFI and NPD contracts still operating in Scotland, and say the SNP’s reforms are merely a ‘rebrand’.

Mr McDonnell added: “Jeremy Corbyn has made it clear that, under his leadership, never again will this waste of taxpayer money be used to subsidise the profits of shareholders, often based in offshore tax havens.

“The Government could intervene immediately to ensure that companies in tax havens can’t own shares in PFI companies, and their profits aren’t hidden from HMRC.

“We’ll put an end to this scandal and reduce the cost to the taxpayers.”

The shadow chancellor recommitted to Labour’s programme of renationalisation, warning in an interview earlier yesterday that shareholders may not be fully compensated for their losses as the value of privately-owned assets would be “determined by parliament”.

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In his speech, Mr McDonnell told Labour delegates: “Building an economy for the many also means bringing ownership and control of the utilities and key services into the hands of people who use and work in them.

“Rail, water, energy, Royal Mail - we’re taking them back.”