September 3, 2017 / 2:20 PM / a year ago

Swedish profit cap on private welfare companies to be put before parliament

STOCKHOLM, Sept 3 (Reuters) - Sweden’s minority government agrees with its Left Party ally on the need for a profit cap on private welfare businesses and will press ahead with the proposal despite being unlikely to gain enough support for parliamentary approval, it said on Sunday.

The centre-left government aims to put the plan to parliament early next year, government spokeswoman Matilda Malmquist Glas said, showing its desire to make good on Prime Minister Stefan Lofven’s pledge to deliver tougher regulation after reports of abuse in care homes, bankrupt schools and rich pickings for companies offering housing for asylum seekers.

The cap would limit operating profit of tax-funded welfare companies — excluding healthcare businesses — to 7 percent and is in line with proposals made by a government-appointed commission last November.

“Our tax money should go to schools and welfare, not to unreasonable profits,” Minister for Public Administration Ardalan Shekarabi said.

However, the commission proposal has been heavily criticised and the chances of parliamentary support is very slim, given the centre-right opposition parties have said they will not tolerate any such proposal.

“This proposal will not solve the real problems in the welfare sector, which are quality, accessibility and safety,” said Peter Danielsson, vice chairman of the Moderate Party.

“We will vote against this.”

Much of Sweden’s health and education sector has been deregulated since the 1990s. The most recent figures available show that Swedish regions and municipalities paid private companies almost 120 billion Swedish crowns ($15 billion) for the provision of welfare services in 2014, double the level of eight years earlier. ($1 = 7.9903 Swedish crowns) (Reporting by Johan Sennero; Editing by David Goodman)

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