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Animal Health (Amendment)
Mr. Paul Flynn accordingly presented a Bill to improve the welfare of animals in quarantine; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 28 November, and to be printed [Bill 51].
Orders of the Day
Finance Bill
(Clauses 1, 15, 17 and 19)
Mr. Tim Boswell (Daventry): I beg to move amendment No. 13, in page 11, line 15, leave out from 'section' to end of line 16 and insert
'shall not take effect until Her Majesty's Government has published a study of the additional National Health Service spending required to accommodate the extra patients resulting from the consequential cancellation of medical insurance contracts'.
The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): With this, it will be convenient to discuss amendment No. 14, in page 11, line 15, leave out from 'section' to end of line 16 and insert
'shall not take effect until Her Majesty's Government has published an assessment of the effects of the withdrawal of this tax relief on National Health Service spending in 1997-98, 1998-99 and 1999-2000.'.
Mr. Boswell: The amendment would defer the implementation of any Budget changes to health insurance until a full appraisal of their impact on the national health service and its waiting lists had taken place and been published by the Government. I am bound to say that such an appraisal is sorely needed. I will deal in due course with some of the evidence that I have on the matter, but we need an authoritative Government statement, in particular, as my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), who is on the Front Bench beside me, has been labouring hard to ascertain some of that material from the Treasury by way of written questions. He has received a number of holding answers on relevant matters, but he has not received the substantive answers. It is regrettable that we did not have the information before this afternoon's debate.
I should at the outset declare an interest in that I have been a member of BUPA for a large number of years. Despite any appearance to the contrary, I do not yet qualify by virtue of age for any tax relief. My mother, on the other hand, is also a member of BUPA, and she does.
In certain respects, this debate mirrors yesterday's debate on mortgage interest tax relief, yet there is a subtle difference in the Government's approach to the two. It is a difference in the scale of the potential revenue. The mortgage interest revenue being discussed yesterday was about £950 million in a full year. By 2000, the revenue gain from the withdrawal of this relief will be £140 million. There is, however, a considerable and significant difference in impact.
Yesterday, we sought to advance the argument that the Government's proposals on mortgage interest would have a widespread effect. After all, there are more than 10 million mortgagors. In contrast to that approach,
which I have occasionally described as saturation bombing, today involves precision bombing on a much smaller number of potentially affected persons, including those who are often least well equipped to fight back in the argument. I shall return to numbers and the impact of the proposed changes later.
If my tone is a little quieter than it was last night, it is because we would all do well to reflect that those who are likely to be affected by the proposed change have generally made a great part of their lifetime's contribution to society through their work, through voluntary work, through raising their families and through many other endeavours. When they write, they often state that they had front-line experience of the second world war and experienced times of real difficulty. They grew up through that.
In many cases, including that of my mother, we are talking of people who have relieved the national health service of costs over many years through their membership of private medical insurance schemes. It is worth saying also that they are not generally candidates for some fairly familiar procedures for younger people. For example, they are not candidates for cosmetic surgery on the NHS, nor are they candidates for orthodontia or the repair of sports injuries. Their cases typically--I use my words delicately and I hope that they will not be misinterpreted--involve the more degenerative conditions such as cataracts and the need for hip joint replacements.
Both in the NHS and the private sector of health care, the expectations of society have changed massively over the past generation. People expect to have cataracts and problems with hip joints rectified. They expect the machinery to be in place to enable them to have operations so that they might maintain or enhance their quality of life.
It is a striking fact that almost half of all health expenditure in the United Kingdom is on persons over the age of 65. In 1966, 16 per cent. of our citizens came within that sector of the population, but we look forward to the greying of the baby boom generation and, over the next 25 years, the proportion will increase to 18 per cent. The impact on the target group and, I concede, on potential savings, will increase commensurately.
It will be clear to all of us who were in the Chamber to hear the exchanges following the private notice question that the health service is under severe funding pressure. The Government, as the Secretary of State for Health admitted, are struggling to contain waiting lists. Perhaps it is not for the Committee to debate why that should be and who gave the impression that they had a magic answer during the general election campaign, but the Government promised to reduce waiting lists, and they, have offered no extra current spending to meet the problems of the health service.
In the context of an aging population and the demand for better health services and rectification of diseases linked to aging and degeneration, the Government's proposals, as set out in clause 17, are characteristic of their general approach to the Budget. They reveal some of the besetting sins that we discussed last night in respect of mortgage interest relief. First, there is haste. Haste has curtailed the reasonable representations--indeed, the time for hon. Members to consider those representations--of
responsible outside bodies on the matter and, perhaps more regrettably from the Government's point of view, led them into error. It has not been in their own interest to rush this measure. Indeed, the Association of British Insurers made the point that it would be prepared to consider phasing out the relief, but it does not want rushed changes implemented in a Budget with immediate effect from 2 July. I shall come to the specific points about that in a moment.
Haste is the first problem. The second problem, which goes through much of what the Government announced in their Budget, is an emphasis on dressing up measures of class spite as though they provide a springboard for surmounting real-world and acknowledged problems in financing public services. Even if we believe the Government's figures for savings as set out in the Red Book--a figure rising to £140 million a year from the current estimate and £120 million in the first full year--the Committee would do well to remember that that would finance the operation of the national health service for precisely 24 hours. Even if they got the lot back, the Government are not buying themselves very much time.
The third characteristic of the Government's approach to the Budget is, of course, the iron law, as we must now call it, of the Financial Secretary--in effect, "If you damage someone, you are acting with their best interests at heart." I invite the Financial Secretary--just as she argued on pensions, and just as one of my hon. Friends did on mortgage interest relief--to talk to my mother, or any other policyholder with medical insurance policies, and explain how this measure will help them.
My fourth and final point about the Government's general approach is that the present Prime Minister and Ministers on the Treasury Bench gave solemn assurances during the election campaign about their wish not to increase taxation. This measure is clearly a withdrawal of a tax expenditure, or, to put it in English, an increase in taxation. That is not good enough.
On openness and transparency, a matter that we discussed last night, I heard a suggestion from the hon. Member for Dudley, North (Mr. Cranston), who is present. Perhaps I did not do him justice in the short time allowed for the winding-up speeches. Perhaps he would have liked to say something, if only space had permitted, in his election address.
I have in my constituency a company called Freight Media, in which I have no interest but which I respect. It operates for all political parties and puts out the wagons with sandwich boards on the side that tell people who they should vote for. Indeed, the company was also in evidence at the grand prix at Silverstone this week.
I wonder whether the Government were really prepared to level with their electors and supporters, given that they are proud of the way in which they have secured, for the first time, representation on the south coast. Would it not have been more appropriate for the Labour party to tour the south coast during the election campaign, when people could still have changed their minds, with large boards affixed to the sides of lorries saying, "We do not propose to increase taxes but"--for reasons that may or may not be explained this afternoon--"we think it right that you, the elderly, should have your health insurance tax relief removed."
By way of context, it is important to flag up that the relief, which was introduced in 1990, was reduced to the basic rate by the Chancellor in 1994. Because it is credited at source, lower rate taxpayers and people who pay no tax can also join in and get the full benefit of it.
There is little evidence that the relief goes largely to the affluent. What is quite clear is that the elderly--those who have retired--are not by any means the richest, let alone the most directly influential, section of society, although some are relatively well off. The Government's proposal targets the weak in a way that I, as a Conservative, find unacceptable.
I want to analyse the Government's proposals, and I shall begin by inviting them to consider one or two points. I should make it clear to the Financial Secretary that they are not in any sense political points; they are Committee points. I hope that the Financial Secretary will do me the courtesy of listening. Although I sometimes challenge her to give an immediate response, and although I would prefer her to try to reply to my points today because of the uncertainties that may well affect some of those involved--including the providers of health insurance--I ask her to reflect on what I shall say about the detailed operation of clause 17, and perhaps introduce further measures on Report.
I concede that the Government have, to an extent, recognised that, even when a Chancellor of the Exchequer gets up to make an announcement, both providers and policyholders are caught when the music stops and there may be inequities if some smoothing relief is not given. As the notes on clauses helpfully explain, an attempt has been made to provide for the renewal of existing contracts--subject to some safeguards--as well as for new contracts that were in the pipeline.
According to my analysis, there are three outstanding points. Some of my hon. Friends who raised those points with me may well want to return to them in more detail. I am not sure whether the first is dealt with in the Bill as currently drafted, but I regard it as important. I refer to cases in which the insurance provider has passed the contract offer for the year just ahead of 2 July, which is the operative cut-off date, to ensure that contracts that are ready to go out are available for the whole year. I am told by some of the providers that there has been no phoney business and no bunching up of contracts. I feel that, when people have made normal commercial arrangements not designed to frustrate anticipated legislation, those arrangements should stand.
My second point relates to oral contracts. Both a provider and the Association of British Insurers have told me that many contracts are now arranged through telephone sales. People give credit card numbers over the telephone, and nothing is written down initially. As I read the Bill, it is pretty clear that the contract exceptions are confined to contracts in writing.
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