July 5, 2017 / 11:25 AM / 2 years ago

Sweden looking to limit profits of private sector welfare providers

STOCKHOLM, July 5 (Reuters) - Sweden’s minority government said on Wednesday it was looking at several ways to limit private companies’ profits in the tax-funded welfare sector but might not choose the profit cap solution recently proposed by a commission.

Sweden’s centre-left government is trying to come good on a promise to limit the profits that private companies can make for providing welfare services paid for by taxpayers.

Public Administration Minister Ardalan Shekarabi denied media reports that negotiations with the Left Party had collapsed and said the government is still trying to ensure that taxpayers’ money was used in the way “they are intended”.

“That requires a limit to the profits in the welfare sector, but we are pragmatic about the way to achieve this,” he told Reuters. “We are open to talks with the centre-right opposition” on the subject, he added.

Among other solutions discussed previously are stricter quality controls of the companies services, owner requirements in order to ensure long-time ownership, and better transparency.

Prime Minister Stefan Lofven had said earlier this year his government would push ahead with a profit cap proposed by a state commission. It would limit operating profit of tax-funded welfare firms to seven percent plus risk-free rate of their working capital.

The commission proposal was widely criticised and the centre-right opposition has vowed to vote against any such proposal in parliament.

Sweden has deregulated much of its health and education sector since the 1990s, but many Swedes are now worried that public services have deteriorated and that taxpayers are directly funding shareholder payouts by businesses.

The private welfare companies have said that the focus should be on the quality of the service they provide, not the size of their profits. (Reporting by Johan Sennero; Editing by Jon Boyle)

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