Everything’s up for grabs in new Labour nationalisation spree

McDonnell’s bid to squeeze out private firms

‘Developing policy positions in a vacuum’

LABOUR would severely restrict government departments from giving contracts to private companies, John McDonnell is expected to say today.

The Shadow Chancellor will announce sweeping plans to cut state ‘outsourcing’ in the party’s latest move to nationalise services – from waste collection to building hospitals.

Mr McDonnell will reveal details of a new Labour ‘insourcing’ policy which would only allow ministries to use private contractors ‘within very tight guidelines’, an industry source said.

Outsourcing was brought in with the aim of cutting costs and improving efficiency by introducing competition to win state contracts but there have been a string of scandals involving firms such as Carillion and G4S. Mr McDonnell is due to deliver a speech on Labour’s new strategy in London this morning and has already gone as far as drafting legislation in case of a snap general election.

Speaking at a picket line of Government hospitality workers earlier this week, Mr McDonnell said: ‘We’re introducing legislation which has an “insourcing” preference, so services would be provided in-house.

‘Only on extremely tight grounds would there ever be any outsourcing under a Labour government. We’ve drafted that legislation and we’re publishing it this week.’

An industry source at a leading outsourcer said last night: ‘Once again it’s disappointing to see the Labour Party developing its policy positions in a vacuum and not consulting industry.’ The practice of outsourcing government contracts was hugely popular under Tony Blair’s Labour leadership from the late 1990s.

But a number of high-profile blunders have brought the industry into disrepute. Outsourcing giant Carillion suddenly collapsed in January last year, and in 2012 the Army had to step in to provide security for the London Olympics after G4S botched its contract.

Earlier this month, Serco was fined £22.9million by the Serious Fraud Office over an electronic tagging scandal in which the firm charged the Government for monitoring people who were dead, in prison or out the country. Labour has already laid out plans to put several parts of Britain’s infrastructure back under government control. But analysts have been sceptical about the proposals. Tom Sasse, from the Institute for Government, said in March that bringing many services back in-house ‘would be a huge challenge’.

Labour declined to comment.