Labour’s health profit cap a muddled mess

April 2, 2015 2:30 pm

Riding the crest of a tough guy wave following his Jeremy Paxman interview, Ed Miliband stood up to greedy profit-driven private health companies last week by announcing that Labour would introduce a cap of five percent on profits made by non-NHS providers on outsourced NHS contracts. Or that is at least how Labour has tried to frame the narrative.

In reality Labour’s proposals are confused and unworkable. Many health experts have warned that the cap will be hard to manage and enforce, with profitability being defined in several different ways. On top of this, Labour’s plans would allow commissioners to either lower or raise the cap should they feel necessary, giving them the power over localised procurement. So, in effect, the same system as we have now.

Labour’s core health policy offer entering the General Election is to repeal the competition elements of the Health and Social Care Act and make the NHS the preferred provider of services, with the independent sector playing a supportive role when needed. There is a whole other debate on how this would work; if it would represent another “wholesale reorganisation” of the NHS; and if Labour could legally exempt the NHS from EU competition and procurement law, which incidentally the King’s Fund believes it can’t.

If Labour is intent on changing the role of the independent sector then the Party should be debating system transformation with all healthcare providers, including the voluntary and independent sector, and not fixating on a meaningless cap that is open to interpretation by commissioners. The NHS is an emotive issue in the public imagination as we all know and the idea of private companies making excess profits out of it might strike a chord with the electorate. However, rather than playing politics with the situation, Labour needs to ask why we incentivise these companies to make profit, to drive up standards and reduce inefficiencies. Surely that is the goal for patients. We won’t get there with an arbitrary cap.

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