Chancellor Rachel Reeves is confronting significant internal opposition as 40 Labour MPs have jointly demanded she abandon plans to use private finance for funding NHS infrastructure projects.
Backbench Rebellion Over PFI-Style Schemes
The rebel MPs, including prominent figures Cat Eccles, Clive Lewis and Rebecca Long-Bailey, have written to the chancellor urging her to commit to direct public investment in NHS buildings rather than returning to what they describe as the damaging Private Finance Initiative (PFI) model associated with the New Labour era.
In their strongly-worded letter, the parliamentarians warned that using private capital for public projects represents a 'fiscal illusion' that offers no genuine value for money. They emphasised that such schemes would saddle the health service with unsustainable debt while damaging public trust in the government.
Learning From Past Mistakes
The MPs pointed to the legacy of PFI schemes initiated under Tony Blair's government, noting that 80 NHS trusts are still repaying a combined £44 billion from previous arrangements while frontline services suffer from funding constraints.
'We are asking you to learn from the mistakes of the past,' the MPs stated. 'We must reject the notion that private finance can be used to build public services in a way that can be to the long-term benefit of the public.'
They highlighted analysis showing that PFI hospitals proved 70% more expensive than publicly financed alternatives, according to National Audit Office findings from 2017.
Government Position and Academic Concerns
The controversy emerges as the government's infrastructure strategy and 10-year health plan mention exploring private capital for building NHS facilities, including neighbourhood health centres.
However, the MPs argued that using private finance for smaller-scale projects like health centres represents even worse value for taxpayers than larger hospital projects.
Their concerns are echoed by more than 50 academics, including Labour peer and accountancy expert Prem Sikka, who have separately written to the chancellor asking her to 'abandon this dangerous and damaging proposal' and fund public services through direct taxation or borrowing.
Health Secretary Wes Streeting has attempted to reassure colleagues that any new use of private finance would be limited and targeted, aiming to avoid repeating PFI errors.
A government spokesperson responded: 'We are exploring the feasibility of using new public private partnership models for taxpayer-funded projects in very limited circumstances where they could represent value for money.'
The statement emphasised that any future models would 'build on lessons learned from past and current models' while supporting the government's aim to shift healthcare out of hospitals and into community settings.
