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  1. ITV Report

John Prescott: PFI for the NHS was a 'major mistake' and is 'crucifying' the health system

A former Labour minister who oversaw an explosion in controversial PFI contracts has said much of their use was a "major mistake" and they are "crucifying" the health system.

John Prescott backed shadow Chancellor John McDonnell's promise to bring back all existing PFI contracts in-house in an interview with ITV News Political Editor Robert Peston.

But he claimed that the pledge only related to the health sector.

PFI contracts see the government use private funding to pay for major one-off projects such as building hospitals, schools and transport networks.

It avoids the government taking on hefty debts on its balance sheet - but often leaves the public purse paying out for years at relatively high rates under the terms of the agreements.

John Prescott and Tony Blair in 2006. Credit: PA

Mr Prescott, who served as Deputy Prime Minister under Tony Blair, said the scheme had helped Labour modernise and improve public services - but it should never have been used for the NHS.

He said said PFI arrangements were "successful to begin with, but I think we made a major mistake".

"All our problems on this have largely come from health," he said.

"It meant you built a huge debt up on public borrowing requirement and it's crucifying our health system.

"I thought it was wrong there, evidence shows it's wrong, but you can be much more intelligent about private and public money coming together to help the public services."

Mr Prescott argued that the scheme worked well for projects such as rail networks that would ultimately bring in an income that could be used to bay back the PFI contract.

However, he said it was not a success for the health service, since users do not pay for treatment and the cost falls back on central coffers.

He argued that Mr McDonnell "is referring to the health finance" when he says Labour Government will being an end to all public contracts.

"It's quite a radical statement to say there will be no more PFIs," he said.

"He's opened up the debate - but it's not just a debate about PFI, it's about your taxation levels, how you get a proper income tax, how you get more for public services."