Labour plans to seize back PFI deals start falling apart after just one day

JOHN McDonnell’s pledge to seize control of private finance contracts worth billions of pounds was unravelling last night, exposing deep divisions within the Labour Party.

The Shadow Chancellor’s colleagues clarified that only a ‘handful’ of the deals, most of which were signed under New Labour, would be taken over by the state. Signalling a further retreat, they announced the policy would undergo a case-by-case review, which could take years.

Mr McDonnell told the Labour conference on Monday: ‘We will bring existing PFI contracts back in-house.’ The comments seemed to indicate every contract was up for grabs.

PFI was used prolifically by Tony Blair’s government to fund new schools and hospitals without the Treasury having to pay costs upfront. But health think tanks said the NHS would have to spend about £30billion just to cancel deals to build and maintain hospitals.

Business group the CBI said Labour’s plans would send investors ‘running for the hills’.

Yesterday, Labour’s health spokesman Jonathan Ashworth said PFI contracts could not be taken back ‘overnight’ and denied that Mr McDonnell had ‘jumped the gun’.

Asked how many PFI contracts are a problem, he told BBC Radio 4’s Today programme: ‘NHS experts generally accept that it’s only a handful which are causing hospital trusts across the country a significant problem, but let’s look at every single one in detail.’