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Private Medical Insurance

Mr. Bob Cryer (Bradford, South) : On a point of order, Mr. Speaker. On the Order Paper there is a note to the effect that the Select Committee's consideration of the statutory instruments with which the House is about to deal has not yet been completed. There is a correction. The Committee met this afternoon and completed its consideration of the instruments. In an extract from its third report, the Select Committee

"draws the special attention of the House to the above instrument"--

the Private Medical Insurance (Disentitlement to Tax Relief and Approved Benefits) Regulations 1989--

"on the ground that it requires elucidation".

That elucidation is provided in a memorandum attached to the report. I thought that it would be of benefit to hon. Members to have that knowledge.

Mr. Speaker : I thank the hon. Gentleman for that information. Is the report available in the Vote Office?

Mr. Cryer : It is, Mr. Speaker.

10.13 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East) : I beg to move, That an humble Address be presented to Her Majesty, praying that the Private Medical Insurance (Disentitlement to Tax Relief and Approved Benefits) Regulations 1989 (S.I., 1989, No. 2389) dated 19th December 1989, a copy of which was laid before this House on 19th December, be annulled.

Mr. Speaker : With this, it will be convenient to take the following motion :

That an humble Address be presented to Her Majesty, praying that the Private Medical Insurance (Tax Relief) Regulations 1989 (S.I., 1989, No. 2387), dated 18th December 1989, a copy of which was laid before this House on 19th December, be annulled.

Mr. Brown : I thank my hon. Friend the Member for Bradford, South (Mr. Cryer) for raising that helpful point of order. Some of his concerns will be raised by me and other Opposition Members. It is ironic that, on the day when Britain's ambulance workers employed by the National Health Service have come to the House of Commons to present their case, the House has before it two statutory instruments that set in place tax handouts to private medical insurance schemes costing, on the Government's calculation, some four times the cost of settling the ambulance workers' claim. Set alongside each other in this way, the two issues provide a telling and disgusting insight into the Government's priorities.

On Second Reading of the Finance Bill last year, the then Chief Secretary, later Foreign Secretary and now Chancellor of the Exchequer, told the House that these proposals would ease the burden on the National Health Service. He did not go on to say how that would happen, and surely it is a fair question to ask : how does it relieve the burden on the NHS to give a tax handout to those who already have private medical insurance? The Government's figures show that some 90 per cent. of the cost of the proposals in the coming year are dead-weight costs. This expenditure is a subsidy to existing schemes, so I again ask : how does that help relieve the burden on the NHS? Surely the correct way to do that is to give the NHS the money direct.


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The Government's first-year costings do not tell the whole story--they were never intended to do that. The understatement of the first-year costs is deliberately designed. As the Chancellor told us on Second Reading, it

"needs to be seen in perspective".

He went on to boast about the money that the Government were giving the NHS. Again, the tabling of these regulations just before the House rose for the Christmas recess was hardly designed to ensure the maximum publicity for the proposals, yet what is set out could have far-reaching significance for the NHS.

These arrangements for claiming tax rebates under the scheme do not speak of a modest proposal, operating at the margins--a proposal that "needs to be seen in perspective".

The arrangements that have been put in hand for basic rate taxpayers and, indeed, non-taxpayers are similar to those currently in place for claiming mortgage tax relief. It is a private medical insurance MIRAS scheme. Just as there is no real point in introducing tax relief to reward people for doing what they would have done anyway without the relief, so there is no real point in putting those arrangements for claiming into place for a scheme that is intended to be modest.

On the basis of the evidence so far, it seems reasonable to suspect that something more far-reaching is intended. When dealing with the Conservative party, it is important to watch carefully what it is doing rather than just listen to what it says. There can surely be no doubt that the arrangements could be a stepping stone for the introduction of more general tax reliefs for private medical insurance. It is pretty easy to predict the way in which the debate inside the private medical insurance industry will go-- indeed, it has begun already. The industry mentions the costs of the administrative arrangements that accompany tax relief in this form--costs that fall on the industry and therefore, eventually, on the consumer. The industry makes the point that encouraging special private medical insurance for pensioners distorts existing cross-subsidy arrangements between older-- and therefore more vulnerable--and younger consumers of its product, to the industry's disadvantage. Arguing from that point of view, the logical next step is to make the existing reliefs more generally available. No doubt, the Chancellor will argue that such a step would relieve the burden on the Health Service even more. If that is not the Government's true intention, now is the time for them to say so. If the Minister can give the House a firm assurance that those reliefs will be extended before the next general election, I shall happily give way and afford him an opportunity to do so. The hon. Gentleman may refer to it in his speech, as he does not seem to want to do so in mine.

Mr. Tim Smith (Beaconsfield) rose --

Mr. Brown : I am prepared to take assurances from wherever I can get them. I suspect that the hon. Member for Beaconsfield (Mr. Smith) has slightly more sympathy with my points than most Conservative Members. If the hon. Gentleman felt that in some future Conservative Government an assurance from him would be binding, I should willingly give way to him. It is disappointing that he obviously does not think that.

There can be no doubt that the regulations reduce the tax base in an unfair and socially divisive way. The true subsidy is, of course, open ended and it is not limited to the Government's estimate of £40 million.


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In a pretence of fair play, the present Chancellor of the Exchequer said on Second Reading :

"Even non-taxpayers will benefit because they, too, will pay their premiums net of tax relief."--[ Official Report, 25 April 1989 ; Vol. 151, c. 818.]

There are three broad categories of non-taxpayers, but for the sake of my argument we shall leave royalty out of this, which leaves two broad categories. The first consists of those who are rich, but who are non- taxpayers because they are advised by professional tax avoiders. Under the regulations, even the most unscrupulous tax avoider will receive the relief, whether he pays tax or not. The second category includes 75 per cent. of Britain's pensioners who do not pay income tax because they are too poor and who are too poor to pay private medical insurance premiums.

Why should older people have to pay into private medical schemes? They have been frightened into it by a pretty realistic assessment of what the Government intend to do to the NHS and frightened into believing that, even on a restricted budget, private medical insurance must be a priority and a matter of life and death. Why should Britain's pensioners be bullied into paying private medical insurance premiums? Have not they, of all people, already paid towards the NHS? Now that they are more likely, because of their age, to need to use the NHS, the Government say, "Pay again, go private and we shall give you tax relief." How typical it is of the Government's business dealings, exemplified by the privatisation programme, that they are trying to sell again to Britain's pensioners the health care provision that they thought that the NHS already gave.

Needless to say, the statutory instruments fly in the face of the Government's stated tax policy. The Government's case used to be that they were reviewing and, where possible, eliminating allowances with a view to reducing overall rates of direct taxation. Tax allowances were a form of public expenditure, which were listed in the White Paper. The Conservative party's case used to be that it sought to reduce the burden on ordinary taxpayers, but here the Conservative Government are doing the exact opposite. The taxpayer has to pay for handouts to pensioners with private medical insurance, 90 per cent. of whom were in such schemes anyway, even without the inducement of the relief.

I want to draw the attention of the Financial Secretary to several matters of detail which arise from the two statutory instruments, and to which my hon. Friend the Member for Bradford, South referred in a point of order at the start of the debate. Regulation 4 of the Private Medical Insurance (Tax Relief) Regulations 1989 sets out the information that has to be provided by an individual to claim relief at source. Part of the information required is a certificate specifying that the contract satisfies the requirements of section 54(2) of the Finance Act 1989. That provision requires that the person who is insured by the contract is resident in the United Kingdom. I believe that the regulations should also require the individual to notify the Inland Revenue if the position changes at any time during the period that is covered by the insurance. Why do the regulations not require that? Why should it be possible to take the relief and then to move overseas?

On a similar point, why does regulation 10 not require non-United Kingdom insurers to make the information that regulation 10 requires available in the United Kingdom? Under regulation 12, which relates to qualifying insurers, a declaration has to be made to the


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effect either that the person is carrying on a business in the United Kingdom or, if not, that he is a national of a member state of the EC. Should not the insurer certify that the contract will be brought in, in its entirety, as part of the business carried on in a member state and that it will not be reinsured offshore? Does not the wording provide a loophole to permit offshore reinsurance? When we discussed these matters in July 1989, the then Financial Secretary--now the Chief Secretary--announced in a written answer a broad outline of the areas that would be eligible for tax relief. That was with a background of the industry lobbying against what it felt might be an unduly restrictive framework of regulations. Hence the then Financial Secretary opened his July answer with a robust : "Our intention is that a comprehensive range of treatments will be permitted under private medical insurance contracts which attract tax relief."--[ Official Report, 19 July 1989 ; Vol. 157, c. 181. ] The Medical Insurance (Disentitlement to Tax Relief and Approved Benefits) Regulations set out the detail. It is pretty comprehensive. The regulations provide that services must be associated with the treatment or consequent upon it. That is pretty broad. I know that it was the then Financial Secretary's intention to exclude alternative medicines, but I am by no means certain that that is what the regulations do. Will the Minister assure the House that it will not be possible for, say, a wealthy, eccentric pensioner to undergo therapeutic treatment by standing in a bath of water and having small electric shocks passed through it and to claim tax relief at the top rate on the whole bizarre arrangement? Let me put it like this. She could, in any event, claim under the regulations for the private ambulance to take her there and back. The regulations provide for generous tax relief for the use of private ambulances, when the Government are willing to see the industrial dispute in the ambulance service that the rest of us use drag on and on. There can be no morality in that.

On the subject of morality, are not the regulations open to abuse in another way? It would not be the first time that the Conservative party had got itself into trouble with society osteopaths, but in Harold Macmillan's day nobody, so far as I am aware, suggested that the arrangements should qualify for tax relief.

A provision limiting accommodation, as a service, to not more than 14 days is surely easily evaded by regular return trips to hospital. Anyway, who will enforce the provision of accommodation for the patient's family or friends? In fact, there is very little in the regulations that allows for supervision of the arrangement, nor is there much history of the supervision of private medical insurance. The Government, who proclaim themselves to be keen on investor protection, provide no special protection for consumers of private medical insurance. There is no body to adjudicate on disputes. There is just the individual, probably ill, confronted with the might of an insurance company that will not pay up.

These rotten and unenforceable regulations do nothing to improve this already contemptible provision in the taxation system. The proposals are designed to spearhead development of a two-tier Health Service, with top rate tax relief and a queue-jumping inside track for those who can afford it, and an under-resourced and neglected Health Service for the rest of us. Private medical insurance is a risky business. Preconditions are not covered and the


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policy may not cover the specific illness with which the insured ends up. And of course one cannot rely on the tax relief either, because an incoming Labour Government will abolish it in its entirety and put the money safely back into the National Health Service where it belongs.

10.27 pm

The Financial Secretary to the Treasury (Mr. Peter Lilley) : I apologise to the House if my voice is at all slurred. It is not because I have dined well but because I have been to the dentist--an NHS dentist, I hasten to add.

I am grateful for the opportunity the Opposition have given us to debate these instruments, but I am slightly surprised that we are being asked to debate them and that they are being prayed against. After all, the most important of the two statutory instruments is named "Disentitlement to Tax Relief and Approved Benefits". It is a limiting and restrictive measure. It restricts the availability of these reliefs, to which I understand the Opposition object. The rationale was debated and the debate was resoundingly won in the Committee on the Finance Bill and on the Floor of the House last year. As it has been reopened, it is worth recalling why the measure was introduced. The number of people covered by private medicine doubled in the 1980s.

Mr. Frank Dobson (Holborn and St. Pancras) : Not by individual choice.

Mr. Lilley : From a sedentary position, the hon. Member points out that a number of trade union members were collectively covered by private medical insurance and contributed to the 10 per cent. of the population who are so covered. But only 5 per cent. of over-60s continue with private medicine, obviously because on retirement people who have had insurance cover, often provided by their employers, find that the premiums rise as their income falls. The relief is introduced to help people in precisely those circumstances to continue their private medical insurance, if they so wish. The regulations have a second purpose--to relieve pressure on the National Health Service, especially for elective surgery, and thereby enable the NHS to provide a better service for those who choose or cannot afford to do other than remain on the NHS.

It might be possible to mount a critique--for a moment I thought that the hon. Member for Newcastle upon Tyne, East (Mr. Brown), in his lucid and witty speech, was going to follow this line of argument--that the relief will not be sufficiently attractive to encourage many more people into private medical insurance, and therefore will not provide much relief for the National Health Service. But he rapidly abandoned that line of argument and went in the other direction, as did every Opposition Member in Committee on the Finance Act 1989. The hon. Gentleman was worried that the relief would prove too attractive, that it would attract a great deal more private medical insurance among those over 60, and that as a result the relief would cost more than the initial £40 million which we expect in the first year.

The hon. Gentleman asked how the regulations could provide relief. It is fairly obvious that every extra person attracted into private medical insurance provides relief for


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the NHS. It means that potentially fewer patients need treatment on the NHS. So long as the cost of the tax relief on operations carried out privately is less than the cost of providing similar extra operations on the NHS, tax relief must be a more cost- effective way than extra spending. This will be the case so long as the cost of the operation in the private sector is less than two and a half times what it would be in the public sector. Of course, it is four times where basic rate tax relief is concerned, when we are talking about 25 per cent. of the cost of private operations being borne by tax relief as against 100 per cent. if they were carried out in the public sector.

If Opposition Members are seriously suggesting that private medical operations are carried out at such a multiple of the cost of operations in the NHS, they must also be saying that pay beds in the NHS must be enormously profitable, because they can sell at the private medical price operations provided at NHS cost. Therefore, they would be raking in a great profit. It is extremely odd that they sought to close down and eliminate pay beds from the National Health Service, despite the fact that it is generally recognised that pay beds provide a certain profit, but not on anything like the level that would follow from the costs that Opposition Members suppose.

Mr. A. J. Beith (Berwick-upon-Tweed) : Surely the Minister is making the wrong comparison between the cost of the operation in the public sector and the cost of the tax relief on the premiums, including the premiums of those who do not have operations on the National Health Service because they are not ill, and the premiums of those who are not able to to avail themselves of private insurance arrangements because they do not cover the circumstances which arise. He should be comparing the cost of the hospital operation with the cost of the tax relief on the premiums.

Mr. Lilley : That is what I am implicitly doing. The premiums reflect the cost of treatment, which, by and large, the non-profit-making private medical insurance organisations have to pay for. If the hon. Gentleman is suggesting that those organisations are surreptitiously making profits and creaming them off, he ought to report that more publicly. But the whole principle of insurance is that those who do not require treatment --or make losses or suffer damage--are paying for those those who do. Matters are evened out through the cost of the premiums.

The hon. Member for Newcastle upon Tyne, East asked a number of questions about the contents of the regulations. He said that the regulations would allow all sorts of strange treatments--the nature of which caused some amusement--to be available on the NHS. I do not know why anyone should wish to claim that. If he reads the regulations closely--

Mr. Nicholas Brown : The NHS?

Mr. Lilley : I am sorry. I meant available on private and medical insurance and therefore eligible for relief.

If the hon. Gentleman reads the regulations closely, he will find that they restrict relief to those operations and treatments that are more frequently carried out on the National Health Service than in the private sector. That is a simple way of excluding, for example, inessential plastic surgery. Essential plastic surgery operations are carried


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out on the NHS, but not purely cosmetic plastic surgery operations, which would therefore be excluded under the definition.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) : We all know 80-year- olds who want to have their faces lifted.

Mr. Lilley : Exactly.

The hon. Member for Newcastle upon Tyne, East asked me to predict whether any extension of the tax relief was envisaged. I have made it clear that the relief deals with a specific problem--that is to say, people dropping out of medical insurance schemes on retirement. That is its purpose and that, I think, is a justification which separates it from any wider relief.

Mr. Nicholas Brown : We seemed to be so close there. Can the Minister give the clear and specific undertaking that the reliefs will not be extended at all before the next general election?

Mr. Lilley : I thought that I was very clear and specific. The hon. Gentleman also asked me whether regulation 12 would prevent offshore reassurance. The answer to that is that there is no need. The important point is that the insurer must be in the European Community. If it reinsures the risk, that makes no difference to the tax relief due.

Mr. Paul Boateng (Brent, South) : Wrong piece of paper.

Mr. Lilley : I am moving on from the issue that fascinated the hon. Member for Newcastle upon Tyne, East so much.

Although the hon. Gentleman did not emphasise it tonight, he has tried to pretend on previous occasions that the relief that we are offering for medical insurance for the over-60s would merely divert resources away from the NHS and not provide any relief to it. Underlying that is what, by analogy with the famous lump of labour fallacy, one might call the "lump of health care" fallacy. Clearly it is a fallacy to suggest that the supply of health care cannot be expanded to cope with the demand generated by £40 million-worth of tax relief. How else could there be enough extra supply of health care available to meet the £2 billion of extra money which we have pumped into the National Health Service this year--for about the second year running? If we expect that the supply of health care can be increased if extra money is made available on the substantial scale on which the Government have made it available to the Health Service, and that that there will be a response to it, it is reasonable to suppose that on the comparatively small scale that the insurance relief represents resources will also become available in the private sector to meet the extra demand so created.

Mr. Nicholas Brown : How does the Minister account for the 90 per cent. dead-weight cost in the Government's first-year costings for the project? Surely the overwhelming bulk of the relief that they are to give is to people who already have private medical insurance, so it will make no difference at all.

Mr. Lilley : Simply because it is the first year and it will take time for the medical insurance companies to market the relief and to expand it. As has been said from a


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sedentary position, that will lead to a greater relief, but, as I said earlier, it will lead to a greater relief of the burden on the NHS. That is both likely and welcome.

Only those who oppose private medical insurance and treatment per se are against the relief, which is basically the attitude of the Opposition. They resent people making provision for their own health care. We believe that in a free country it is perfectly right for people to have the opportunity to do so and that it is reasonable to provide encouragement for those who are over 60 to continue with their private health care. This modest relief enables them to do so while reducing the pressures on the Health Service. I commend that and the regulations to the House.

10.40 pm

Mr. A. J. Beith (Berwick-upon-Tweed) : It is absolute nonsense for the Minister to claim that it is necessary to be opposed to all private health care and all private health insurance in order to be opposed to the tax relief that the regulations embody. The Minister must be in favour of all sorts of things on which he does not give tax relief. I presume that he is in favour of child care being more widely available, but he is stalwartly opposed to giving any tax reliefs for child care and he advances all sorts of arguments about why it should not be done. I am sure that, among other things, the Minister is in favour of all sorts of environmental measures on which he is currently resisting tax reliefs in discussions with other Ministers.

It is simply nonsense to claim that anything that is good must have a tax relief attached to it. There are people who are in favour of private medical insurance or who certainly think that it is a proper legal and legitimate activity, whether or not they wish to encourage it, who do not feel that this tax relief is necessary. That part of the Minister's argument is therefore plainly absurd.

Equally, there are strong reasons to believe that the signals that are given out by the regulations are extremely damaging to the National Health Service and that they are intended to be so. They give many people the signal that they may not be able to rely on the National Health Service if the Government stay in office for much longer and that they would therefore be well advised to make alternative provision. The Government are saying, "What's more, in order to underline that, we'll offer you a tax relief if you are retired to encourage you to take out that provision." That is a bad and demoralising signal for everybody who works in the National Health Service.

The Minister must have argued on numerous occasions that any tax relief is a subsidy and a deliberate distortion of what would otherwise be a market choice or a market decision. Some tax reliefs are defensible and have a purpose, so presumably this one has a purpose. The purpose is to encourage people to believe that they need private health insurance instead of relying on the National Health Service. Presumably that is the only basis on which the Minister is willing to agree that such a subsidy should be offered--unless, of course, it is simply the consequence of the Prime Minister insisting, as she has done over other things, such as football identity cards, "Never mind the logic, I want it, so the Government are going to have it." Perhaps that is what has turned the Treasury's traditional arguments against tax reliefs on their heads. The regulations provide tax relief in an area and in such a way


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as to lead people to believe that the National Health Service is far from safe in the hands of the present Government.

The Minister advanced the argument that it is a tax relief of limited purpose. It is intended to encourage those people who have had occupational schemes of private health insurance, partly provided by their employers, to continue those schemes at the point where they become most vulnerable, when they retire. If that was so, the tax relief would be confined to people who were already members of such schemes, and it is not so confined. The Minister made it clear that it will be open to people--indeed, they will be encouraged--to take out such schemes anew, even if they have had no part in any previous employers' scheme. That limited purpose cannot, therefore, be the regulations' purpose.

If the Minister has any hopes of reducing the massive dead-weight costs of the scheme, he must be hoping that it will attract a great deal of new business, some of which will not come from people who are simply continuing with their existing health insurance that might otherwise become too expensive for them when the retire.

I said that all tax relief is a subsidy. Equally, all tax relief is a diversion of funds. There may be a justification for choosing to divert money from some other purpose to relieve the premium costs of people who pay for particular insurance policies. However, no justification has been advanced for this measure which is not intrinsically harmful to the whole concept of the National Health Service.

Many people need no encouragement from tax relief to sustain the private health insurance industry. The diversion of funds seems even more pointless when all that it does is to put money into the pockets of people who already, without tax relief, have decided that they wish freely to spend their money on private health insurance. They are fully entitled to do so, but they needed no tax relief to make them do so and they do not need it to enable them to continue to do so.

I am strongly opposed to the regulations. If I had not known the Government better, I might have imagined that the phrase "disentitlement to tax relief" meant that the Government had seen the error of their ways. We know that they have not and that they are still deeply committed to the scheme.

I find myself in agreement with almost everything that the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said in his opening remarks. However, although I was amused by him, I began to part company with him when he spoke about alternative medicine. There is no logic in discriminating heavily against alternative medicine in operating the scheme.

Some of the people who are most keen--keen is the wrong word ; perhaps I should say compelled--to make use of health provision outside the National Health Service are those who want to use forms of alternative medicine that are not readily available within the Health Service. Once the door is opened to tax relief for insurance schemes, it would not be right to have some general presumption against legitimate and well-established aspects of alternative medicine in the scheme. I hope that the Minister will not take the satire of the hon. Member for


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Newcastle upon Tyne, East as a signal that there is general approval for the idea that alternative medicine should be pushed out.

I suppose that it is in the nature of things that alternative medicine has an uncomfortable relationship with the National Health Service. Some operates within it and some operates without it. The pattern is not even across the country. The relationship of alternative medicine with the private sector is such that I hope that the Minister will not discriminate against alternative medicine in the operation of the scheme.

We cannot be much impressed by the mess that the statutory instrument is in. I know that the hon. Member for Bradford, South (Mr. Cryer), the Chairman of the Select Committee on Statutory Instruments, seeks to catch your eye, Mr. Deputy Speaker, and will say more about it in detail. I shall confine myself to the passage in the memorandum supplied to the Committee by the Inland Revenue. Referring to one of the oversights, it says :

"Whilst this oversight is most regrettable, it does not affect the meaning of the regulations. The references to the repealed provisions are simply ineffective and have to be construed as if they were not there."

Why on earth do the Government bring before the House regulations which are the law which have to be construed as if they were not there? What are we coming to? Only last week the House was presented with a statutory instrument on which it had to vote without knowing the outcome of the considerations of the Select Committee on Statutory Instruments or the Committee which considered the merits of the instrument. Week after week, we see delegated legislation pour through the House in more and more of a mess. The Government should be thoroughly ashamed of bringing before the House statutory instruments which are not fit to be on the statute book.

10.48 pm

Mr. Tim Smith (Beaconsfield) : My hon. Friend the Minister probably knows that I am less than enthusiastic about this new tax relief, as I explained when we debated the matter in the Committee which considered the Finance Bill last summer. Having listened carefully to his arguments this evening, I am no more persuaded now than I was then.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) asked about the possibility of the relief being extended so that everyone could obtain tax relief. That would not be an expensive exercise. Millions of people already have such relief. It is provided by their employer and is tax-deductible for the purposes of corporation tax. They have to pay tax on it as a benefit in kind. The taxability of the benefit would have to be withdrawn. I should be completely opposed to that.

Treasury Ministers have never seemed to me enthusiastic about the new relief, so I am sure that they do not want to extend it any further than necessary. I hope that they have got Inland Revenue officials to crawl over the regulations, even if they are defective, to ensure that the relief is restricted as far as possible. For that reason, I do not agree with the hon. Member for Berwick-upon-Tweed (Mr. Beith) who said that it should be extended to alternative medicine. Since I was against the relief in the first place, I should like to see it restricted as far as possible and the cost to other taxpayers kept to the minimum.

My hon. Friend the Minister said that the first object of the exercise was to help people on retirement who went


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from a situation where their employers paid for such private health care to paying for it themselves. There are many other things provided for by employers for which people must pay on retirement--for example, a company motor car or other benefits in kind. I do not think that anyone would suggest that there should be tax relief on such items. On retirement, people simply have to cope on a lower income with some costs that were previously met on their behalf by their employer. I understand the argument, but I do not think that it is a powerful one.

My hon. Friend also said that the tax relief would help the National Health Service, as it would encourage people to make private health care provision and to have certain operations carried out at private hospitals. However, one of the greatest burdens on the NHS is our old people. That is no criticism of them : it is a fact of life that, as one gets older, one is more prone to illness. The growing geriatric population is a great burden on the NHS, and many of the ailments and illnesses from which the old suffer are uninsurable. In the long run, the NHS always picks up the tab. I do not believe that the relief will provide the help to the NHS for which a case has been made. I agree with other hon. Members that there will be a substantial dead-weight cost--the Treasury also accepts that. On any objective cost-benefit analysis, the relief is not worth pursuing. I am against eroding the tax base, and I look extremely critically at all proposed new tax reliefs. Soon after the relief was announced--in February, I believe--it did not come as a surprise to me that people wrote to me to ask whether we could have tax relief on private school fees. Others might argue that tax relief should be given to commuters to meet their fares. Except in exceptional and well-justified circumstances, I do not see why one group of taxpayers should be required to subsidise other taxpayers. I should like to see as broad a tax base as possible and tax rates as low as possible. I hope that the Inland Revenue has looked closely at the regulations. I am certain that it has as it will want to restrict the relief as much as possible. A better way in which to spend the £40 million would have been to give some relief to all tax-paying pensioners by increasing the age allowance. Those tax-paying pensioners who do not take advantage of the relief available as a result of the regulations will be subsidising those who do. No case has been made in favour of that.

10.52 pm

Mr. Bob Cryer (Bradford, South) : I want to deal with the position of the Select Committee on Statutory Instruments, which does not concern itself with the merits of instruments. I shall conclude by expressing my views about the merits of the instrument. The Committee, however, would not want to impose an attitude about the merits of the instrument, as the function of our Committee is to deal purely with its technicalities.

As I mentioned on a point of order, we reported the instrument, as the Committee thinks that it needs elucidation. The Committee can report an instrument to the House if it believes that the drafting is unclear. The Committee asked for a memorandum from the Inland Revenue on why regulation 6(1) of the Private Medical Insurance (Disentitlement to Tax Relief and Approved Benefits) Regulations 1989 specified that drugs used in the


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course of surgical procedures were covered, but did not similarly refer to drugs used in the course of medical procedures.

We felt that by specifying "drugs and dressings" in regulation 6(1)(c) in an attempt to clarify the position, the Department had created yet more confusion. We suggested that the confusion was made worse by the reference to drugs and dressings, which suggests that things used in providing care after an operation--for example, changing bandages--are excluded from cover. It also leaves in doubt the question whether drugs and dressings used in the provision of relevant services, such as the fitting of prosthetics, are also covered.

The Committee takes the view that legislation which goes from this place should be as clear as we can possibly make it. If this case is argued, it will be argued in the courts--an expensive and lengthy procedure which, in the Committee's and certainly my view, should be unnecessary.

It is worth considering why the Select Committee on Statutory Instruments is having to report so many of the instruments to the House. The Government determine the House of Commons' timetable. They were determined to put down the prayer--albeit tabled by the Opposition--for debate today. The Select Committee did not have adequate time to carry out its function.

Its proper function should have enabled the report to be in the Vote Office in advance of this debate so that all hon. Members could see from the Order Paper that the statutory instrument had been reported to the House. The Committee is obliged to do that under the Standing Order by which it was established so that Members can get hold of reports and see for themselves whether they want to take part in the debate. They can then make a judgment about the information. That is our function.

However, the Government are rushing through too many pieces of subordinated legislation, too many statutory instruments, for the procedure to be properly followed. The Select Committee on Statutory Instruments takes a fortnight to carry out its business. We meet every Tuesday at 4.15 pm. We consider an instrument on the first Tuesday and, if we find a flaw--an abuse of power, unusual use of powers or, as in this case, lack of elucidation in the drafting, making it ambiguous--we are obliged to ask the Department for a memorandum.

We generally consider the memorandum the following Tuesday--one week later. Today, we considered the instrument, produced the report and put it in the Vote Office. However, we simply could not do that if there were half a dozen instruments which needed reporting on the same day. Normally, we would have reported this instrument for next Tuesday, in plenty of time to get it in the Vote Office and for Members to consider it.

One difficulty is that the rubric on the Order Paper says that we have not completed our consideration. Some hon. Members may have seen that during the day, when it was perfectly true, who are not here now because they are waiting until next week when they think that the Committee's report will be completed.

The Government, far from making good their claim in 1979 that they would take government off the backs of the people, are in reality imposing more and more legislative burdens every week. If we take as a standard the number of statutory instruments which were produced by the last Labour Government--a basis of comparison that the Government are fond of making-- we find that the


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