John McDonnell has unveiled a plan to end new Private Finance Initiative (PFI) contracts and bring existing ones back ‘in-house’.
The shadow chancellor told delegates at Labour’s autumn conference in Brighton that “never again will this waste of taxpayer money be used to subsidise the profits of shareholders”.
Delegates cheered and whooped as Mr McDonnell slammed the “scandal” scheme that was set up under Prime Minister John Major but heavily stepped up by Tony Blair and Gordon Brown.
He claimed nearly £200bn will be paid out of the public purse to private companies “over the next few decades”, and that £830m had been made by contractors in the NHS alone.
Image: John Major set up the PFI scheme in 1992
The scheme has proved controversial, with complaints from Labour and Conservative MPs over the years.
Some argue it means public bodies are forced to pay multiple times the original value of the commissioned property over the decades.
Video: McDonnell promises credit card repayment limit
Mr McDonnell announced: “The scandal of the Private Finance Initiative, launched by John Major, has resulted in huge long-term costs for taxpayers, whilst handing out enormous profits for some companies.
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Image: PFI contracts were heavily stepped up under Tony Blair
“Profits which are coming out of the budgets of our public services…
“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.”
Mr McDonnell also announced plans for a cap on credit card interest, which would limit total charges to 100% of the original amount borrowed, as a means of helping three million people in persistent debt.
:: What is PFI?
PFI contracts are tendered to private companies by the government.
They are usually for infrastructure projects – like schools, hospitals and transport connections.
A company will borrow the money to build it, but at a higher cost to the government.
The incentive is for firms to build ‘super’ projects with new technology and maintain them, typically for 25-30 years.