Say goodbye to PFI deals, Richard Leonard tells Labour conference

Richard Leonard has pledged that Scottish Labour will stop using controversial private finance initiatives (PFI) to build schools and hospitals as he outlined an unashamedly socialist vision for Scotland.

Richard Leonard addresses his party at Caird Hall, Dundee, yesterday. He promised to bring private finance initiatives in house and spend the savings on better mental health services. Photograph: Jane Barlow/PA

The Scottish Labour leader said he would go into the next Holyrood election with a commitment to halt PFI deals as he vowed to end private companies profiting from the public sector.

In his first keynote speech to the Scottish conference as leader, Leonard said a Labour Government would raise taxes, create a national energy company, re-nationalise the railways and de-privatise public services.

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As he attempted to move the conference beyond the party splits over Brexit, the Scottish leader also announced a policy to cap the profits that private agencies make from the NHS.

PFI deals, whereby private companies are contracted to build and manage public projects, were introduced by the Conservatives and used by Tony Blair’s government.

In Scotland, the SNP has used a similar scheme known as the Non-Profit Distribution (NPD) model to finance public infrastructure projects.

Leonard said he would bring existing PFI deals back “in house” while developing alternative public-sector funding models to save money.

Cash saved could then be invested in mental health services.

Leonard said high suicide rates meant that more money was required for mental health services.

“Put simply, more funding is needed and here’s a suggestion,” Leonard said.

“Why don’t we simply call a halt to the racking up of extortionate PFI debts which push local services to the brink?

“So I pledge today, under my leadership, Scottish Labour will go into the next Holyrood election committed to signing no new private finance deals.

“At a time when the public sector is facing so many budget cuts it is unjust that private companies, through PFI and the SNP’s NPD and Hubco schemes, are raking off millions in profits.”

Leonard attacked the SNP’s record on the NHS, saying GP shortages had risen, nursing vacancies had rocketed and wards had closed over the last year.

Promising to give NHS workers a pay rise that would not be paid for by hospital cuts, Leonard pledged to cap profits made by NHS agencies.

“A Scottish Labour government would legislate to cap the profits that private agencies make in our health service, investing instead to attract and retain staff, benefiting patients as well as the workforce,” Leonard said.

During a speech that saw the first public appearance of his wife Karen on the conference platform, Leonard drew from his family’s experience to attack the SNP’s and Tories’ economic record.

Leonard gave the example of his brother-in-law Thomas Sim,47, who had been made redundant from three contract jobs in the last 12 months.

In between, he had driven a taxi to pay the mortgage and provide for his two children.

“I am angry about the callousness of the Tories and the complacency of the SNP,” Leonard said.

Developing his left-wing theme, he said the economy needed “less market and more planning” to make jobs less precarious.

He added: “Our party’s mission under my leadership is not simply to secure a fairer distribution of wealth from the existing economic system – it is to fundamentally change the existing economic system.

“I tell you in all sincerity that is the only way to end the stark inequality of wealth and power that confronts us in Scotland today.”

Addressing delegates in Dundee’s Caird Hall, the Scottish Labour leader spoke of his plans to end cuts, invest in the NHS, raise child benefit and give public sector workers a pay rise. His proposals, he said, would be financed by tax rises.

“This would be paid for by a social responsibility allowance, a tourist tax, a land value tax on vacant land and by using the top rate of income tax so that those with the broadest shoulders bear the biggest burden.

“Because there is nothing wrong with the old socialist principle of from each according to their means, to each according to their need.”

As part of his radical economic plan, Leonard confirmed he would take Scotland’s train services “back into public ownership at the earliest opportunity”.

The move was part of a broader commitment to “de-privatising public services and developing public ownership”.

Today Leonard’s vision of a restructured economy with an enhanced role for the state will be endorsed by Shadow Chancellor John McDonnell when he speaks on the last day of conference.

McDonnell will say: “We will need to fundamentally reorganise our society collectively. We know that the free market fundamentalism of recent years cannot deliver the change we need.”

At a conference that has been dominated by splits over Labour’s Brexit position, Leonard said the party had to accept the result of the EU withdrawal referendum.

He said UK leader Jeremy Corbyn was right to support remaining in the customs union. He resisted calls from Remainers within the party to commit to the single market, saying options had to be kept open.