Labour plans to renationalise PFI contracts ‘could take the Cabinet Office years’

Written by Kevin Schofield and Tamsin Rutter on 26 September 2017 in News

Shadow health secretary said Cabinet Office and Treasury would work together to review contracts

Jon Ashworth spoke at a rally against NHS cuts during the Labour Party conference in Brighton. Credit: Gareth Fuller/PA

It could take years for the Treasury and Cabinet Office to unpick Public Finance Initiative contracts and bring them into public ownership, shadow health secretary Jon Ashworth has said today after shadow chancellor John McDonnell’s set out plans yesterday  at the Labour party conference to nationalise the deals.

McDonnell told the Labour party conference that all PFIs would be brought into the public sector if the party wins the next election.

But Ashworth – who worked for then-chancellor Gordon Brown when the last Labour government expanded the use of PFIs – said this meant that every contract would be reviewed, and he refused to speculate on how many would be brought under central government control.

“We need to look at every single PFI contract, and see if we can renegotiate them and see if we can get a better deal for the taxpayer,” he said.

Asked on BBC Radio 4’s Today programme whether the scale and complexity of these contracts meant this process could “take years”, Ashworth responded: “Oh yes, this could take some time. This is not a thing that happens overnight.”

He added: “It’s the right thing to do, for the Treasury and the Cabinet Office to work together and look at how these various contracts can be renegotiated”. 


McDonnell said yesterday he wanted to end the “scandal” of private firms making huge profits on the back of deals to build hospitals, schools and other public infrastructure.

Under PFI, privately-run consortiums agree to build major public construction projects, with taxpayers making payments over the term of the contract.

In his speech in Brighton yesterday, McDonnell said that “over the next few decades, nearly two hundred billion is scheduled to be paid out of public sector budgets in PFI deals”.

He said that in the NHS alone, £831m in pre-tax profits have been made by private firms involved in PFI contracts.

The shadow chancellor said Labour had already pledged not to sign any new PFI deals if it comes to power at the next election.

And he added: “We will go further. I can tell you today, we’ll bring existing PFI contracts back in-house.”

It is unclear how much the policy would cost, with some estimates in the tens of billions, but shadow Treasury secretary Peter Dowd insisted it would be “pretty self-financing”.

McDonnell’s vow came just hours after he revealed that former civil service chief Lord Kerslake is leading the development of “implementation manuals” for Labour policies, including its plans to renationalise the Royal Mail, water industry, railways and energy sector.

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Kevin Schofield and Tamsin Rutter
About the author

Kevin Schofield is editor of Politics Home, where a version of this story first appeared. Tamsin Rutter is senior reporter for Civil Service World and tweets as @TamsinRutter

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