February 24, 2017 / 10:46 AM / 6 months ago

Swedish PM says schools could be first step in welfare profit cap

STOCKHOLM, Feb 24 (Reuters) - Sweden's Social Democrats, the largest party in the government, will push forward with a plan to cap private companies' profits in the tax-funded welfare sector, Prime Minister Stefan Lofven said on Friday.

The minority centre-left government has promised stricter regulation after reports of abuse in care homes and pupils shut out of bankrupt schools. Rich pickings for firms offering housing for asylum seekers have also provoked widespread anger.

Short of parliamentary support for a general cap, Lofven said a first step might be in education, where the opposition has also expressed concern about profit-taking.

"We want to limit profit in the whole welfare sector - that includes schools, healthcare, and elderly care," Lofven told reporters.

"As a government, we have to have a practical approach and ask ourselves how do we get a majority for our policy in parliament?"

Sweden was a trailblazer of deregulation in the health and education sector in 1990s, but many Swedes are now worried that public services have deteriorated while taxpayers are directly funding shareholder payouts by businesses.

In November last year, a government commission suggested a cap on the operating profit of tax-funded welfare firms in relation to their working capital of 7 percentage points plus the risk-free rate.

However, the study has been widely criticised and the centre-right opposition has said they would vote against such a proposal in parliament.

In 2014, Swedish regions and municipalities bought services for almost 120 billion crowns from private welfare companies in 2014, double the level from eight years earlier.

Reporting by Johan Sennero; Editing by Simon Johnson and Toby Davis

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