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Column 790Prime Minister's promise that the NHS is safe in Conservative hands because it seems from a report in The Independent on 15 April that there are pressures on the Government to extend tax relief in the private health sector. The article said :
"The government is being pressed by some of its closest advisers on the National Health Service review to extend further tax relief on private care Two proposals are being put forward : one to allow people over 60 who pay for treatment to claim relief ; the other to allow the creation of special tax-free savings plans through building societies or other routes for private health care. The former move in particular could significantly increase the private health care market. For example, for a £4,000 hip replacement, those over 60--or the patients' relatives paying on their behalf--could reclaim £1,000, or £1,600 if they pay higher rate tax. The ideas have been put to officials by Dr. Michael Goldsmith, medical director of Medisure, the medical insurance advisers, who helped form the idea that GPs should become budget-holders able to buy hospital care ; and by David Willetts, director of the Centre for Policy Studies, the right- wing think tank, who has been a key government adviser on the NHS changes."
According to the article, Mr. Willetts said :
"I hope that tax relief will not cover just insurance, and that it will cover any direct payment mechanism. I would like to see mechanisms in which you would have tax relief on any of your own directly paid costs."
The article continued :
"That could come, for example, if individuals used their savings to buy non -urgent health care."
Mr. Willets added :
"I hope that we will get this through".
The Government should make it plain whether this is the last measure of its kind. Did the Financial Secretary mean it when he said that clause 51 will be the only relief on private medical insurance, which we believe undermines our National Health system? I agree with the hon. Member for Epping Forest (Mr. Norris) who has been quoted today as saying that this is a dangerous precedent, taking us on the easy steps to a two-tier Health Service. This is not simply a matter of tinkering at the margins, as the hon. Member for Gedling said. This is a case of eroding the fundamental principles of the NHS, one of which is that it should be free to all at the point of use according to need. In other words, it does not depend upon a price and privilege model of health care in Britain.
One of the key phrases that could be used to describe the NHS is that it is a comprehensive service. The whole point of private health care is precisely that it is not a comprehensive service. That is especially true for the elderly, and that is why clause 51 is so strange. For a serious operation or long-term care an elderly patient will have to turn back to the NHS. The chief executive of BUPA has claimed that
"Chronic illness is not a suitable subject for insurance." And the Private Patients Plan no longer includes "long term illness" as suitable for insured treatment.
The 1986 general household survey shows that, far from this being a great boon to pensioners, only 4 per cent. of people over the age of 65 have any private medical insurance cover and only 1 per cent. of pensioners from skilled or semi-skilled manual categories are covered by any private medical insurance. No unskilled manual worker pensioners are covered. If this is a measure to assist pensioners who need help, it does not work--on two counts. It is not helping the poorest, and it does not help their health needs when most are in need of substantial treatment because they come into the categories of chronic or long-term illness. It is exactly at that point that they have to switch back into the NHS.
Column 791Will the Minister confirm that 52 per cent. of the in-patient stays of people of all ages with private medical insurance are on the NHS? Private health insurers specifically exclude most of the pre-existing medical conditions and chronic conditions such as arthritis, senile dementia or loss of mobility--precisely the complaints from which most pensioners suffer. Sixty per cent. of people aged between 65 and 74 are classed as having a long-standing illness, and that figure rises to 69 per cent. for people aged over 75.
How on earth can this measure be said to be helping pensioners in their old age to receive health care? Even if they are wealthy enough to benefit from the tax concession, they will have to fall back on the NHS. This is supposed to be a health care measure, but it would be better to put the resources into the NHS rather than subsidising commercial medicine, which itself lives off the NHS, using its trained staff, facilities and resources. That should be taken into account when we evaluate the relationship between the NHS and the private sector. The Government do not have a mandate for private health care in Britain.
I was interested to debate at the weekend the state of the world today with a Conservative. He suggested that there are only two categories of people in Britain--the investors and the wasters. If that is the kind of outlook of the Conservative party, it, sadly, will write off millions of people in our society who do not earn enough to be investors. We are now being told that we must invest in our health care otherwise we will be wasters.
Many pensioners, certainly those who I represent, know exactly where they stand on clause 51. They will not be coming to my surgeries to welcome being given the choice to move into private health care. I suspect that they will say that if the Government want to assist pensioners, rather than sales talk for private medicine they would prefer a decent pension. They would have preferred their pensions to have been uprated last year according to the right rate of inflation, not that in October, as a result of which their pensions went down this year. They would also prefer to receive full housing benefit which has been cut for the past four years. That way pensioners would have a decent income and be able to make real choices about their lives rather than see the wealthiest being offered incentives via subsidies in private health companies. Some Conservative Members have said that this is a marginal measure which does not involve a great amount of money. If that is true, is it worth the trouble that will be caused by the possibility that this measure will open the door to subsidies for private health care? I urge Conservative Members to reject this measure and demonstrate their faith in the NHS. They should show that it is a marginal measure, not by removing the measure altogether but by suspending it now so that it can be put to the test at the general election. I hope that hon. Members will support the amendment and oppose clause 51.
Mr. Anthony Coombs (Wyre Forest) : Unfortunately, I have not been able to listen to all of what I am sure has been a fascinating and varied debate. However, what I have heard so far underlines my impression that the
Column 792Oppostion parties' reaction to a pragmatic, limited and sensible measure is precisely the knee-jerk one that they seem to reserve for those people who dare even to think of providing for themselves rather than relying exclusively on the state.
Not only do the Opposition reject, purely for ideological reasons, measures which will inevitably increase the total resources going into the health sector, and attempt to deny the long-term and well-established trend which shows that people want to provide for their own demands, whether in housing, education, share ownership or pensions--which, as has been said, extends even to some trade unions--but, sadly, by arguing for a delay to 1993, they refuse to recognise the urgency of the demographic changes and the demand that they will create on the resources of the Health Service. To meet this a variety of funding mechanisms will inevitably be required, despite the massive increases in this Government's funding of the National Health Service.
The facts are there. Even at the present time 50 per cent. of NHS beds are used by people over the age of 60 and no less than 40 per cent. of the resources expended by the NHS are spent on elderly patients. By the year 2000 the number of people over 65 will have risen from 9 million to 10 million, the number of people over 75 will have increased by 43 per cent. and, according to an article in The Economist on 25 March this year, the number of people over 85 will have doubled to no less than 1 million.
These health demands will not go away. They will continue to impose themselves on health services per se in both the public and the private sectors throughout the country. Everything that we can do to ensure that state money brings forward additional finance from the private sector will help us to meet the inevitably burgeoning health demands resulting from the demographic changes that I have described.
It is obvious, as my hon. Friend the Member for Gillingham (Mr. Couchman) has said, that the provision of tax relief in this area, even assuming a rough balance between premium payments and treatment costs and a 10 per cent. administration levy by insurance companies on whose premiums tax relief will be available, and even assuming exclusively the top rate of tax, will mean a net gearing for Government funds which otherwise would not have been available of two and a half and, even at basic rate tax, possibly four times. It really is nonsense to say, as the Royal College of Nursing does, that the demand for resources for the care of the elderly into the next decade is likely to become increasingly acute, and at the same time to put forward on purely ideological grounds the antediluvian argument that by denying choice to some will increase choice for everybody ; that even though the 330,000 potential National Health Service patients who may take advantage of this scheme may only rely upon it for certain services, their doing so will do nothing whatsoever to increase the opportunities in the National Health Service for the less well-off who have to rely upon it exclusively. Logically, those opportunities must be increased, and to argue against that is to argue against the interests of the less well-off patients who are at present waiting for operations which they would otherwise be able to have far more quickly.
The proposal has other advantages. As has been agreed by Help the Aged, the elderly in this country inevitably become wealthier and have more disposable income. This
Column 793scheme should eventually increase competition and therefore cost effectiveness in the private health sector. It is worrying that 80 per cent. of treatments in the private sector are at present carried out by three companies and 50 per cent. by one alone, BUPA.
Mr. Battle : Would the hon. Gentleman then explain to me why Help the Aged is opposed to this proposal?
Mr. Coombs : Help the Aged approaches this proposal on precisely the kind of anachronistic ideological grounds as the Opposition. Yet at least Help the Aged recognises that an increasingly wealthy elderly population will demand the kind of services that other people have been able to demand over the last 10 or 20 years. I think that we ought to give them the opportunity rather than try to deprive them of it as the Labour party no doubt would.
Quite obviously, these proposals will increase demand within the private health sector and, as a result, the range of treatments offered by that sector is likely to increase, further reducing demands upon the National Health Service. They may also well improve preventive health care in the private health sector and thus lead to the wider introduction of services such as health check-ups and well men and women clinics, which at present are provided almost exclusively in the public sector. As a result, public sector health resources will be concentrated more accurately on those who most need them and who cannot afford to pay for them themselves.
I believe that these proposals are pragmatic. They go some way towards meeting an increasing need which will increase still further in the future and they provide for further resources with which to look after an increasingly healthy elderly population and enable it to improve further its own standard of living.
I would like to see these proposals go further. There is a case for the increasing number of people over retirement age who continue to work and who at present have their insurance premiums for private health care paid for by their companies to have these disregarded as taxable benefits.
Secondly, these proposals ought to extend not only to those pensioners with taxable earnings but also to those who have accumulated tax allowances. That would give us a successful scheme which I believe would have an enormous take-up, given the fact that this kind of health insurance after tax relief will make possible health care for £3 per week. That large take-up will enable elderly people in this country to emphasise their rejection of the ideological, Luddite, anachronistic arguments that we have heard from the Opposition Benches tonight.
I therefore support this scheme and shall have great pleasure in voting against the amendment.
Dr. Kim Howells (Pontypridd) : The arguments of the hon. Member for Gillingham (Mr. Couchman) and other hon. Gentlemen have sought to prove that the £40 million relief funded under this clause will not drain the Health Service of resources but will strengthen it. I believe that in many ways what they have said is at the heart of this debate. The Opposition are seeking to argue that no one, rich or poor, young or old, should have to worry about having access to the very best in health care as represented by a strong and dynamic NHS, an NHS, moreover, which refuses to discriminate as to who it will and will not treat and stands as a model of care and medicinal excellence in a civilised modern society.
Column 794I do not believe that the provisions in clause 51 will shake the financial roots of the NHS. They will serve, however, to promote some fear and jealousy and a good deal of uncertainty in the minds of many who depend upon the NHS but whose lack of income in the form of the receipt of wages or pensions places them outside the ranks of those who stand to gain from clause 51.
In south Wales it will serve to deepen existing suspicions that these provisions are intended to help drive another nail into the coffin of the NHS. I do not expect the Government to understand that. They should understand it, though, because it was shouted at them time and again during the Vale of Glamorgan by-election. But I fear that the Government have become so arrogant, so sure of the infallibility of the increasingly mystical goals which are proclaimed from No. 10 Downing street, that they can no longer understand good advice or warning messages, let alone sheer criticism. But I heard those messages time and again during both the recent south Wales by-elections. The Government's goals may not have been quoted back at me word for word in the form in which they appear in clause 51, but people could recite without difficulty the philosophy that inspired them.
I am new to the House, so my right hon. and hon. Friends will forgive my observation that I am startled that experienced and ambitious politicians such as those who were seated on the Government Front Bench earlier--young politicians even--are prepared to mortgage their political futures to legislation that is as wrong-headed as that encapsulated in clause 51. There can be only one explanation, which is that they have mortgaged themselves to such ideological nonsense in the vain hope of currying favour with the Prime Minister.
I bet that a few of them do not sleep too well at night--not necessarily because they are worried about the future of the Health Service or of its patients, but because they heard the shuffling of feet and the drawing of daggers in the darkness behind them. They heard the impatient, dismissive growls of the former Defence Minister, the right hon. Member for Henley (Mr. Heseltine), as he seeks platforms to argue for a more corporate attitude to state intervention, on Japanese lines.
Other Conservative Members heard the public plea, "It's got nothing to do with me, guv" from the present Secretary of State for Wales as he rushes from press conference to press conference stealing local authority initiatives and calling them his own, and doing everything that he can to convince the Welsh people that, like the right hon. Member for Henley, he is at heart a state interventionist. I have no doubt that Conservative Members wake in the night wondering how they can ditch that mortgage and survive when their political backers are put out of business.
How much better it would be if their nights were disturbed by misgivings, not about their political futures but the likely implications of clause 51 for the future provision of health care in constituencies such as mine. In my constituency, large centres of population are unable to afford the luxury of properly equipped, modern health centres. Clause 51 will not help to get them built. It will not help a community such as Tonyrefail in the north of my constituency, which cannot by any stretch of the imagination be called wealthy, but is full of hard-working, respectable people who have always sought to pay their
Column 795way in life. They are people who have paid their national insurance stamp for decades and who display enormous patience and forbearance in tolerating an underfunded local health system.
Last Saturday, a constituent of mine from Tonyrefail who is employed at the Royal Mint at Llantrisant--one of the most modern money factories anywhere in the world--told me that the people of Tonyrefail are desperate for a modern health centre. I asked him where the doctors there hold their surgeries now, and he told me--in the converted front rooms of terraced houses, as they have done for the past 30 years. That is an indictment of a decade ruled by the present Government.
The Chancellor of the Exchequer has squandered £60 billion of oil revenue, yet a hard-working, respectable community such as Tonyrefail does not have a modern health centre. Nor do many similar communities in my constituency boast their own health centre. The people of south Wales have grown used to the Government preaching the gospel of private provision in all kinds of sectors. We expected something like clause 51, and we fully anticipate that it will result in future shortcomings similar to those we have experienced in other vital sectors such as education, training and environmental control. We witnessed at first hand that it is one thing to legislate for the private sector to provide an accessible, dynamic and comprehensive service to the general public, but it is another to convert that legislation into real results. As we have witnessed all too often in the case of the citadels of ideologically inspired government in eastern Europe, when good practice and common sense are shunted aside in the name of a political creed, it is the service and the people who suffer--as the people of Poland, Hungary, Romania and the Soviet Union are suffering now. The commissars, big-shot bureaucrats and hustlers can afford visits to private clinics in Switzerland or to private hospitals elsewhere for treatment. That scenario is one with which we in this country are becoming increasingly familiar. The chief commissar of Downing street, for example, boasts of her ability to choose dates, doctors and hospitals convenient to her. That was an insensitive and vulgar exhibition of the Prime Minister's lack of comprehension of the situation in which most of my constituents languish when they find themselves in need of surgery that is not considered urgent or of top priority. The majority of my constituents have neither the personal wealth nor the facilities available to them to exercise a similar degree of choice. Nor do they have something else that the Prime Minister has--thank God. They do not possess that vulgar streak of exhibitionism that drives the right hon. Lady to flaunt her wealth and position and to boast of it in the midst of a society still fraught with long hospital waiting lists and in which respectable communities such as Tonyrefail are denied even the provision of basic facilities such as a health centre.
That is the real meaning of clause 51. It is another version of the Prime Minister's boast, another reprise of that increasingly stale melody that Conservative Members continue humming as they mortgage away their political futures. Clause 51 is another insensitive and vulgar gesture in the face of the vast majority of people, made at the same time that the minority are urged to celebrate their good fortune. Clause 51 is saying to them, "Rejoice, rejoice. Celebrate the fact that you're not someone who has to join the queues for surgery or suffer means-testing to enjoy even the most basic medication and health care."
Column 796More than 500,000 people are covered by the Mid Glamorgan health authority and they will not stand by in silence as its £149 million revenue allocation is whittled away and scattered around the shrine of the Government's barmy ideology. Those people made their voices heard last February in Pontypridd when the Tory vote slipped to third place behind the nationalists, and again last week in the Vale of Glamorgan, when the Tory vote dropped straight into the Bristol channel.
If I am to be candid, a part of me hopes that the Government will not modify legislation such as clause 51, because in that way their support will be eroded as it was even in an area such as the Vale of Glamorgan, which voted Conservative for the past 38 years. The public understand only too clearly the intention behind clause 51 and its ilk. It is not about improving the Health Service but about ditching responsibility for a symbol of collective care and of community. The Prime Minister has made public her distaste for anything that smacks of community responsibility. If she is to surpass the vulgarity of her previous odes to the virtues of private medicine, she need only remind the public that if they find themselves unable to afford adequate health care in the privatised future, then they can chew aspirins. Supermarket shelves are full of them, and they are manufactured by the same transnational chemical corporations whose products poisoned us in the first place.
My constituents complain frequently that they need to take aspirin to counteract the pain that the Prime Minister's speeches and those of her Ministers give rise to in their heads--and in other parts of their anatomy a long way from their heads.
This year, Mid Glamorgan health authority's entire capital allocation is a little more than £7 million. The £40 million given away by clause 51 could solve a lot of problems that will not be solved because of the existing limit on that health authority's capital allocation. In my constituency there is a desperate shortage of nebulizers, for example, for the very young and very old suffering from asthma--as my own son does--and from pneumoconiosis and other respiratory disorders. They cost about £100 apiece, but many families in my constituency earn far less than £4,000 per year.
My constituents want to hear something more relevant to their needs than these hymns to private insurance. They want to know why the east Glamorgan hospital has not been replaced yet. It has 500 beds and its fabric is deteriorating rapidly. This Government's indecision on its future is causing demoralisation and great unhappiness among east Glamorgan's most excellent staff. They do not want this kind of irrelevant, divisive legislation. They want to hear the Chancellor make it abundantly clear that the Exchequer does not grudge the allocation of extra funds to promote health care at all levels for everyone in this country, and not simply for those who can afford it. That is the way to promote efficiency, well-being, a sense of civic pride, a sense of belonging to a responsible, modern nation. Slapdash temporary buildings, patched-up wards and dependence on charity for purchasing vital medical equipment are not symbols of a responsible Government and certainly not symbols of a Government who care for the people.
The health authority in my area sighs with desperation and disbelief when it sees legislation such as this. The general manager informed me today that he needs funds
Column 797for hospital redevelopment, for building maintenance, for investment in community care services, to make progress on their strategy in dealing with mental health problems and for general investment in new technology. We have dire problems of finance for our geriatric units at Dewi Sant, Tonteg and Rhiwfelin hospitals. The Hensol hospital for the mentally ill needs refurbishing and re-equipping, as does the Talygarn rehabilitation centre, which does such sterling work in returning the injured and disabled to meaningful employment, where they can help to top up the tax revenue collected by this Government.
Clause 51 will do nothing for the hospitals and health care in my area of the Mid Glamorgan health authority ; nothing constructive, that is. It will simply confirm what my constituents know already, that this Administration lacks the basic decency which refuses to allow those who possess it to flaunt their new clothes publicly, like a kept tart, and kept this Government have been : kept by the windfall of oil revenues, by a mean, parsimonious, grasping ideology, which takes from the weakest and rewards the strongest, as this clause seeks to do. However, it will not be kept for much longer. The people of Wales know that and the word is out. This Government and their vulgar, tasteless clause are on the way out. That is why I support the amendment tabled by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), and I hope that the Committee will as well.
Mr. Beith : I had the opportunity earlier in our proceedings to talk more generally about our objections to this clause and my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) developed those arguments. I want to pick up one or two points referring specifically to amendment No. 21.
The hon. Member for Wyre Forest (Mr. Coombs) has left us again, after a brief appearance in which he sought to comment on a number of speeches he had not heard, which was a pity because if he had listened to the hon. Member for Beaconsfield (Mr. Smith) or even the hon. Member for Eastbourne (Mr. Gow), with whom I usually find myself in disagreement
The Financial Secretary to the Treasury (Mr. Norman Lamont) : The hon. Gentleman was not here when my hon. Friend the Member for Eastbourne (Mr. Gow) spoke, so how does he know?
Mr. Beith : I was very sorry, during a brief absence, to miss what may have been the first speech of his I have agreed with for a long time.
Mr. Lamont : I have never heard my hon. Friend the Member for Eastbourne speak without referring to the absence of the Liberals, which is normally his theme.
Mr. Beith : It is a very old sport between us, and I am sorry that he is not here now to hear the Minister make that point.
What the hon. Member for Wyre Forest did not appreciate was that the objections to this clause and the reservations about it are not of the narrow, ideological kind which he sought to suggest, but extend into his own party, for the very good reason that the idea of subsidising private health insurance is one to which there are many well-based objections.
A number of Government Members have spoken as if the argument were about whether people should be permitted to take out private health insurance. It is not
Column 798--certainly not so far as I am concerned. It is about whether taxpayers in general should subsidise those who make this particular choice, and do so particularly at a time when, if the purpose of this is to devote revenue to the Health Service, that revenue could more usefully be devoted directly to the Health Service, and if it were, it would benefit more of those people in greatest need. When they argue that more money is becoming available for health care as a result of this clause, they seem to neglect the fact that it gives more money to health insurance for people who have already got it, and the vast majority of funds in the coming year will go to people who have already made the decision to take out private health insurance and do not need this clause to induce them to do so. Ministers have made great play of the argument that the main purpose of this proposal is to enable people to continue to have the private health insurance which they began when they were in employment, rather than to extend it, but alas I cannot believe them because it is clear from many speeches today that the spirit behind those within the Conservative party who like this clause is to extend this principle far more widely.
Another Government Member argued that it is illogical simply to devote the tax relief to health insurance. It should, he argued, be extended to treatment as well, and I can see his logic that if there is to be a subsidy for public health insurance, why not put it direct to the treatment, to the person who has not got health insurance and is told that his only chance of a hip operation is to go private, otherwise he will have a long time to wait? Why should he not have the benefit of tax relief?
Once this gate is open there is no limit to it, which is why Government Members should take more seriously the argument that the direction of these funds into the Health Service is a more cost-effective and better- controlled way of using them.
Referring to amendment 21, it seems to me entirely illogical that the Government should feel it neccessary to extend this tax relief even to the extent of top rate tax. Ministers have admitted this afternoon that 50 per cent. of the relief coming out of this clause will go to 20 per cent. of the beneficiaries. They have argued that 80 per cent. of those who benefit from it will be on the standard rate of tax, but 50 per cent. of the relief will go to that 20 per cent. paying top rate tax. To do this, the Government must have the machinery to allow these people to reclaim tax at the higher rate, and it would be cheaper administratively, as well as in terms of the relief being afforded, to exclude the top rate of tax from the provisions of this clause. I see no reason at all why the Government should not accept amendment No. 21.
I do not think that I could find very many pensioners in my constituency who regard this feature of the Budget--or any other, for that matter--as helpful to pensioners. They will see it as further confirmation that the Government want the Health Service to develop on the basis that those who can afford to will be well advised to make some other provision for themselves, and will be helped to do so. That is not the kind of Health Service in which I believe.
Mr. Nicholas Brown (Newcastle upon Tyne, East) : Unlike many of those who have spoken in this debate, I
Column 799have been able to attend the entirety of it, as indeed has the Government Front Bench. That is the way things work in this place, and quite right too. It is only fair that I confide to the Committee that the purpose of our amendment, although it only implies a delay in the implementation of clause 51 until 1993, is, of course, to do the clause in altogether. We anticipate winning the next general election, and the Labour party is certainly winning the by-elections.
The Committee has had a good trawl through the claims which the Government have made for the measure contained in clause 51, and essentially the Government's case has come down to two separate propositions. The Government claim that the scheme will help people who have had private health care cover during their working lifetime to continue with private medical insurance into retirement, when, as the Government have acknowledged, incomes fall and private medical insurance premiums rise.
The second, separate proposition which the Government have advanced for clause 51 is that it will reduce pressure on the National Health Service. As far as this side of the House is concerned--certainly as far as the Labour party is concerned--neither of those propositions has stood up to the scrutiny of today's debate. We regard the scheme contained in clause 51 as unfair, expensive and socially divisive, about which even those who genuinely support the Government have reservations. We were not surprised to learn from what I think are described as "the usually informed sources" among journalists, that initially the Secretary of State for Health and, indeed, the Chancellor strongly opposed the measure, and I find the denials that have been offered wholly unconvincing.
Many Conservative Members consider the proposal the first step towards more significant and far-reaching changes, seeing it as the starting point for a two-tier Health Service in which better-off citizens enjoy private medical care and separate, diminished provision is made for the rest of us. The hon. Member for Horsham (Sir P. Hordern), indeed, saw it as a starting point for other tax reliefs--applying, for instance, to private education-- and said that he would never support that.
The Chancellor would have reasonable and understandable grounds for less than wholehearted enthusiasm about the scheme. My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) pointed out that the right hon. Gentleman is trying to thin out the range of tax allowances available to be offset against income. Now, however, he is being forced by the Prime Minister to acquiesce in the introduction of a whole new range of income tax reliefs. The scope for tax avoidance is clear, and it makes nonsense of the Government's efforts to thin out some reliefs and cap others.
Much tax avoidance relies on a detailed knowledge of taxation regulations and an ability to fit the different bits together in such a way that losses can be offset against what would otherwise be taxable real earnings. Those who seek to reduce the scope for avoidance by cutting the number of reliefs available are fighting a losing battle against those who exercise real power in the Conservative party.
That should come as no surprise to anyone. The Conservative party is prepared to tolerate the abuse of the
Column 800business expansion scheme and to allow the potential, indeed actual, avoidance in personal equity plans. It is willing to countenance a tax regime under which somebody earning £1 million a year could theoretically, if he made use of all the available allowances, pay no tax at all. In those circumstances, is it surprising that the Government are willing to acquiesce in this whole new territory for abuse-- tax relief for private medical insurance?
I understand that even their own supporters have asked the Government to narrow the regulations as far as possible and to restrict the scope of the scheme. The political implications are obvious : tax concessions for the rich and a two-tier Health Service for the rest of us. The offer of tax relief is clearly of particular advantage to the better off. As my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) has pointed out, it is they who need further financial concessions the least.
There was a rather ungainly scrap at the beginning of the debate : the Chief Secretary seemed astonishingly reluctant to confirm the facts contained in a parliamentary answer given by his right hon. Friend the Financial Secretary. I think it would be helpful if I read out that answer, in which the right hon. Gentleman told my hon. Friend the Member for Dunfermline, East (Mr. Brown) :
"Tax relief on private medical insurance for the over-60s will not be available until 1990-91, when about 330,000 tax units (single people and married couples) aged 60 or above are expected to qualify for tax relief on medical insurance. The average subscription per tax unit is estimated to be about £400. 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. ]
I am surprised that the Chief Secretary found it difficult to stand up and say, "Yes, that is correct." Perhaps, however, his difficulty was understandable, as the social divisiveness of the proposal is something that the Government are trying to minimise.
According to the Government, about 90 per cent. of the cost of the scheme will be attributable to those who already have private medical insurance. In other words, it is a straight concession to people who have already decided to make such provision without the incentive of tax relief. The implication is that only 10 per cent. of the estimated cost is to be laid at the door of those who find the new tax allowances attractive. That is the "year one" position, and that is the key to the Government's thinking. Why on earth make all the elaborate arrangements for deduction at source for the person making the payment, along the lines of the MIRAS scheme? Why ensure that higher-rate taxpayers obtain their rebates through adjustments of their PAYE codes if the measure is to have only marginal consequences? Why put such arrangements in train if the long-term implications are not extensive or important?
These are the kind of arrangements that would be introduced for a scheme that was intended to be used widely and to become commonplace in the British income tax system. That is incompatible with the claim made by the hon. Members for Fulham (Mr. Carrington) and for Gedling (Mr. Mitchell) that this was not to be treated as any great event. I hope, incidentally, that the wife of the hon. Member for Gedling remonstrates with him when he gets home and she finds out what he has said tonight.
The Financial Secretary has told the Committee that the average subscription per tax unit is estimated to be about £400. That figure assumes the take-up set out in the parliamentary answer that I read out earlier. BUPA tells
Column 801us, however, that the full cost for a pensioner couple can be as much as £2,160 a year, out of which the public will now have to finance payments of up to £860. It is not all as high as that, of course. BUPA claims that the cost of comprehensive cover when the older partner is over 70 will be £1,102 a year, cut to £827 by standard-rate tax relief.
Mr. Win Griffiths : To do a little fine tuning on BUPA's description of its insurance scheme, will my hon. Friend confirm that when BUPA talks about "comprehensive cover" it actually means cover for certain specified types of illness, and that anyone suffering from an illness cannot obtain insurance cover?
Mr. Brown : That is correct. BUPA operates a range of different schemes. I understand that the Government are to introduce regulations that will also limit the extent of insurance reliefs. BUPA offers what it calls a low cost scheme in which payments are restricted. Annual premiums under that scheme will be cut from £655 for a couple to £491 by standard rate tax relief.
Those are large sums, and it is difficult to see them as being comparable with the small sums mentioned in the parliamentary answer. For those searching in the bargain basement of private sector health care insurance there is a new senior prime care scheme--it sounds more like beef than health care --which offers a substantial no claims discount of 27.5 per cent. for those aged 65 or over. Of course, that is capped at age 75. The cost of that would be £458.20 per annum for a couple.
The assumption that must lie behind the Treasury estimate that the Financial Secretary gave to the House is that a small number of pensioners will opt for cheaper schemes. That assumption is surely wholly at variance with the arrangements that the Government are putting in place to handle the relief. Either the Government believe that this is the right thing to do and they want to encourage as many people as they can to take part in it, or they believe that it is small beer and nothing to get worried about. They cannot make both arguments, as they have tried to do in the debate.
My hon. Friends the Members for Burnley (Mr. Pike) and for Halifax (Mrs. Mahon) emphasised that the scheme will do the Health Service no good and will certainly do it harm. If the Government had £40 million, or £200 million--the commitment is open-ended--to spend on health care, it should have been spent on the National Health Service so that everyone could benefit. There is no need to spend it on some citizens rather than on all. Depriving the National Health Service of the money does it harm. The private sector will not train nurses or provide long-term patient care. The private sector will not relieve pressure on National Health Service waiting lists and queues. The objective of the private sector is only to ensure that its clients can jump the queues by virtue of being private patients.
My hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) made the point vividly that a Government that cared equally for everyone would try to reduce waiting lists and ensure fair and equal treatment for all patients regardless of their economic circumstances. The Government are exacerbating the problems, not eliminating them. They are saying that the wealthy should have preferential treatment in health care. What use will
Column 802the scheme be to the poor and the majority of British pensioners who do not pay income tax and cannot benefit from tax relief? The majority of pensioners have no prospect of having their private sector health insurance premiums paid for them by wealthy relatives. The Chief Secretary tried to suggest that even poor pensioners could benefit if they were lucky enough to have a son or a friend who had become wealthy and was willing to pay for them. In those rare circumstances I suppose that they could benefit, but what are the odds of that happening? I was amazed that no one on the Conservative side suggested that poorer pensioners should think about clubbing together to form syndicates and offer themselves as tax loopholes to wealthy entrepreneurs along the lines of some of the schemes in business expansion projects. Perhaps encouragement of that is some way down the line.
Britain's pensioners will have lived through the second world war. Many of them will have served their country during that war. They will all have paid their taxes and national insurance contributions throughout their working lives. Now, rightly, they believe that they are entitled to the best health care that the country can provide for their retirement. No one on the Labour side sees anything unreasonable in that. The Government are telling them that they can have the second-best health care that the country can provide or that they can take out private medical insurance. The Government echo the highwayman--"Your money or your life." That is a disgraceful, grotesque, unfair and callous message from Britain's most publicised granny.
What is a pensioner who has waited for a hip replacement for perhaps more than two years to think when he sees a privately-insured pensioner having the operation carried out straight away in a National Health Service hospital, using National Health Service facilities, but paid for by private medical insurance? The majority of pensioners who will be in that position will not consider that to be anything but grotesquely unfair. It is the socially divisive nature of the proposal that is its main condemnation.
The cause of delays in National Health Service operations is not administrative. In one local health authority in the northern region consultants were startled to receive a memo from the administrator asking them to refrain from carrying out expensive operations until the end of the financial year. When the consultants protested, they got a further memo asking them to try to carry out cheaper operations until the end of the financial year. Life is not like that, except perhaps for accountants. As my hon. Friend the Member for Pontypridd (Dr. Howells) said in an excellent intervention, health care should be delivered at all levels and not just to those who can afford it. Those sentiments will be echoed by every Opposition Member. The issue is not solely about resources. Private medical care will not create extra facilities in the National Health Service ; it will redistribute the use of existing facilities. Conservative Members have argued that the private sector is more cost-effective than the public sector. I have some figures showing the comparative costs of operations in the private and the public sector in the United Kingdom. I apologise to the Committee as the figures are a year old, but the differentials still stand.
Depending on the extent of the operation, the cost of a hip replacement operation in the private sector is £1,750
Column 803rising to £3,350. The National Health Service bill is a set £3,300. The National Health Service bill for a hysterectomy is £1,200 and the private sector bill is almost twice that at £2,200.
Mr. Couchman : Are the costs that the hon. Gentleman has just quoted for National Health Service treatment in hospitals where the costs are low, high or average? I suspect that the hon. Gentleman may be quoting those figures to present his argument in the best light.
Mr. Brown : The figures were obtained from Hansard on 28 January 1988. They were supplied in a parliamentary answer, so I presume that they were designed to fit the interests of the Government rather than those of the Opposition. If they do not sustain the Government's case, all I can say to the hon. Gentleman is that the truth will out.
Mr. Couchman : The hon. Gentleman will know that one of the complaints, worries and concerns of those of us who follow health care matters closely is that some hospitals within the National Health Service are vastly more efficient than others. Clearly, they are able to deliver more effective and therefore probably cheaper services than other hospitals. It is well known that some of our centres of excellence are comparatively expensive in delivering treatment.
Mr. Brown : The evidence that I am citing shows that the private sector is comparatively expensive, as the hon. Gentleman pointed out. I can quote him the example of a hernia operation. I have a range of figures from the private sector from £660 to £1,270, a separate source gives the cost at £890 and a further source quotes £1,000. Those are all private sector quotes. According to Hansard, the cost in the National Health Service is £650. Those are substantial differences. The hon. Gentleman can say that I have picked the examples that suit me best, but I have quoted all the private sector quotes that we received, not simply the ones that suit my case best. I could have simply quoted £1,270, but I quoted all the figures from every source. Even the lowest quote from the private sector was more expensive than the National Health Service. That underlines my point.
When the Chief Secretary, in a slightly embarrassed manner, hacked his way through what I thought was an unconvincing justification of the Government's position, and knocked lumps off the Financial Secretary in the process, some Conservative Members took part in the debate.