Party’s election campaign launched with move – which would affect all outsourced NHS contracts worth over £500K – aimed at curbing excessive profiteering

This article is more than 5 years old

This article is more than 5 years old

A profits cap would be imposed on private health companies by an incoming Labour government, Ed Miliband said as he launched the party’s election campaign.



All outsourced NHS contracts valued at more than £500,000 would be required to include a profit cap, with the default level set at 5%. NHS commissioners would have the power to lower or raise this profit level to take account of particular issues relating to individual contracts.

Any company that made more than 5% from the contract would be forced to reimburse the NHS for any returns above the level of the cap.

Miliband also announced that a Labour government would try to stop the cherry-picking of profitable contracts by “developing a more cost-reflective tariff system to ensure that the prices paid better reflect patient complexity”. The aim will be to stop providers getting over-reimbursed if they only treat simple cases and ensure that NHS hospitals that have to treat all cases are not short-changed.

Commissioners would have powers to terminate contracts if they judged the private-sector provider was not providing high enough quality care.

Labour claims concerns have been expressed both by the health select committee and the National Audit Office over excessive profiteering.

Miliband said the new profits cap, alongside the commitment to extra funding for the NHS already announced, represented a double-lock to protect the NHS. The proposals will anger independent providers, as well as cause concern among those Blairites in the party who believe there is a legitimate role for the private sector in providing additional services or driving up standards through competition.

The Labour leader claimed a further five years of Tory control would mean more privatisation in the NHS, including forced tendering even when clinicians were opposed to the move.

He reaffirmed he would repeal the Health and Social Care Act – the controversial reforms introduced by former health secretary Andrew Lansley – and ensure the NHS is the preferred provider when bids are made.

Private health companies are pocketing a record £18m each day from the NHS budget as more and more health contracts are passed over to the private sector.



Figures from the Department of Health show that last year £6.6bn was taken from the NHS coffers to pay private health providers – a 50% rise from before the coalition took power.

Critics of the coalition government’s health reforms say this trend of allowing private companies to cream off NHS cash is set to increase.

“The money we pay for healthcare must go on healthcare and not for excess profit for private firms,” Miliband said.

Labour said current profits levels were between 5% and 10%. The proposed cap would not apply to GPs, pharmacies or dentists. Miliband added that a third of NHS contracts had gone to the private sector since the Health and Social Care Act had been passed.

Privatisation and fragmentation was the last thing the NHS needed, Miliband said, insisting that Labour had shown the source of its proposed extra funding.

“We will rescue the NHS from this government,” he said, claiming health services had gone backwards under the Tory government. “For all the promises and airbrushed posters, he [Cameron] has broken his solemn vow to the NHS.”

The profits cap is bound to be attacked as a bureaucratic nightmare, as NHS trusts find themselves in conflict with independent providers over the costs and profits of contracts.

In a policy note, Labour said: “There is a limited role for independent sector providers in providing services but that must be to support the NHS, not to break it up.”

In his broader speech, Miliband summarised the party’s five election campaign pledges and insisted a spirit of optimism would pervade his campaign, repeatedly saying that Britain can do better.

He claimed the TV debates on Sky and Channel 4 had shown “a rattled prime minister running from his record and a prime minister living in a different world”.

Miliband also dismissedCameron’s claim that food banks were on the increase not because of falling living standards or payday lenders but because of a more effective government advertising campaign.

On the prime minister’s claim in the debate that many people wanted to live on zero-hours contracts, though he could not, Miliband said: “If it is not good enough for you it is not good enough for the people of Britain.”