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.’