Private firms running public services must be “shown the door” to prevent a repeat of the Carillion debacle, Jeremy Corbyn has told Theresa May.

The Labour leader seized on the collapse of the construction giant – putting services and tens of thousands of jobs in jeopardy – as the symbol of a “broken system” that must change.

In rowdy scenes in the Commons during Prime Minister’s Questions, Mr Corbyn set out a clear ideological dividing line with the Government, telling the Prime Minister to end this “costly racket” of privatisation.

“This isn’t one isolated case of government negligence and corporate failure – it’s a broken system,” he said.

Virgin and Stagecoach had been allowed to “spectacularly mismanage” running the East Coast main line, yet had been handed a £2bn bailout which could see the line remain in their hands, Mr Corbyn claimed.

Meanwhile, Capita and Atos had been handed further contracts, even though their much-criticised tests had “continued to wreck the lives” of disabled people.

G4S had bungled security at the 2012 Olympics, forcing the Army to “step in and save the day”.

Mr Corbyn added: “These corporations need to be shown the door. We need our public services provided by public employees with a public service ethos and a strong public oversight.

“As the ruins of Carillion lie around her, will the Prime Minister act to end this costly racket of the relationship between government and some of these companies?”

But Mrs May insisted “public services continue to be provided and the taxpayer protected” in her Government’s handling of the Carillion liquidation.

And she argued Mr Corbyn’s stance showed Labour, under his leadership, viewed the private sector as “the enemy”.

“What Labour oppose isn’t just a role for private companies in public services, but the private sector as a whole,” Ms May said,. “The vast majority of people in this country, in employment, are employed by the private sector – but the Shadow Cabinet calls businesses the real enemy.