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Kali Mountford: I am interested in that contribution, but the hon. Member for Guildford clearly had some measures in mind. Since our measures were well heralded long before the election--far earlier this year--they are no surprise to anyone. I should have expected the Opposition to be prepared if they felt the matter was so important.
Mr. Boswell: Were the measures in the hon. Lady's election manifesto?
Kali Mountford: Yes, they were. I will indulge the hon. Gentleman. I spoke in person to more than 1,000 people in my constituency on that very matter and, in particular, on VAT on fuel. I do not think that any of my constituents will have found the measure a surprise. Indeed, it is typical of this Government and my party to consult widely when any measure is introduced, so I do not need to go further on that point.
Mr. Peter Brooke (Cities of London and Westminster): Will the hon. Lady give way?
Kali Mountford: I will be indulgent.
Mr. Brooke: I am grateful to the hon. Lady for her indulgence. How much consultation has taken place on advance corporation tax?
Kali Mountford: I am interested that you want to broaden the debate.
The First Deputy Chairman: Order. The right hon. Member for Cities of London and Westminster (Mr. Brooke) may want to broaden the debate, but I do not.
Kali Mountford: I concur completely with your wisdom, Mr. Martin.
Some while ago, I remembered a Conservative Member who used to represent Derbyshire, South advising people such as the two constituents to whom I have referred that they would do well to wear hats and silk underwear to keep warm. That was said at about the time when value added tax on fuel was introduced. That piece of advice has not benefited my constituents, but they will benefit from the ability to pay the fuel bills that are now causing them so many problems.
Conservative Members ask why a review has not taken place. At the same time, they do not support the reviews that we are conducting. Conservative Governments did not conduct a review and we have decided to repeal tax relief for medical insurance. We are following the trend set by the previous Government in relinquishing the higher tax benefit, so there is nothing new in our approach.
We are a Government who follow common sense. Surely it is common sense to say that we shall do what we promised before the general election, at the same time taking into account factors that the Conservative Government seem not to have considered. The cold temperatures in which my constituents live contribute to their illhealth, and that illhealth is a cost to the nation through the national health service. Many medical reports set out the consequences of cold weather, leading to the illhealth of the elderly and the very young, whom I care about deeply.
As I said, I have received one letter in support of retaining private medical insurance tax relief. That constituent did not state that he would be part of a great haemorrhage from private medical insurance schemes--indeed, quite the opposite.
We are saying that we shall fulfil our election promises in a thoughtful way. We shall give people time to take proper decisions for themselves. They will be able to make choices for themselves. The greatest benefit will go to those people who do not have a choice, such as the two constituents to whom I have referred.
The Government are saying, as I have always said, that there must be fairness in taxation. We must have an equitable taxation system and an egalitarian society that ensures that those in most need will receive benefit. Those who have the least needs should not receive benefits that they do not require.
Mr. Loughton:
I cannot be alone in feeling that, whenever a Labour Member contributes to the debate, he or she succeeds only in tying the Government up in a knot. Earlier, the Financial Secretary accused me of some inconsistency. Perhaps she will consider the inconsistency that she introduced by claiming that there has not been a net increase in the numbers of pensioners taking advantage of tax relief on medical policies. If there has not been a large increase in those numbers over the past seven years, that suggests to me some contentment with the way in which the national health service has been run for most of the 18 years under a Conservative Administration.
Another inconsistency comes from those who suggest that the tax relief that the Government are seeking to claw back is worth more than the underlying treatment in the NHS for which patients will have to qualify. There is a
further absurd inconsistency when it is suggested that there is no price elasticity. When it comes to mortgage interest relief at source, however, there is elasticity, because the Government have been using it as a way of cooling down the property market. These arguments do not add up.
I should disclose an interest as someone who has enjoyed a corporate BUPA subscription for some years, although I have never taken advantage of it. For many years, however, I have had to pay tax on it as a benefit in kind, and have been happy to do so. That has provided additional funds that can be used for patients using the NHS, as my family and I have done frequently.
It has become a cri de coeur or soundbite of the Government that they are a Government of the many, not of the few. It is a cliche that we hear time and time again. But this mean-minded measure is entirely consistent with the abolition of the assisted places scheme. There is no firm evidence that it will produce financial savings. No consideration was given to the future education of those children who are now enjoying assisted places. The Government will proceed, however, because it is politically correct so to do.
We shall have the same ordeal with country sports, but in the meantime the Government have decided to attack those pensioners who chose to spend their money as they thought fit on taking out their own private medical insurance, and in doing so took some pressure off the NHS, which we are constantly reminded is under pressure. That pressure is not denied, and in my constituency it is a key issue.
Let us remember that between 40 and 50 per cent. of expenditure in the NHS is directed to pensioners, who constitute just 16 per cent. of the population. That is happening because pensioners are a claims-intensive part of the community when it comes to spending in the NHS. They require longer stays in hospital, understandably. With further medical advances being made all the time, the situation will be compounded.
Many figures have been cited in the debate, and I shall add to them by saying that more than 400,000 private medical insurance contracts for pensioners have been taken out, involving more than 600,000 individuals. Many of the contracts are taken out for families.
Dawn Primarolo:
Does the hon. Gentleman accept that the Inland Revenue's figures show that there were 375,000 such contracts in 1996-97, 25,000 more than in 1990, covering a maximum of another 50,000 people?
Mr. Loughton:
I shall not argue the toss between 375,000 and 400,000. I think that my point was well made. Different figures have been presented by different Labour Members. I shall use figures that come from BUPA, which is the largest provider of private medical health care insurance cover for pensioners. It takes account of about 48 per cent. of the market. BUPA estimates that the average cost to pensioners is just under £1,200 a year, which amounts to just under £300 a year in terms of tax relief. The figures are almost double for married couples.
These are not small sums. They apply to people who have saved for many years. We are talking of those--certainly this applies in my constituency--who have
cheaper premiums as elderly people because they were members of medical insurance schemes before they were pensioners, and have remained so all the way through. Now, all of a sudden, without so much as a by your leave, it is all to go. They will be faced with deciding--it will be a hard decision--whether they will be able to afford to keep their insurance. That is what we are talking about.
Kali Mountford:
When some of my constituents suffer the degenerative illnesses to which we referred earlier and require a long stay in hospital, they often find that they are not covered by their private medical insurance. Have the hon. Gentleman's constituents had similar problems?
Mr. Loughton:
Indeed, the hon. Lady makes a fair point. That is why in some insurance policies there is great leeway in the cover that one can purchase. That will not go away, regardless of how we pay for it. Those patients will have to be looked after at some stage, be it through private medical insurance and private health care or through the NHS. It makes no difference. If the hon. Lady is saying that there should be better regulation of the services provided under medical insurance cover, that is an entirely different point, and it is not proposed in the Budget. I shall return to my point and then deal with my constituency in particular.
BUPA has suggested a likely lapse rate of about 30 per cent., which would mean that 180,000 people would become reliant on the NHS. That probably translates to between 40,000 and 50,000 hospital episodes--when people have to go to hospital for treatment that they would previously have had under private medical insurance cover.
What will the impact be in my constituency? I said at the beginning that I should declare an interest. I should declare a further interest in that Worthing has the largest pensioner population in the country, and West Sussex has the highest density of pensioners with private medical insurance cover. The hon. Member for Colne Valley (Kali Mountford) may be interested to know that this measure impacts on my constituency one heck of a lot.
I do not want to trade numbers over mailbags, but this is a significant issue and it has come before me time and again, both before and after the election. I do not say that it has suddenly come out, but a very real fear has been put around. Perhaps that is why there was such a reduced swing against the Conservatives in my constituency--but I shall not press that point.
The people who have private medical insurance, particularly those in Worthing, are not rich. They are people who were previously on average earnings and are of average means. They live in modest bungalows, particularly those in parts of Worthing. In Worthing, more than 1,000 pensioners have private medical cover with BUPA. That is a lot of people, just in the borough of Worthing.
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