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Labour would cap private NHS profit at 5%

The Labour Party would cap profit-making from high-value NHS contracts at 5% of contract value, with any subsequent profits paid back into the NHS budget.

Under the plans, announced on Friday by Labour leader Ed Miliband, all outsourced NHS contracts with a value of £500,000 or more would include a profit cap.

The default level of the cap would be set at 5% but commissioners would be able to lower or raise this depending on specifics of the particular contract if justified.

Any profit above this cap would have to be paid back into the NHS budget by the company in question.

The Labour Party press office clarified that the capping on profits does not apply to GPs or dentists as it is about capping profits from private tendering, not the commissioning of GP or dental services.

Labour said the move comes as part of its bid to ‘stop the drive to privatisation under David Cameron’, alongside previously announced plans to remove the competition element of the Health and Social Care Act 2012 and give ‘preferred provider’ status to NHS bidders for health service contracts.

In a statement, the Labour Party said: ‘There is a limited role for independent sector organisations in providing services where there are gaps in delivery or the NHS cannot provide a particular service, but that must be to support the NHS – not, as the Tories want - to break it up.’

Quoting a Pulse article, the statement added: ‘Doctors have raised concerns over private companies “winning contracts that have multi-million pound profit margins.” (Pulse, May 2014)’

In a speech in London, also on Friday, Mr Miliband said: ‘Privatisation cannot meet the needs of 21st century healthcare. We’re going to restore the right principles to our National Health Service. With the next Labour government: We’ll scrap David Cameron’s market framework for the NHS and stop the tide of privatisation. The NHS will be the preferred provider.

‘No company working with the NHS will be able to profit by cherry picking: rejecting patients with the more complex and expensive needs for their own advantage. And, for the first time, we will cap the profits that private health companies can make from our National Health Service.

‘The standard rule will be a five per cent cap. Because the money we pay for our health care should be invested for patient care not for excess profits for private firms.’

 

Readers' comments (7)

  • you throw peanuts, you get monkeys. Why isn't this line used to explain why none of the things they are promising, like 7 day working, are feasible. No health care professional is going to work out of good will for 5% profit or evening and weekends for free. There is no good will left. Thanks to CQC, GMC, NHSE, and any other quango you want to throw out there.

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  • Will they also be able to "cap" losses?

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  • Typical of Ed Millibrain and his bunch of intellectual gnomes. Big private business and its creative accountants will have no problem hiding the profits.

    And anyway, why impose a limit? Why punish the ones who can provide the service but lower the costs and increase the profit. Either you accept private business or you don't. And if you don't accept it Mr Millibrain, where do you get the profits to tax to do all the spending you want to do on your client voter base?

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  • Vinci Ho

    Interesting the debates on 'cherry picking' has died down a lot after HSCB was passed in House of Commons. Not surprisingly , EM tried to re-cycle these arguments to win grounds.
    He said he would abolish section 75 . So , is this capping profit a contingency plan as he now realised he might not be able to change the law?

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  • John Glasspool

    I thought New Liebour were the ones who started all this private nonsense? Can't remember which party started PFI though, tbh.

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  • Are they also going to cap profits made by defence contractors? What about all govt services provided by the likes of G4S, SEMA etc etc. What about the huge fees and profits by the army of management consultants the govt employs?

    Ed Millibrain is a total (insert whatever ultra rude insult you wish)

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  • ‘There is a limited role for independent sector organisations in providing services where there are gaps in delivery or the NHS cannot provide a particular service, but that must be to support the NHS – not, as the Tories want - to break it up.’

    Here we go again, they think our memories are as bad as theirs!!!

    Privatisation of the NHS was started many moons and many governments ago, not least when Mr Bliar's government (of which Mr Milli Bland was a member) completely privatised General Practice.............. oh sorry no that was the granting of Independant Contractor Status wasn't it not privatisation!!!! Silly me.

    If anything, the Tories are trying to take General Practice back into Government ownership.

    I wish this Idiot would stop treating us all as if we are as thick and shallow minded as he appears to be.

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