A future Labour government would bring “wasteful” PFI contracts back in the public sector, shadow chancellor John McDonnell has said.
He told Labour’s conference the contracts were set to cost the taxpayer £200bn over coming decades and private companies were making “huge profits”.
He said Labour, which has previously promised to strike no new deals, would bring PFI contracts “back in house”.
Labour sources later said this meant they would “review” all PFI contracts.
This means it is not clear whether all existing PFI contracts would be brought back “in house”.
The PFI model of funding public services such as new schools and hospitals was pioneered by the Conservatives in the 1990s and has continued under successive governments.
But Mr McDonnell told activists in Brighton that it was draining the public sector of resources and its time was at an end.
“The scandal of the Private Finance Initiative has resulted in huge long-term costs for taxpayers while providing enormous profits for some companies,” he said.
“Over the next few decades, nearly £200 billion is scheduled to be paid out of public sector budgets in PFI deals. In the NHS alone, £831 million 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.”
The BBC’s assistant political editor Norman Smith said such a move would “end the 25-year consensus” on using the private sector to fund major projects but to do so would require a “massive” compensation bill and it was not clear where the money would come from.
One leading economist, John Appleby, from the Nuffield Trust, told the BBC that the NHS alone was repaying private firms about £2bn a year for PFI schemes and the cost of interest payments for completed projects was likely to total £56bn by 2048.
But he added: “The trouble with these kind of announcements is the fine print of the details. Taking them back into public ownership does not come free. The money will have to come from somewhere.”
Mr McDonnell said Labour had proved doubters wrong by making gains in June’s snap election and its goal was to get into power, “rescue” the UK from austerity and “set the political agenda for a generation”.
“We have proved we are an effective campaigning party,” he said. “We now have to prove we will be an effective governing party.”
He promised to bring “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”.
In his speech, he also promised legislation limiting the amount of interest that can be charged on credit card debts.
Labour said the changes on credit card debt would work in a similar way to measures on payday loans, which came into force in 2015, “tackling the persistent debt spiral”.
“I am calling upon the government to act now apply the same rules on payday loans to credit card debt,” he said. “It means that no-one will ever pay more in interest than their original loan. “If the Tories refuse to act, I can announce today that the next Labour government will amend the law.”
UK Finance, which represents the financial and banking industry, said it was committed to responsible lending and “the last thing the industry wants is to see those who are most vulnerable being pushed towards the hands of unscrupulous and unregulated lenders”.
When the FCA called for action in April, the UK Cards Association, which represents the major credit card providers, said the industry was “committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest”.
The Conservatives said action was already being taken to outlaw “rip-off credit card charges” and ensure companies help customers clear debt.
Carolyn Fairbairn, director general of the employers organisation the CBI, said Mr McDonnell’s plans on nationalisation and PFI was “the wrong plan at the wrong time”.
“Forced nationalisation of large parts of British industry will send investors running for the hills, and puts misplaced nostalgia ahead of progressive vision,” she said.