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John McDonnell: Labour would bring PFI contracts 'back in-house' John McDonnell: Labour would bring PFI contracts 'back in-house'
(35 minutes later)
Labour would bring PFI contracts, and the workers they employ, back under the control of the state, the shadow chancellor, John McDonnell, has announced.Labour would bring PFI contracts, and the workers they employ, back under the control of the state, the shadow chancellor, John McDonnell, has announced.
Labour’s manifesto included a pledge not to sign any new PFI (private finance initiative) deals, but McDonnell received a standing ovation at Labour’s conference in Brighton on Monday when he went further by announcing: “We’ll bring existing PFI contracts back in-house.”Labour’s manifesto included a pledge not to sign any new PFI (private finance initiative) deals, but McDonnell received a standing ovation at Labour’s conference in Brighton on Monday when he went further by announcing: “We’ll bring existing PFI contracts back in-house.”
The shadow chancellor said the contracts – a way of financing large-scale infrastructure projects, including schools and hospitals, widely used under Conservative and Labour governments over the past two decades – had generated £831m in profits for private sector firms over the past six years alone.The shadow chancellor said the contracts – a way of financing large-scale infrastructure projects, including schools and hospitals, widely used under Conservative and Labour governments over the past two decades – had generated £831m in profits for private sector firms over the past six years alone.
“The scandal of the PFI, launched by John Major, has resulted in huge long-term costs for taxpayers whilst handing out enormous profits to some companies,” he said.“The scandal of the PFI, launched by John Major, has resulted in huge long-term costs for taxpayers whilst handing out enormous profits to some companies,” he said.
The language in an accompanying press release was more ambiguous, suggesting Labour would only take back control of the contracts, “if necessary”.The language in an accompanying press release was more ambiguous, suggesting Labour would only take back control of the contracts, “if necessary”.
“Labour will review all PFI contracts and, if necessary, take over outstanding contracts and bring them back in-house, while ensuring NHS trusts, local councils and others do not lose out, and there is no detriment to services or staff,” it said.“Labour will review all PFI contracts and, if necessary, take over outstanding contracts and bring them back in-house, while ensuring NHS trusts, local councils and others do not lose out, and there is no detriment to services or staff,” it said.
McDonnell did not make clear whether a Labour government would buy out the outstanding contracts or simply write them off – a prospect that will alarm shareholders in PFI firms.McDonnell did not make clear whether a Labour government would buy out the outstanding contracts or simply write them off – a prospect that will alarm shareholders in PFI firms.
McDonnell also said he would prevent firms that own shares in PFI projects from listing in tax havens. “The government would intervene immediately to ensure that companies in tax havens can’t invest in PFI projects and their profits can’t be hidden to HMRC,” he said.McDonnell also said he would prevent firms that own shares in PFI projects from listing in tax havens. “The government would intervene immediately to ensure that companies in tax havens can’t invest in PFI projects and their profits can’t be hidden to HMRC,” he said.
In response to claims the plan would be prohibitively expensive, a Labour spokesman said: “Shareholders will be compensated in the form of government bonds, exchanged for shares. Parliament will assess the appropriate level of compensation at the point at which contracts are brought back in house”.
The announcement formed part of a rousing speech that was interrupted at several points by standing ovations. McDonnell said the next Labour government would set the agenda for the next generation.The announcement formed part of a rousing speech that was interrupted at several points by standing ovations. McDonnell said the next Labour government would set the agenda for the next generation.
“I tell you it is a Corbyn Labour government that will rescue our country from the long years of austerity. And it will be up to us to lay the foundations of the new world that awaits us,” he said, paying tribute to the Harold Wilson government and also to the increase in public sector investment under Tony Blair and Gordon Brown.“I tell you it is a Corbyn Labour government that will rescue our country from the long years of austerity. And it will be up to us to lay the foundations of the new world that awaits us,” he said, paying tribute to the Harold Wilson government and also to the increase in public sector investment under Tony Blair and Gordon Brown.
McDonnell received further cheers when he promised to renationalise public utilities including water and rail, and to cap the interest on debt repayments.McDonnell received further cheers when he promised to renationalise public utilities including water and rail, and to cap the interest on debt repayments.
Business groups have expressed concern about the statist approach to the economy spelled out in McDonnell’s speech, including large-scale nationalisation.Business groups have expressed concern about the statist approach to the economy spelled out in McDonnell’s speech, including large-scale nationalisation.
Carolyn Fairbairn, director general of the CBI, said, “The shadow chancellor’s vision of massive state intervention is the wrong plan at the wrong time. It raises a warning flag over the British economy at a critical time for our country’s future.
“Business and politicians share a determination to create a fairer society in which everyone benefits. But the trickle of stalled investments caused by Brexit uncertainty could become a flood if these plans were to become reality. This would threaten the living standards of the very people that need help, from pensioners to students.”
Adam Marshall, the director-general of the British Chambers of Commerce (BCC), said: “Business communities around Britain will welcome Labour’s recent efforts to deepen engagement on the big issues around economic growth, trade and Brexit.Adam Marshall, the director-general of the British Chambers of Commerce (BCC), said: “Business communities around Britain will welcome Labour’s recent efforts to deepen engagement on the big issues around economic growth, trade and Brexit.
“However, with the UK’s departure from the EU on the horizon, businesses will be concerned by the shadow chancellor’s proposals for widespread and deep intervention across the economy. Proposals to nationalise key industries would put business investment in the deep freeze at precisely the time that it is needed most.“However, with the UK’s departure from the EU on the horizon, businesses will be concerned by the shadow chancellor’s proposals for widespread and deep intervention across the economy. Proposals to nationalise key industries would put business investment in the deep freeze at precisely the time that it is needed most.
“While we can agree that we want a productive and innovative economy, and better infrastructure, the role of government is to get the fundamentals of the business environment right – not to direct every aspect of economic life in the UK.“While we can agree that we want a productive and innovative economy, and better infrastructure, the role of government is to get the fundamentals of the business environment right – not to direct every aspect of economic life in the UK.