"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".
Huge public building projects would no longer be funded by private finance, and even existing PFI contracts would be "brought back in-house".
Delegates cheered and whooped as Mr McDonnell slammed the "scandal" scheme that was set up under Prime Minister John Major but heavily stepped up by Tony Blair and Gordon Brown.
Mandatory bond-for-share swaps, approved by Parliament, would compensate the private firms involved, but would be far cheaper than the GBP200 billion cost to the taxpayer of continuing to pay out on the contracts over the decades to come.
In the run-up to his re-election a year ago she tweeted: "One day in the far distant future we'll look back and we won't laugh, because this isn't bloody amusing".
"In the NHS alone, £831 million in pre-tax profits have been made over the past six years". It means that no-one will ever pay more in interest than their original loan.
Labour have prepared for a run on the pound if they are elected, shadow chancellor John McDonnell has admitted. He warned that if the Conservatives did not bother to do anything on this matter, then the law will be amended by the subsequent Labour Government.
His planned intervention into the utilities market will follow a similar move to cap interest rates on credit cards and other consumer debt to ensure no one pays more than double their original loan. "You can call it the McDonnell amendment".
The shadow chancellor was cheered as he confirmed that a Labour government would scrap university tuition fees, overturn Conservative trade union legislation and nationalise rail, water, energy and the Royal Mail.
But Mr Corbyn insisted the comments were from an "off-stage voice" as he pointed to a pending rule change created to toughen Labour's stance on anti-Semitism and racism, which he said "all wings" of the party are united around.
Brighton and Hove's Labour council leader Warren Morgan said he was very concerned at "the anti-Semitism being aired publicly in fringe meetings and on the floor of conference". "We now have to prove that we will be an effective governing party".
Labour's annual conference is proving a hot ticket for businesses keen to get to know the opposition party again after its left-wing conversion proved popular with voters and edged it closer to power.
He also promised massive government investment in public sector infrastructure.
Mr McDonnell said that, had Labour won the general election in June, it would have already introduced new taxes as part of measures aimed at raising £48bn. "And it will be up to us to lay the foundations of the new world that awaits us".