Budget 2018: Philip Hammond pledges not to sign any new PFI contracts

'I have never signed off a PFI contract, and I can confirm today that I never will,' chancellor tells House of Commons

The chancellor pledged to end the use of private finance initiatives (PFI) which he described as a "classic Labour solution; pouring good money after bad."

"I have never signed off a PFI contract, and I can confirm today that I never will," Mr Hammond told the House of Commons in his Budget speech on Monday.

A centre of excellence will be established to manage current contracts, which will be honoured, the chancellor said.

The chancellor said 90 per cent of current PFI contracts were signed under Labour.

PFI, which allows private companies to finance public investment, has been used to build hospitals, schools and other spending projects but has generated a huge amount of controversy.

Many PFI projects have locked in public authorities into long and expensive contracts.

Michael Wistow, partner at law firm White & Case, said: “To abolish the use of PFI completely is a blunt instrument. Yes there were some that weren’t value for money but to effectively say they are all bad regardless of how they were structured isn’t correct.”

PFIs were thrown into the spotlight earlier this year this year when construction firm Carillion collapsed, putting thousands of jobs at risk.

The firm’s most recent annual report before it went bust showed that it received around £253m in 2016 from various UK public private partnerships, mainly made up of PFIs.

The announcement came as Hammond hailed a turning point for the UK economy from “Labour's Great Recession”, as growth targets were revised up and borrowing predictions came in below target.

Debt will fall ahead of schedule, the chancellor said, and the “jobs miracle” will continue as an additional 800,000 people will be in work over the forecast period.

The Office of Budget Responsibility (OBR) predicted growth will improve from 1.3 per cent forecast in the Spring statement to 1.6 per cent, still low by historic standards.

The deficit is due to fall from 10 per cent under Labour to less than 1.4 per cent next year and 0.8 per cent by 2023/24

Britain's “jobs miracle is set to continue”, Mr Hammond said. The UK economy has added 3.3 million jobs since 2012, the chancellor said.

He took a pop at shadow chancellor, whose prediction for job numbers in Britain was out by 5.4 million, about the same as the population of Scotland.

For consumers, there was a freeze on fuel duty for the ninth successive year, saving the average car driver to more than £1,000 and the average van driver over £2,500, according to Treasury figures.

Tax on beers and ciders, and a freeze on duty on spirits - in a nod to his Scottish Tory colleagues. Duties on wine to rise in line with RPI inflation and white ciders to be taxed at a new higher rate.

The tobacco duty escalator remains in place meaning tax on smoking products will continue to rise at inflation plus 2 per cent.