House of Commons Hansard Debates for 9 May 1989

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So keen are the Government to push this proposal through that they have made it a subsidy which is paid directly, through the cost being reduced, to the person with private medical insurance.

I have examined the housing benefit forms that have been devised by the Government since the reform of social security. When pensioners want housing benefit, they must first obtain a form, fill it in, carefully read the detailed questions and supply the necessary information about their income, the income of people staying in the house and the details of savings and capital. They must be open about every bit of cash in their possession. All of that must be done to obtain a minimal amount of housing benefit.

On the other hand, to get this private medical insurance tax relief, people need only wait for the private medical insurance industry to give it to them. The Treasury has made it that easy for people to obtain it. But the means-testing that is done for housing benefit, poll tax rebate and everything else is such that for pensioners it is a huge hurdle to overcome.

Whatever the Government claim, this subsidy--and it is a subsidy--will go to a minority of pensioners for a minority of treatment and operations. The best way to relieve pressure on the NHS--the test which the Government say they are imposing--is not to give money to private health services but to give it directly to the NHS.

Mr. James Couchman (Gillingham) : The hon. Gentleman referred pejoratively to my Second Reading speech. He may not be aware that my main point was that the benefit coming from this tax relief will directly benefit health care. Whatever money is given by way of tax relief will represent an addition to the resources that go to health care in Britain.

Mr. Brown : The hon. Gentleman has missed the point. Three Members of the Cabinet are over 60. They will enjoy a subsidy on their private medical insurance policies. They will get that relief without even having to claim it. The only claim they will need to make will be in respect of the top rate tax relief, but they will get the basic rate relief automatically.

I have in my constituency a number of people on NHS waiting lists waiting, for example, for cataract and hip joint operations. The Government have made a choice between giving additional money to the NHS, to people who need it, and giving the money to people with private medical insurance policies, people who do not need it.

Mr. Couchman : Is the hon. Gentleman aware that those on NHS waiting lists will benefit as a result of people taking their ills to the private sector?

Mr. Brown : If what the Government propose goes ahead, those in the queue will be subsidising the queue-jumpers. If the Government want to use £40 million or more of resources to the best effect to help people on waiting lists, the most cost-effective way of doing that would be not to give it to BUPA and other similar bodies, but to give it to the NHS.

Mr. Couchman : Will the hon. Gentleman concede that £40 million of tax relief, even at the top rate of tax, would result in £100 million worth of additional resources going to health care?

Mr. Brown : I do not accept that. I assume that the same point will be made by the Chief Secretary. That £40 million

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will not go to pay for operations and hospital treatments. The hon. Member for Gillingham knows that because he has been advocating Denplan as an insurance scheme. The money will go to pay for the administration and marketing of BUPA and other schemes, and not necessarily towards improving the quality of health care.

Mr. Win Griffiths (Bridgend) : Does my hon. Friend agree that Mr. David Lock, the managing director of Private Patients Plan, gave the game away when he asked the Government :

"Please do not ignore the incentives which would encourage patients to provide for themselves and their families and reduce government expenditure on the NHS"?

Mr. Brown : I am grateful to my hon. Friend for making that point. Not only have many people in the private health industry given the game away, but almost every organisation associated with the NHS--the Royal College of Nursing and others--has come out against the plan. Only a few days ago the Chief Secretary, in support of the Budget, quoted comments from Help the Aged, saying that it gave an unqualified welcome to the proposals in the Budget. But I have to tell him that only today it has said that the proposals being put forward for private medical insurance tax relief are a complete irrelevance. The same has been said by Age Concern and many other organisations.

The Chief Secretary may also like to know that the Centre for Policy Studies, the Right-wing organisation that the Prime Minister helped to set up some years ago, has not come out in support of the plan. It has advocated that the plan should not be proceeded with. It said :

"It would be wrong to give it tax relief The US system of private health insurance came close to collapse because nobody has responsibility for managing health costs. This mistake should not be repeated here."

It goes on to give three additional reasons why it believes that private medical insurance tax relief should not be operated. Mr. Eindhoven, an American research scientist, has been given a great deal of credit for developing the proposals for the internal market on which the Health Minister and the Prime Minister have based their plans. Only a few days ago, in an interview to the British Medical Journal he was asked :

"Were there no specific points"--

in the Health Service review-- "that made you think my goodness?' "

Mr. Eindhoven said :

"The only thing like that was the proposal of tax relief for private health insurance. My reaction to that is watch out. This has been a disaster for us in the States."

He was asked why, and he said :

"Because it costs the federal budget a great deal of money--about $40 billion a year--and works to encourage the choice of a more costly rather than a less costly health scheme."

Others have made exactly that sort of comment on the proposal. There is no support from the Health Service, there is no support on the basis of established Treasury principles, and there is little support even from some people in the private medical insurance industry.

There are good reasons why the country should be opposed to the scheme.

Mr. Tony Marlow (Northampton, North) : The hon. Gentleman has a reputation for being an ex-student leader, so obviously at some stage in his life he was educated. Therefore, why cannot the hon. Gentleman understand

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that if the Government provide an incentive for health insurance more people will take it out, enabling more people to obtain their health care elsewhere, and freeing resources in the NHS for his constituents and my constituents and adding to the increasing resources that the Government have already put in to the Health Service?

Mr. Brown : The hon. Gentleman fails to understand the drift of the argument. The Opposition argue that if the Government have £40 million --this also happens to be the argument of any serious person who has looked at the issue--the best and most economical way to use those resources to provide health care is not through a subsidy to the private medical insurance industry or people who take out private medical insurance, but to use them in the NHS. The hon. Gentleman has been unable by his question to persuade us that he has any case for the point of view that he has put forward.

The problem is that we are not just talking about £40 million going in tax relief to private medical insurance ; This is £40 million as a start that is going to a small number of people who are already rich enough to afford that private medical insurance in the first place. Doubtless one or two people in the lower income group will benefit from the scheme, but we know that half the cost of the first year of relief will go to the top 5 per cent. of pensioners--people who are already rich enough to afford private medical insurance and who already have massive tax relief from the Government in many other areas.

4.30 pm

Even those people, who have benefited so much, would say that if the Government had wished to give to pensioners the first priority should have been to do something about housing benefit cuts, eyesight and dental check- up charges, and low poll tax and rate rebates--all things that they know have done damage not just to individual pensioners but to the integrity of our community life in this country.

The Chief Secretary tells us that the aim of this scheme is to help a number of elderly people who have had their private medical insurance through their companies all their working life and will be unable to afford to continue it after the age of 60. Somehow, he tells us, a priority for public spending resources in this country should be that a small group of people who have had private medical insurance as a perk from the company during their working life should now receive from the taxpayer additional resources to pay for their health care.

I have had dozens of constituents come to see me about the freezing of transitional protection. I have had scores of constituents complaining about the implementation of charges for eyesight tests and dental check-ups and rising prescription charges. I have had hundreds of constituents worried about cuts in housing benefit. I have not received one constituent inquiry from someone worried about this tax relief for pensioners. Those people who argue the case for private medical insurance tax relief must bear in mind that the people most in need of resources from the Government are not those rich enough to afford private medical insurance but those whom the Government have made poor as a result of housing benefit and other cuts.

Our objections to this tax relief go beyond that. It is not just that only a few at the top are liable to benefit ; it is that this subsidy is open- ended. The Chief Secretary has not yet

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told the House, and it has not been in the public arena to the extent that it should have, that this tax relief proposal is not just open to people over 60. There are 900,000 people under 60 who will be entitled to receive the benefit of this tax relief because they are married to people over 60 and their policies will be covered by the tax relief as well. That is another reason why this scheme is not ring- fenced, as the Chief Secretary says ; it is open to another group of people, as high a figure as nearly 1 million of them, throughout the country.

Mr. Beith : There is an even larger potential group of people who can also benefit from high-rate tax relief. Any relative who cares to pay the premiums for a pensioner to whom he is related can get the highest rate of tax relief in that way.

Mr. Brown : I am grateful to the hon. Gentleman for pointing that out in his second intervention this afternoon. BUPA itself has said that this scheme will be used by what it calls yuppies--people with high salaries who buy private medical insurance as a present for their elderly parents. I have to ask the Chief Secretary whether he thinks it is a proper use of public sector resources to subsidise gifts of this sort.

As to the question whether the subsidy is open-ended, I was interested in what the Financial Secretary said when he dealt with this matter. He said that he could not tell us what the costs of this scheme would be--rather like the Chief Secretary this afternoon. So we have the Treasury entering into a scheme without knowing what the cost will be. Then he said that the costs depended on meeting the new marketing challenge. The question was how much BUPA and other private sector organisations would meet the marketing challenge. So the resources devoted to this scheme are not to be decided on the basis of the needs of pensioners or the needs for health care throughout the country ; they are to be decided by the extent to which BUPA meets the new marketing challenge. It is the advertising budgets of Saatchi and Saatchi that will decide the take-up of the scheme rather than the real needs of pensioners throughout the country. I will tell the Chief Secretary and the Financial Secretary how these resources could be better used. The £40 million, if it is really £40 million, that is being devoted this year to private medical insurance would pay for 3,000 nurses, 1,000 consultants, 20, 000 ventilators, 1,300 ambulances or nearly 20,000 hip- joint replacement operations. But the money will not go to guarantee any operations or treatments ; it will merely go to provide tax relief on insurance money that is paid out to companies such as BUPA. What will BUPA and similar organisations be able to do for pensioners with the money that is given in the form of subsidies to those who subscribe to private medical care? People who have had illnesses or even symptoms in the past cannot, when they are aged over 60, obtain private medical insurance in many cases. Policies will not anyway cover the mentally ill or those requiring psychiatric care, the physically or mentally handicapped, or those suffering from long-term conditions such as cancer. So that money will be used to subsidise a minority of people undergoing a minority of treatments, and almost certainly a minority of the operations that they really need. Is that the best use of £40 million or more of public sector resources?

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Much of that money will be spent on administration. We know that about 6 per cent. of National Health Service costs and 5 per cent. of hospital costs are accounted for by administration. However, we know also that 10 per cent. of BUPA's costs are accounted for by administration, and that the figure is 12 per cent. in the case of Private Patients Plan. That is hardly cause for arguing that money is better spent in the inefficient private sector. The private sector under BUPA is the most inefficient of all.

The cost of a hernia operation in the private sector is more than twice the National Health Service figure, as is that of a hip joint replacement. Operations as simple as cataract removal also cost twice as much in the private sector. The Government support the private sector not because it is efficient but simply because it is the private sector. They oppose extra funds for the public sector not because it is inefficient but simply because it is the public sector. The Government prefer to subsidise an inefficient private sector rather than support an efficient public sector.

The Prime Minister herself, even though she supports the private sector, acknowledges that the coverage it can give is inadequate in respect of major operations. She commented : "The day may come when we"--

she uses the term "we" again--

"have to have a very complicated operation. I hope not. I hope it will never come. But if it does, then I am afraid that one could not possibly perhaps bear that on private insurance."

Those are the words of the Prime Minister, who is the greatest supporter of private medical insurance and the author of the subsidy--but she recognises that no matter how large the resources she gives to private medicine to try to make it function more efficiently and encourage more people to subscribe to it, at the end of the day the private sector is unable to do the job if a major operation is required.

The National Association of Health Authorities today published a new survey of Health Service finances, which reveals very clearly the remaining backlog. The survey claims that since 1980 the Government have underfunded the National Health Service by £3 billion. Last year underfunding was of the order of £400 million, as it was the year before that. Despite all the claims made by the Chief Secretary and other Ministers as to the huge resources that they made available to the Health Service this year, the hospital and community health services remain underfunded by £490 million.

On the same day as that survey is published, the House is asked to divert to the private sector money that should go to the Health Service. All health arguments and all traditional Treasury arguments have been set aside. The only question asked by the Prime Minister was what could be done for the private sector, and how could the rich be helped to help themselves.

We now know what the Chancellor meant when he gave that unintended interview to the correspondents on that Friday last year which caused so much embarrassment. He said then that he wanted to target benefits to pensioners, that only a tiny minority of pensioners concerned him ; what he did not say was that the tiny minority were not the poorest in the land but the richest and that the targeting was to be on the richest, not the poorest.

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This proposal has been rejected by almost everyone who has looked at it. It commands very little support, even on the Minister's Back Benches. It is objected to by all health organisations which have looked at it. It is even rejected by many of the Right-wing think-tanks which the Minister knows are the authors of many of the worst proposals for the National Health Service. Yet Ministers and the Government have made a choice between giving Health Service resources to those who need them and to those who do not. They have chosen to give these resources to those who do not need them. That is why we will oppose the proposal this evening.

Mr. Major : In moving his amendment, the hon. Member for Dunfermline, East (Mr. Gordon Brown) was typically forceful, and it might be appropriate at the beginning of what I suspect will be a lengthy and interesting debate to set out the background and concerns to the proposal to introduce tax relief and the secure justification we believe exists for it.

As I listened to what the hon. Gentleman said, I found it hard to appreciate that we are discussing tax relief for a limited number of elderly people rather than, as his dramatic delivery would have led us to believe, the ritual slaughter of the first born. It is curious that on all other occasions when assistance for the elderly has been suggested--and a lot of assistance for the elderly has been introduced under this Government --the Opposition tend to support it but on this occasion, for rather curious reasons, which I will come to later-- [Interruption.] Not the rich elderly, as hon. Members will find out in a moment. I fear the hon. Gentleman has the measure rather out of perspective, though the manner in which he presented his case will enable elderly people who enjoy tax relief and who may enjoy tax relief to put the Opposition very clearly in perspective. In the course of his remarks the hon. Gentleman made a number of errors of substance, to which I shall return. There were a number of minor errors, which I simply correct in a spirit of accuracy. [Interruption.] The hon. Gentleman finds accuracy funny, as we have noticed before. My right hon. Friend the Chancellor mentioned tax relief for health insurance in his Budget. The cost of £40 million which the hon. Gentleman referred to arises, of course, next year, not this year. I assume that was a just a slip of the tongue. The position about the open- ended cheque is not at all correct. Treatments which may be covered will be specified in regulations and there is a natural limit to those. Those regulations will be available to the House at a later stage.

Mr. Gordon Brown : Will the right hon. Gentleman give way?

Mr. Major : In a moment. If the hon. Gentleman intervenes every time I point out his inaccuracies, we will still be here in the middle of August.

The hon. Gentleman is, of course, wrong about getting relief without claiming it because the application form for insurance cover will also contain the claim for tax relief. Whether the claim is made is optional. Claimants will have to certify in the normal way as to their eligibility for tax relief, just as with mortgage interest tax relief, which to the best of my knowledge the Opposition have not yet declared it to be their intention to abolish.

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The hon. Gentleman made some other errors, to which I will return when we deal with the more substantive parts of this amendment.

Mr. Gordon Brown : Will the Chief Secretary confirm whether there is a ceiling on this tax relief or not?

Mr. Major : There has never been in any tax relief of any sort the possibility of setting a cash limit. If the hon. Gentleman does not understand that, he ought not to be the Shadow Chief Secretary, for he understands very little. As it happens, Shadow Chief Secretary is likely to be the limit of where he gets-- [Interruption.] I am perfectly prepared to exchange badinage with the Opposition if they wish, but they may care to listen to the substance of the debate. Amendment No. 5 would delay the introduction of tax relief on private health care provision until 1993. As the hon. Gentleman made clear, its intention is wholly different ; but the effect is simply one of delay, which implies--inaccurately--that the Opposition accept the principle of tax relief and merely wish to defer it. The Opposition, however, are wholly opposed to tax relief, as any casual listener to the hon. Gentleman's tirade will have understood. The hon. Gentleman hopes that a delay beyond the end of the current Parliament will enable a new Labour Government quietly to strangle the extra help for the many elderly people who will welcome it. It will not, of course, because there will be no new Labour Government after the next general election. One of the reasons for that is Labour Members' basic and instinctive hostility to self-provision, self-dependence and individual choice, which they are showing yet again today. They hate those things ; unless provision is made by the state, in their eyes it is not good.

4.45 pm

Mr. Gordon Brown : Will the Chief Secretary simply confirm that of that £40 million he expects at least £20 million to go to the richest people--the top 5 per cent.?

Mr. Major : Let me tell the hon. Gentleman in precise terms that the Inland Revenue's best estimate is that, in the first year of the tax relief, well over 80 per cent. of those aged over 60 and covered by medical insurance will be either basic-rate taxpayers or not liable to tax at all. I hope that the hon. Gentleman will remember that when next he makes his inaccurate speeches.

Mr. Gordon Brown : Will the Chief Secretary now answer my question? Is it or is it not the case that half the £40 million that he expects to be set aside will go to top-rate taxpayers?

Mr. Major : I do not expect that to be the case. My answer to the hon. Gentleman's question showed clearly the extent to which he either does not understand what is going on or deliberately chooses to misrepresent it. I have opted for the charitable explanation, although others, of course, may not.

Mr. Win Griffiths : Is the Chief Secretary aware that NHS provision is paid for by taxpayers and payers of national insurance? The clause merely gives extra help to a very small number of people, when those resources could be better used in the NHS.

Mr. Major : I understand the hon. Gentleman's point entirely, but we live in a society where there is a private

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medical sector as well as a National Health Service, whether he likes it or not. I suspect that that point is not alien to him. The private medical sector provides a good deal of care for people who would otherwise need to be treated within the NHS, which would add to the difficulties and delays that sometimes occur within it. [Interruption.] If hon. Members will permit me to get past the few first seconds of my speech, I shall explain the point directly, as it is the substance of the amendment.

Mr. Gordon Brown : Is the Chief Secretary willing to correct his statement of a few minutes ago? Is he prepared to accept the accuracy of the answer given to me by his right hon. Friend the Financial Secretary on 22 March, stating that about half the relief is expected to be received by higher-rate taxpayers?

Mr. Major : As far as I am aware, what I said a moment ago is correct : 80 per cent. of the beneficiaries will be basic-rate taxpayers. Although it is not possible to be certain about how that 80 per cent. breaks down within the total tax relief, it is clear that over a period the majority will go to basic-rate taxpayers--or indeed, as I shall explain shortly, in reduced payments for those who are not taxpayers at all. They will find, as we operate a MIRAS-type system, that the cost of their medical insurance cover is reduced by the rebatable element--25 per cent. at present--when they make their first payments under the new system. That will in our judgment grow over the years.

Mr. Gordon Brown : Will the Chief Secretary tell us whether the Financial Secretary was right or wrong? I asked on 22 March : "what is his estimate of the proportion of the £40 million set aside for tax relief for private medical insurance that will go to top-rate taxpayers."

He replied :

"Around one half of the cost of relief is expected to be received by higher rate taxpayers."--[ Official Report, 22 March 1989 ; Vol. 149, c. 588 .]

Is the Chief Secretary disowning the Financial Secretary?

Mr. Major : The hon. Gentleman is overlooking two factors. [Interruption.] I am just about to explain to the hon. Gentleman since he does not understand. That includes, first, the basic rate of tax relief. So only a proportion of that half to which he refers is higher rate tax relief, for they would be entitled to the basic relief in any event. [Interruption.] It is no good hon. Gentlemen giggling and shouting. That happens to be fact. Secondly, since 80 per cent. of the beneficiaries will be basic rate taxpayers or not taxpayers at all--I shall reiterate the point so that the hon. Member for Dunfermline, East does not get it wrong again--over a period of time the majority of the tax relief will go, not to the rich, whom the Opposition claim are receiving such disproportionate amounts, but to people who are basic-rate taxpayers or not taxpayers at all. I hope the hon. Gentleman now understands the point. [Interruption.] If the hon. Member for Holborn and St. Pancras (Mr. Dobson) wishes to intervene instead of cackling in such an absurd fashion from a seated position, I shall give way to him. He is the best advertisement I have yet seen for having television in the House. Then people might see how he behaves.

Mr. Frank Dobson (Holborn and St. Pancras) : Will the Chief Secretary confirm that of those people who have private health insurance, no fewer than 50 per cent. go into

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a National Health Service hospital when they are sick and in need of in-patient hospital treatment, thus saving the National Health Service not a penny?

Mr. Major : As the hon. Gentleman's hon. Friend pointed out a moment ago, those who have private medical health insurance will also have paid their tax and national insurance contributions, so they have the same entitlement as the hon. Gentleman, if they choose to exercise it, to use the National Health Service. If they choose to pay separately and not use the provision, that is a matter for them which ought not to concern the hon. Gentleman.

Mr. Denzil Davies (Llanelli) : As I understood it, the Chief Secretary said that some elderly people who do not pay tax will get a benefit. Will he please explain that? I presume that most people on state pensions who do not have any other income do not pay tax. I take it that the personal allowance still covers the whole pension. Is he saying that that pensioner can deduct a sum equivalent to tax at the standard rate when making the payment of the premium, and can retain that money and not have it reclaimed by the Inland Revenue?

Mr. Major : That is entirely correct. Since a system like MIRAS will operate, someone who is not a taxpayer would have the equivalent of the basic rate refund deducted from the premium, so that person would have a lower premium than otherwise.

Mr. Denzil Davies : Could the insurance company reclaim the sum in full from the Inland Revenue?

Mr. Major : Yes, in precisely the same way as the mortgage interest relief system operates, as the right hon. Gentleman, as a former Treasury Minister, will know.

Mr. Beith : Will the Chief Secretary make it clear that the non- taxpaying pensioner will not have to sign a form when making the initial claim to say that he or she is liable to tax?

Mr. Major : I will have to check that, but I suspect that people will have to indicate that they are eligible--no, I think the answer is that they will not because the 25 per cent. would be deductible automatically in any event. If I am inaccurate about that, I shall write to the hon. Gentleman later.

One of the curiosities about the position of the Opposition, although they may not care to admit it, is that they are resolutely opposed to helping the elderly help themselves, or to helping families help the elderly, despite the general position that they take that they care and want to assist the elderly in whatever way is possible. The 5.5 million people currently covered by private medical insurance will surely notice that.

I wish to turn in a moment directly to the concerns that the hon. Gentleman raised, but I should like to say something first about private health care provision and public health provision. Although the Opposition choose not to mention it, public provision for the National Health Service has grown dramatically in recent years to deal with a variety of changes in circumstances, such as improving medical treatments, greater public expectations and demographic changes. By any realistic yardstick, the National Health Service is better funded than ever before.

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I, for one, have no doubt that that trend will continue, for we are determined to produce and improve public health care. The whole thrust of the health reforms has that in mind.

Where we part company with the Opposition is that we believe that support for public provision should not mean opposition to private provision, although for many--I suspect not all--Opposition Members, private provision adds to the total resources for health care and should generally be welcomed. As to provision for health care, even the Labour party yesterday committed itself to the belief that firm public expenditure control was desirable and necessary. Whether the Labour party will ever pay more than lip service to that belief, or have the chance to, is a separate matter.

I must make it clear to the hon. Member for Berwick-upon-Tweed (Mr. Beith), who raised the point earlier, that I welcome the expansion of private health care provision. I welcome it unreservedly, as one who has invariably used the National Health Service.

There is a variety of reasons for my welcome for private health care provision. First, it relieves pressure on the National Health Service. Secondly, it increases the scope for co-operation between the National Health Service and the independent sector. Thirdly, it increases individual choice, and I find that attractive. It also means, of course, a wider range of options for National Health Service management as well as individual patients.

There is already a growing partnership between the National Health Service and the independent sector. Through the reforms that we have in mind we want to open up further opportunities for the public and the private sectors to work together, providing services for each other, engaging in joint ventures, and sharing the use and spreading the cost of expensive hospital facilities. Anyone needing treatment, including those of us who continue to depend wholly on the National Health Service, can only benefit from closer co-operation, for private provision will supplement and not replace public provision in the National Health Service.

The new relief that we are debating is limited. It is not a general relief for private medical care or even for medical insurance. It is limited in scope and ring-fenced to those over 60, or, as the hon. Member for Dunfermline, East accurately pointed out, the wives of those who are over 60, who also receive age allowance on exactly the same principle--unless the hon. Gentleman proposes to withdraw the age allowance in those circumstances. If he wishes to do that, I will let him admit it now ; I assume that he does not. I am pleased that he is consistent and agrees with the principle.

I must make it clear to him that we have no plans to extend the relief further down the age scale. Direct payments for private health care and most medical insurance premiums for those aged under 60 will not in future attract tax relief. [Interruption.] Many things come forward in the debate, but I think that a reference to the dock labour scheme may stretch the Chairman's patience.

The central justification for the new relief is entirely clear. It is one that I have set out before. As people reach 60, the cost of their private medical insurance rises. If they retire, their income generally tends to fall. Of course, usually they lose employers' contributions to any private medical insurance scheme to which they may have belonged. Many elderly people think that it is grossly unfair, and for the benefit of the hon. Member for

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Berwick-upon-Tweed I must make it clear that I agree with them without qualification. Clause 51 addresses that difficulty. The effect of the clause that the amendment seeks to wreck is that the new tax relief will be available from April 1990 where an individual aged 60 or over is covered by eligible medical insurance. It will be due where the premium is paid by the elderly themselves or where another individual pays the premium on their behalf. In most cases, that individual is likely to be a son or daughter or other close relative ; but it could equally be a family friend.

5 pm

Mr. Win Griffiths : The Minister is enunciating what I take to be a principle which he wishes the Government to spread throughout tax relief between the employed person and the retired person. He seems to be saying that it is one way of helping people belonging to company-financed health plans to continue with those plans after retirement. Does he therefore agree that that principle could apply to any other perk that a company provides, such as a company car--so that people could receive some help with having a car after they retire--or any scheme of luncheon vouchers, as retired people might need help with their meals after they retire. Is the Minister seriously trying to tell us that there is a need to provide help with perks that were received during employment when people retire?

Mr. Major : Unlike the hon. Gentleman, we know the difference between health relief and luncheon vouchers. That is why we have ring- fenced that relief specifically to people seeking some form of health or medical insurance. Unlike the hon. Gentleman, we think that that is particularly important and brings comfort to many elderly people who are keen to continue with the insurance, the protection and the cover that they enjoyed until the age of 60. It is ring-fenced to that.

Mr. Win Griffiths : That is nice to know.

Mr. Major : The hon. Gentleman now need be in no doubt about it. Basic rate relief will be given at source--like MIRAS to which the right hon. Member for Llanelli (Mr. Davies) referred a moment ago--so that only a net premium will need to be paid to the insurer. That means, even where a subscriber is not liable for tax, tax relief will still be given and only a net sum will be payable.

The hon. Member for Dunfermline, East repeatedly referred to the fact that tax relief benefits only the rich, and I outlined the extent to which basic rate taxpayers will benefit. His belief that only the rich benefit is wholly wrong, as it is in the case of tax relief on mortgage interest. The measure brings private health care within the reach even of non-taxpayers for the reasons we have discussed in the past few minutes.

Dr. Lewis Moonie (Kirkcaldy) : Can the Minister estimate the number of people on the basic old age pension who will take out private health insurance after this generous scheme comes in?

Mr. Major : We shall have to wait and see. But I can tell the hon. Gentleman that any pensioners who do that will find that the tax relief reduces their premium by the standard basic rate of taxation--currently 25 per cent.--in precisely the same fashion that I have set out. Therefore, the hon. Gentleman may be surprised at the number of

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