LABOUR Party leaders this week highlighted Hexham General Hospital’s withdrawal from a Private Finance Initiative contract as a model for other health authorities to follow.

In his address to the party conference in Brighton on Monday, Shadow Chancellor John McDonnell said long-standing PFI contracts would cost taxpayers £200bn over future decades, diverting potential spending on the NHS into the hands of private investors.

PFI schemes have been used by past Conservative, Labour and Coalition administrations to support the building of new schools and hospitals.

Mr McDonnell went further than Labour previous policy of ending future PFI deals, by promising to bring existing contracts ‘in-house’.

He told the conference: "The scandal of the Private Finance Initiative has resulted in huge long-term costs for taxpayers while providing enormous profits for some companies," he said.

"Over the next few decades, nearly £200n is scheduled to be paid out of public sector budgets in PFI deals. In the NHS alone, £831min pre-tax profits have been made over the past six years.

"Never again will this waste of taxpayer money be used to subsidise the profits of shareholders, often based in offshore tax havens."

Pressed further on the policy switch, Shadow Health Secretary Jon Ashworth gave the example of the Northumbrian Healthcare Trust, which in 2014 bought back both Hexham and Wansbeck hospitals from PFI schemes.

Mr Ashworth pointed to the success of the buy-backs in saving the public money and allowing more investment into front-line services.

In the first deal of its kind in the country, the trust borrowed £114m from Northumberland County Council at a low rate of interest to pay off private contractors who built and maintained the hospital at Hexham.

The trust estimated it would save £3.5m a year over a 19-year period.

The hospital was opened by then Prime Minister Tony Blair in 2003. It was then one of the Labour Government’s showpiece PFI developments.

It was built at a cost of £51m, but under the terms of the PFI contract, which included ongoing maintenance charges, the final price would have risen to £249m by the time the dent expired in 2033.