Rubbish collection, cleaning and school dinner services will be taken back by local councils, under Labour plans to stop taxpayers being “ripped off” by private firms.

The party has pledged to reverse four decades of outsourcing in local government, blaming it for “scandals” such as the collapse of Carillion at a cost of £150m.

If he wins power, Jeremy Corbyn will legislate to ensure the default option is for the public sector to deliver its own services – instead of the current £80bn being spent on outside contracts.

John McDonnell, the shadow chancellor, said most of the current contracts were “below five years”, making it possible to carry out the shake-up quite quickly.

“They’re coming to an end and then the council will bring it back in house, manage the service effectively, save money,” he told BBC Radio 4’s Today programme.

“Money won’t then be going into the pockets of shareholders in particular, but also they will be more stable.”

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“Remember we’ve had the experience of Carillion, for example, and you have something like 200 schools who have been affected – large numbers of councils, things not being built, services not being delivered and people being laid off.”

Mr McDonnell said councils themselves were “demanding” the change as a way of saving money.

“If you look at example after example when the council says ‘look, we’ve had enough of being ripped off by private contractors, we’ve had enough of poor service’, they’ve brought things in house already and they’ve saved money and had a more efficient service,” he added.

Under the plans, councils would be allowed to employ private contractors under certain conditions, but the presumption would be that they take responsibility for their own services.

They would be supported by providing them with a model contract to save time and resources and access to the government’s legal department to help with contract management.

Any companies bidding to deliver public services would have to prove that they pay fair wages, recognise trade unions and support local labour and supply chains.

The new policy is intended to dovetail with Labour’s plans to renationalise the railways, the Royal Mail and the public utilities.

The drive to outsource the delivery of local services began under Margaret Thatcher, expanding to include construction and maintenance, refuse collections, cleaning, school and welfare catering, grounds maintenance and sports and leisure.

In a speech in central London, Mr McDonnell added: “After year upon year of failures, the public has rightly lost confidence in the privatisation of our public services and the carve up of the public realm for private profit.