Miliband announces “profit-cap” to curb private sector profiteering in the NHS

Ed Miliband today announced that a Labour government would award fewer NHS contracts, and introduce a “profit cap” for private sector contractors in the NHS to stop profiteering at the public’s expense.

Speaking at the ArcelorMittal Orbit in the Olympic Park in London, Miliband repeated Labour’s pledges to invest more in the NHS so that the health service has “time to care”, as well as unveiling what he described as a “double lock” to protect the NHS. Labour’s plans include:

• Imposing a profit cap when private companies provide NHS services
• Stop “cherry picking” so companies cannot profit by only treating easy cases
• Ensure contracts are terminated when companies are not delivering a high-quality service

The party believe that there is a ‘limited’ role for independent sector organisations in providing services where there are gaps in delivery – or if the NHS cannot provide a particular service. But only in a supporting role.

Profit capping was perhaps the most eye-catching part of Miliband’s announcement. All outsourced contracts over £500,000 will be required to include a profit cap – set at a default rate of 5% – with companies forced to reimburse the NHS for any profits generated above the cap level.