McDonnell: ‘We’ll bring PFI contracts back in-house’
SHADOW Chancellor John McDonnell used his flagship conference speech to set out his ambitions for how he wants to change the country if he gets to move into No 11 Downing St.
In a sometimes emotional address to the Labour faithful in Brighton he pledged to support the Swansea Bay tidal lagoon and said a Labour Government would not only reverse years of privatisation but would bring Private Finance Initiative (PFI) contracts in-house.
The CBI denounced the speech as the “wrong plan at the wrong time” but the Shadow Chancellor told his audience that “another world” is now “in sight”.
To cheers, he laid out the plans to bring PFI contracts in-house.
He said: “The scandal of the Private Finance Initiative, launched by John Major, has resulted in huge, long-term costs for tax payers, whilst handing out enormous profits for some companies... Over the next few decades, nearly £200bn is scheduled to be paid out of public sector budgets in PFI deals...
“We’ll put an end to this scandal and reduce the cost to the taxpayers. How? We have already pledged that there will be no new PFI deals signed by us in Government.
“But we will go further. I can tell you today, it’s what you’ve been calling for. We’ll bring existing PFI contracts back in-house.”
The Welsh Government is responsible for delivery of public services in Wales but the policy could have knock-on effects for UK spending.
Mr McDonnell promised a reversal of privatisation, saying: “Building an economy for the many also means bringing 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.”
Underscoring his support for the Swansea Bay tidal lagoon, he said: “This country has huge natural, renewable resources. And we have an immense heritage of scientific and engineering experience.
“Yet this Government has slashed the funding to the renewables industry that it needs to get on its feet. We’ll ensure we become world leaders in decarbonising our economy and we’ll do it partly through a publicly owned energy supply based on alternative energy sources.
“Where the Tories have dithered and delayed to deliver zero-carbon electricity, we will absolutely commit for example to building projects like the Swansea Tidal Lagoon.”
Mr McDonnell also sought to put his tanks on traditional Conservative turf when it came to borrowing.
He said: “First, we will do what the Tories have failed to do, and bring the Government’s deficit and debt under effective control. The Tories have borrowed more than any Labour Government ever.
“On arrival in office, we will set out plans to eliminate the deficit and reduce debt, based upon our Fiscal Credibility Rule.
“For each policy in our Manifesto, we are preparing detailed implementation plans.”
Acknowledging Labour has to prove it can govern as well as campaign, he said: “[We] have proved that we are an effective campaigning party. We now have to prove that we will be an effective governing party. A Government that can set the political agenda for a generation.”
Mr McDonnell was unequivocal that the public sector pay cap should be scrapped for all workers – not just individual sections of the workforce.
The speech alarmed CBI Director-General Carolyn Fairbairn.
She 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.
“Forced nationalisation of large parts of British industry will send investors running for the hills, and puts misplaced nostalgia ahead of progressive vision.
Labour Treasury spokesman Peter Dowd said it was not possible to estimate at this point what the immediate cost of taking back PFI contracts would be, but he said the policy would be “pretty self-funding” in the long term, as the state would not have to make payments to contractors stretching years into the future.
He rejected suggestions that a Labour government would have to shell out “billions and billions of pounds” upfront.
A Welsh Government spokesman said: “We await more detail on how this announcement will work. Our own pioneering Mutual Investment Model is an innovative approach to investment in public infrastructure that will enable us to fund £1bn of new capital infrastructure investment in hospitals, schools and roads.”
However, Chief Secretary to the Treasury Liz Truss said that Mr McDonnell’s plans would add billions of pounds to the £253bn of spending promises she claimed had already been racked up by Labour since the launch of its manifesto.
“These unaffordable Labour promises wouldn’t improve public services and the costs would just rack up and up,” said Ms Truss.
“Working people would pay higher taxes and we would spend more and more on debt repayments instead of public services. It all shows that Labour just aren’t fit to govern.”