'You don't have an infinite budget' Labour mulls return to public-private partnerships

Labour is preparing to kick off a new wave of public-private partnerships (PPPs) in England to build the neighbourhood health centres at the heart of its NHS 10-year plan.

- Heather Stewart

Ministers will make a final decision in the autumn budget about whether to use the funding approach, which was put on pause eight years ago.

But critics warn that lessons have not been learned about the pitfalls of PPPs, and point to the chaos unleashed by the 2018 collapse of the mega-contractor Carillion, with its complex portfolio of projects. While PPPs were originally conceived under the Conservatives, Tony Blair's Labour government made significant use of the private finance initiative (PFI), a form of PPP used to build schools, hospitals and other public infrastructure without adding to the national debt.

Backers of PFI say this approach allowed public infrastructure to be built that would not otherwise exist; but opponents say the taxpayer was often left footing eye-watering bills for inflexible contracts that ran for as long as 30 years.

Treasury data shows that 560 PFI contracts are outstanding in England, for projects including schools, hospitals, libraries and road maintenance. Hundreds of these contracts are due to end in the coming years, raising questions about the state of the assets being inherited by the taxpayer, and potentially triggering legal battles about the precise conditions of "handback".

A report last year from the Association of Infrastructure Investors in Public Private Partnerships (AIIP), chaired by the Labour peer and former frontbencher John Hutton, warned of the risk of "serious disruption" as these deals come to an end, amid what it called "mistrust between the parties to some PFI contracts".

Rachel Reeves will be under no illusion about the pitfalls of PPP, having chaired the House of Commons business select committee when MPs examined the fate of Carillion, which was enmeshed in a number of PFI deals as well as being a direct contractor to government.