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Mr. Boswell: On a point of order, Mr. Lord. Last night, I heard some remarks by the Financial Secretary that were in that vein and I have today again heard it asserted that Opposition Members are in some sense not treating these matters with the seriousness that they deserve and that their inability to do so is related to the consumption of alcohol. The matter has been drawn to the attention of the Chair on past occasions. I do not have a copy of "Erskine May" in front of me, but in the absence of any definite information should not the Financial Secretary be invited not to proceed further with her line of argument and, indeed, to withdraw the remarks that she has just made?
The Second Deputy Chairman: The obvious answer is for everyone in the Chamber to concentrate on the matters in hand.
4.45 pm
Dawn Primarolo: When private medical insurance relief for the over-60s was introduced by the Conservative Government in 1990, they claimed that it would encourage the growth of insurance cover for that group in society. They did not undertake any research to find out whether it would work, and it did not. The subsidy did not secure a significant growth in provision.
When the relief was introduced, some 350,000 contracts existed, covering 500,000 individuals. Those people had already purchased medical insurance, so the tax relief was a subsidy to them. No doubt they were very grateful to receive it, but it played no part in their decision to take out insurance. The question that the hon. Member for Daventry (Mr. Boswell) must answer is, should people be subsidised for action that they would have taken anyway?
Mr. Tim Loughton (East Worthing and Shoreham)
rose--
{**/sp
I want to pick up the hon. Lady on her remarks and, with reference to the major health care providers, ask on what evidence she is basing her claim that people who took out health care insurance before 1990 have not changed during the years to 1997. What about those who have died? What about those who have been priced out of the market because the average price of pensioner health care insurance has gone up by at least 11 per cent. a year? Is the hon. Lady really saying that there has been no change in policyholders over those years?
Dawn Primarolo:
Conservative Members need to make up their minds on their line of argument against the Government. The hon. Member for Daventry said that people were long-standing contributors to the schemes and that they should not be deprived of them. Now, the hon. Member for East Worthing and Shoreham is taking a different line, saying that that is not the case.
Mr. Boswell:
The substance of my argument was that some members were long-standing contributors, and that they had some wish, in equity, to get some benefit from their long-standing withdrawal from imposing, at least partially, any cost on the NHS. Equally, some were marginal cases and might otherwise have stayed with the NHS rather than subscribe to private medical insurance.
The matter is not entirely clear, but it could be clarified by the sort of report for which we have asked. If the hon. Lady does not wish to produce one, I suggest that she speaks to those who produced the EAG report, and explains what is wrong with the calculations in it.
Dawn Primarolo:
I shall demonstrate that insurance companies--by using information that they themselves have provided; and they provide the insurance cover--expect that there will be almost no impact on the number of people who have insurance policies. Already those companies are offering solutions.
Provision of the subsidy is truly a measure that benefits only the few--5 per cent. at most--at the expense of the majority. Why should taxpayers pay for relief that offers no clear benefits? The Government have therefore decided to use the money saved from abolition of the relief to help pay to cut VAT on fuel to 5 per cent., thereby particularly benefiting low-income households and pensioners.
It is truly breathtaking for the Conservative party, after 18 years of undermining the national health service, to try to portray itself as the pensioner's friend, worrying about the NHS while painting a bleak picture of it.
Mr. Desmond Swayne (New Forest, West):
The parliamentary newsletter of the Association of British Insurers states:
Dawn Primarolo:
I am so glad that the hon. Gentleman has managed to have an original thought, although it has been supplied by someone outside the Chamber. I will, however, deal with precisely that point.
There is no indication that those who have private medical insurance and receive relief will change their minds because of our decision. In the name of fairness, however, the Government have made specific provisions in the clause to ensure that relief is not ended immediately, but honoured to the end of the annual contract. Such provision will give individuals who are concerned about their private medical insurance time to seek advice from their insurers and examine the options available.
I will deal with the options that insurance providers say are available after I allow the hon. Member for Grantham and Stamford (Mr. Davies) to intervene. Perhaps he can tell us whether it is right that people should be subsidised to do something that they would have done anyway.
Mr. Quentin Davies (Grantham and Stamford):
The Minister just said that there is no indication that relief withdrawal will reduce the number of people who qualify on age grounds taking out private health insurance. That proposition is extraordinary, and essentially amounts to saying that one can increase the price of something--the net price to individuals taking such insurance cover will increase substantially after abolition of tax relief--without reducing demand for it. Surely that proposition is fundamentally implausible, and cannot possibly be true in the health care or any other sector.
Dawn Primarolo:
What do the insurance companies say about the point raised by the hon. Gentleman? In The Times of 3 July 1997, in an advertisement headed "If you think private healthcare will be too expensive without tax relief, consult a specialist", Norwich Union--one of the largest providers of such insurance packages--stated:
Mr. Nick St. Aubyn (Guildford)
rose--
Dawn Primarolo:
I am sure that the hon. Gentlemen, to whom I am not giving way, will be able to catch your eye, Mr. Lord, and make their own contributions.
These are the facts. The Government have outlined their case for abolition on the basis that the relief is not justified. It has not worked. There has been no substantial increase in the number of people with private medical insurance. The amendment is defective. There is no reason why the many taxpayers should continue to provide this massive subsidy for the few. I hope that the Committee will reject the amendment, and support the Government.
Dr. Vincent Cable (Twickenham):
I support amendment No. 13. It echoes amendment No. 14, tabled
It was clear from our interventions on Second Reading that we share the Government's philosophy in many respects. We believe that it is inequitable that a relatively well-off section of the community should be subsidised through tax relief. This tax relief was originally introduced by the previous Government for the wrong motive--to weaken the NHS. We therefore support the Government's broad policy position, which is why we supported the Government on Second Reading.
However, this is the Committee stage. It is an opportunity to review the proposals in more detail, and, echoing some of the points that have already been made, we seek a much more thorough analysis of the financial implications. There are people employed in the Treasury--econometricians labouring in the bowels of the Ministry--who could be asked to produce some useful figures with which we can work.
"Although presented as helping to pay for the cost of reducing VAT on heating, the Association's submission to the Chancellor indicated that it will cost the Government more in terms of extra NHS costs and loss of insurance premium tax than it will save on the relief itself."
Will the Minister comment on that?
"If you're over 60, you've probably benefited from tax relief on your healthcare premiums. That changed after yesterday's Budget and you'll soon start paying up to 30 per cent. more. But to find out how you won't have to, no matter who your policy's with, call the Norwich Union Healthcare Tax Relief Helpline now."
Norwich Union will ensure that people can continue their policies without extra cost. A report in The Independent states that Norwich Union, one of the largest providers of this type of insurance, is confident that 98 per cent. of customers need not pay any more and could keep their private medical insurance. Those are the facts.
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