Leadership frontrunner claims NHS is paying price for ‘City con-trick’ implemented by New Labour and says indebted hospitals should be bailed out

Labour should take responsibility for resolving “the mess” left behind by private finance initiative (PFI) deals used to fund the building of hospitals under Tony Blair and Gordon Brown, Jeremy Corbyn has said.

In an article for the Guardian, the Labour leadership frontrunner said the NHS is now paying the price for New Labour having been “cowed by the press, and duped by the money men” when it used private finance for building health projects.

“Labour has a duty to remove the PFI burden from the NHS – this really was our mess, and we have to clear it up,” Corbyn said.



The Islington North MP said that the legacy of PFI deals – where public infrastructure projects are funded with private capital – was that some hospitals were suffering under a weight of debt.

Labour must clean up the mess it made with PFI, and save the health service | Jeremy Corbyn Read more

He said that there was a case for Labour not only to draw a line under the PFI deals of previous governments but also to bail out such hospitals.

“In opposition we need to campaign for a fund to be set up to bailout NHS trusts from PFI schemes forced upon them. This will save our NHS, rebuild our economic credibility and most importantly, save lives,” he said.

Corbyn praised Sadiq Khan, a contender to be Labour’s London mayoral candidate, for saying he would consider buying up the debt owed by the capital’s hospitals to private companies under PFI. He said this was a good start but any such offer should ideally be extended to the whole country’s hospitals.

Under the coalition government, seven NHS trusts had to be given access to a special bailout fund of £1.5bn in 2012. South London healthcare trust, which runs three hospitals in south-east London, also had to be placed in administration because of its PFI obligations.

On top of these bailouts, some doctors warn that hospitals are still facing unsustainable repayments to private companies.

Corbyn said figures from the Unite union show that 15 NHS trusts are spending more than 5% of their annual budgets on PFI financing, and two-thirds of NHS trusts in deficit have PFI debts.

A Guardian analysis in 2012 of contracts that were sanctioned by the Treasury found the cost of PFI deals would end up costing taxpayers more than £300bn.

PFI projects have, however, been defended by Simon Stevens, the chief executive of the NHS England, who was previously a health policy adviser to Labour ministers.

Last October, Stevens said the scheme had given the NHS important new and modernised hospitals, although he also suggested it could be worth it for some trusts to follow the example of Northumbria Healthcare, which bought itself out of a costly long-term contract with the help of a loan from its local authority.

The renunciation of PFI is Corbyn’s second move in recent days to make an absolute break with a New Labour policy. He said last week he would apologise for the Blair government’s decision to go to war in Iraq if he is made the next leader, which looks increasingly likely according to the bookmakers.



His intervention may revive memories of the time when one of his rival candidates, Andy Burnham, defended the then Labour government’s use of PFI schemes in 2007 when he was a health minister. As the Department of Health unveiled seven new schemes worth £1.5bn, Burnham said he was “satisfied that all the schemes being built are the right schemes and offer value for money”.

However, after leaving ministerial office, Burnham told the Labour conference in 2012 that some PFI deals were poor value for money and the last Labour government let the private sector too far into the NHS.

George Osborne criticised PFI when he was shadow chancellor in 2009, saying it was a flawed model that must be replaced. However, despite having had to deal with public bodies struggling under excessive PFI debts, the coalition overhauled the scheme and continued to sign similar deals under a successor known as PF2.



Corbyn’s argument is that Labour’s investment in the NHS and new hospitals was welcome, but too much was done under PFI, which he said was “like buying your house on a credit card”.

He said that ministers at the time were “too petrified to make the argument for conventional borrowing, and instead fell for the City’s con-trick”.

NHS trusts and the crippling burden of PFI | Letters Read more

Corbyn also pointed out that Unison tabled a motion calling for a moratorium on PFI deals and a review as long ago as 2002, and that he personally raised concerns in parliamentary debates, questions and committee hearings from 1998 onwards.

“The leadership ignored us all: MPs, councillors, public sector workers, members and conference itself. Our pleas fell on deaf ears. Now NHS patients are paying the price, with services and staff cut so that PFI debt repayments can be made,” he wrote.

He added: “Much of the PFI debt is now owned offshore, to avoid paying tax on the profits generated from the taxes you and I pay. Huge profits from public money are being made by tax dodgers. This isn’t the NHS that Nye Bevan built.”

