Government-appointed investigator Ilmar Reepalu will release his finding Tuesday morning.
Government-appointed investigator Ilmar Reepalu will release his finding Tuesday morning. Credit: Henrik Montgomery and Claudio Bresciani / TT.

Proposal calls for profit limits in welfare

Ilmar Reepalu: welfare is not a market like others
4:58 min

An investigation into private companies running Sweden's schools, health and elderly care services recommends limiting profits to 7 percent.

The controversial issue of private profit making companies running schools, hospitals and elderly care homes was a key issue in the 2014 election, following a string of scandals about abuses in private care homes and the bankruptcy of one of the biggest free schools operators JB Education, which was owned by Danish venture capital firm Axcel.

Tuesday morning, the man appointed to lead the welfare profits inquiry, Malmö's former Social Democratic Mayor, Ilmar Reepalu, presented his 850-page-long report.

He proposed limiting profits in healthcare, schools and elderly care to 7 percent of invested capital, as well as government borrowing, amounting to three percent. Surpluses should be reinvested in the business, for instance, hiring more staff at a school or care home.

He said that "Welfare is not a market like others and it is a cornerstone of the Swedish model."

Reepalu added that profits in the tax-funded welfare sector are twice as high as those made in the service sector. He said that 20 billion kronor in clean excess profits in the welfare sector was made between 2005-2013. That, Reepalu said, can employ many workers in the welfare sector.

Countering claims that it would force private businesses to close, Reepalu said that those who want to run a business with normal, reasonable profit returns will not be aversely affected by his proposals.

Jan Björklund, leader of the Liberal Party and the former education minister, tells news agency TT that the profit ceiling is in effect a ban on all profit making in the welfare sector. He says that the proposals are fit for the waste paper basket and are tough for parents and patient choice.

Håkan Tenelius from the Association of Private Care Providers, tells Swedish Radio that the proposals could lead to businesses closing down, partly because investors will turn away.

The opposition centre-right parties are totally against a limit on profits in the welfare sector, they would prefer quality controls instead. The  proposals will not make it through parliament and will no doubt become a key issue in the next election.

Social Democrat Ardalan Shekarabi, Sweden's Minister for Public Administration, welcomed the report. "This is the first time we have had such an inquiry. It is a complicated legal and political question." he tells Radio Sweden.

Asked whether he supported the 7 percent figure put on profits, he said. "We have to study the inquiry and the next step is to have broad discussions with all the actors involved."


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