Election 2015: Labour to cap private profits in NHS

Labour would cap the amount of profit private firms can make from the NHS in England, Ed Miliband has said as he launched the party's election campaign.

He pledged to halt the "the tide of privatisation" he claims has taken place in the health service since 2010 and ensure a "proper" level of funding.

Private firms will have to reimburse the NHS if they exceed a 5% profit cap on contracts, he told activists.

The Conservatives said the move was an "ill-thought through gimmick".

Speaking at the site of the 2012 London Olympics in east London, Mr Miliband placed the NHS front and centre of Labour's campaign and claimed the election is "neck and neck" and "may come down to the wire".

The Labour leader said his party are "the optimists" and the UK can "do better" than another five years of a Conservative-led government, whose "extreme spending cuts would led to the disintegration of public services".

Although the election campaign is not officially due to start until Monday, when Parliament is dissolved, Labour is seeking to get out of the blocks early and to emphasise the choice facing the electorate on 7 May.

In other developments on Friday:

• Plaid Cymru leader Leanne Wood says Wales' future is in "its own hands" at the party's campaign launch

• David Cameron highlights the Conservatives' help for first-time buyers, including the extension of the Help to Buy Scheme to 2020

• Chancellor George Osborne hosts a group of US politicians - including House of Representatives Speaker John Boehner - on a trip to Cheshire to showcase his plans for a "northern powerhouse"

• Reaction continues to Thursday's Channel 4/Sky News leader interviews - the first of four major TV events during the campaign - in which Mr Miliband insisted he was "tough enough" to be prime minister

• Leaked documents seen by the BBC suggest the Conservatives are considering options for scrapping several benefits

Labour is saving the majority of its new policy announcements for its manifesto launch but Mr Miliband used Friday's speech to set out clear dividing lines between Labour and the Conservatives on the NHS.

NHS treatment is free at the point of delivery for patients but external contractors are paid for providing a range of services to the health service.

Ed Miliband said there was "stark choice" between the parties at the election

Mr Miliband hit the campaign trail with senior colleagues after his speech

Under a Labour government, profits on all private sector contracts worth more than £500,000 will be capped, Mr Miliband said, suggesting that private sector involvement was "draining money away" from the NHS.

The cap will be set at a default level of 5%, although this could raised or lower to reflect the specific terms of different contracts.

Any returns that firms make above this level would have to be ploughed back in full into the NHS to support patient care - while NHS commissioners will have the power to terminate private contracts early in the event of unacceptable performance.

Analysis by BBC Health Editor Hugh Pym

Amidst Ed Miliband's rhetoric on the "drive to privatisation" of the NHS which he claims is happening under David Cameron is a new policy - imposing a cap on profits made by private providers.

Currently around 6% of health service provision in England comes from companies in the private sector.

Labour wants to limit profit margins to 5% on all contracts above £500,000.

But what we haven't been told is how widely the net would be cast.

Would the cap, for example, include dentistry and the private finance initiative?

Margins on some contracts like catering and cleaning are probably below 5%.

But the private sector argues that companies need a return if they invest up front to provide clinical services and that some might be deterred from bidding if there was a profit cap.

What Labour, if elected, will have to decide is whether a shrinking pool of private contractors would make it harder for the NHS to keep up with rising demand for care.

Mr Miliband also committed to new controls to stop private firms "cherry picking" the most straightforward cases and to stop the forced tendering of services, making clear the NHS must be the preferred provider for the majority of services.

"Privatisation cannot meet the needs of a 21st Century health service," he said.

"The money we pay for our health care should be invested for patient care and not for the excess profits of private firms."

David Cameron spent the morning highlighting the Conservatives' housing record

The restrictions, in combination with the £2.5bn in extra funding already promised by Labour, will provide a "double lock" to protect the NHS, he added.

The Conservatives responded by saying outsourcing to the private sector rose twice as fast under the previous Labour government than it had done since 2010.

"This is no more than a gimmick to scare people about privatisation that isn't happening," said Health Secretary Jeremy Hunt.

"It risks higher infection rates, higher waiting times and chaos for our NHS."

'Neck and neck'

With little to split the Conservatives and Labour in the opinion polls, Mr Miliband stressed the contest is too close to call.

"Like so many races here during the Olympics, it will go down to the wire. Neck and neck," he said.

"But there is one thing that is clear. There are only two possible outcomes in this election - a Conservative government or a Labour government."

He argued the UK cannot afford another five years of a Conservative-led government, claiming David Cameron has raised taxes 24 times since 2010, delivered the "worst record on living standards since the 1920s" and is planning "deeper cuts" after 7 May.

"They say that's as good as it gets. We say Britain can do better than this," he said.

At Friday's event, Labour also unveiled its campaign "battle bus", which will travel round the country rallying support in key marginal seats. Ten senior Labour figures will be on the bus as it makes its first visit to a seat in east London.