McDonnell pledges to bring rip-off private finance initiative contracts back in-house
A LABOUR government will end the private finance initiative (PFI) “scandal,” bringing all contracts and workers back into the public sector, John McDonnell announced yesterday.
The shadow chancellor tore into deals that would see nearly £200 billion of taxpayers’ money siphoned to private companies over the coming decades.
He promised delegates to party conference: “Never again will this waste of taxpayer money be used to subsidise the profits of shareholders.”
And Mr McDonnell made clear that Labour would go further than simply not signing any new deals.
“I can tell you today, it’s what you’ve been calling for. We’ll bring existing PFI contracts back inhouse,” he said to applause.
Public-sector unions welcomed the move, with Unison general secretary Dave Prentis saying it had repeatedly warned PFI would lead to long-term debt problems — “a burden the country couldn’t afford to carry.”
“It’s like buying a house on a credit card. Sky-high interest payments mean far less money for patients and children’s education,” he said.
And civil servants’ union PCS general secretary Mark Serwotka said the news would be “welcomed by all those who have had to deal with the chaos and cost they have caused.”
PFI was introduced by Tory prime minister John Major in 1992 as a way of using private cash to fund public infrastructure projects.
Use of the schemes accelerated under former Labour PMs Tony Blair and Gordon Brown as they used PFI to fund improvements and new buildings in schools and the NHS, keeping the debt off the national books.
But the deals proved costly and inefficient and Britain’s total PFI debt is now £300bn for projects worth just £55bn, meaning almost £250bn of profits has gone straight into the pockets of privateers.
It would have been far cheaper to raise the money needed by issuing bonds, on which Britain has for years had to pay extremely low interest rates.
Mr McDonnell told conference that an eye-watering £831 million in profit has been taken from the NHS in the last six years.
A Labour government would develop alternative public-sector models for funding infrastructure, with the aim of saving taxpayers’ money and improving services and working conditions.
Mr McDonnell told delegates that Labour leader Jeremy Corbyn has made it clear that never again would taxpayers money be used to subsidise shareholders’ profits, “often based in offshore tax havens.”
He called on the government to take immediate steps to ensure companies based in tax havens can’t own shares in PFI companies and hide their profits from HMRC.
“We’ll put an end to this scandal and reduce the cost to the taxpayers.”
Mr McDonnell said that in the era of “the fourth industrial revolution” a Corbyn government would rescue the country from the long years of austerity.
“It will be up to us to lay the foundations of the new world that awaits us.
“For years we have proclaimed that another world is possible. I tell you now, that world is not just possible, it is in sight. Let’s create it together.”