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Mr. Jim Murphy: Will the hon. Gentleman give way?
Mr. Loughton: I should like to continue my point. I have given way several times.
I should also mention that elderly people have the least time available to wait, yet they are denied the opportunity to speed up their treatment by using money from their own savings, and must queue up with everybody else for the national health service. That will not improve. We know the demography of the population. We know that it is an aging population. At the moment, there are about 3.2 working people for every pensioner. In 30 years' time, there will be about 2.5 working people for every pensioner. The problem is getting worse.
The irony is, as my hon. Friend the Member for Bognor Regis and Littlehampton said earlier, that there is no material gain to the Government or the Exchequer in this measure. The cost of the tax relief has been estimated in the Red Book at about £115 million, or £120 million, as my hon. Friend said.
Mr. Murphy:
Will the hon. Gentleman give way?
Mr. Murphy:
I understand that the hon. Gentleman has already declared a corporate interest in receiving the gift from BUPA for private medical insurance. Does he believe that it is correct, just and in the interests of the health service that the majority of pensioners in his constituency subsidise a very small minority who benefit from this relief? Indeed, does that not show that the Government are entirely right to remove it?
Mr. Loughton:
The fact that the hon. Gentleman referred to corporate private health care as a gift underlines that he has got this thing entirely the wrong way up. It is not a gift; it is a condition of employment on which many people pay tax at the marginal rate, as it is a benefit in kind, and contribute a great deal to the Exchequer. The hon. Gentleman is not taking account of the fact that people who enjoy private health care as a result of putting their own money into it are saving the national health service funds that it would have to devote to them were they solely dependent on the NHS.
That brings me back to the point I made right at the beginning--obviously the hon. Member for Eastwood (Mr. Murphy) was not listening. The tax relief does not outweigh the cost of the NHS treatment that it is there to cover. The sums do not add up.
Mr. Murphy:
Will the hon. Gentleman give way?
Mr. Loughton:
I have already given way. I am repeating the point that I made earlier.
Mr. Loughton:
I shall continue. No doubt the hon. Gentleman will want to come back for another stab at this later.
Not only is the cost to the NHS of extra patients likely to be in excess of £100 million, but those patients will add to the waiting list, so waiting times will be pushed up. There will be a further cost in the insurance premium tax, which is likely to lose just over £8 million to the Exchequer, and a further cost in the revenue through NHS pay beds, which will not now feed through from pensioners who use private health care insurance for their treatment--an estimated cost of up to another £20 million.
If all those figures are taken into account, certain people make a very credible case for how much the measure will cost the Exchequer, not only financially but in terms of the great misery that it will cause people who have saved hard and used their moneys as they saw fit: that rug has now been neatly pulled from beneath them. Yet Labour Members accuse Opposition Members of not making firm proposals. We have made some firm proposals, but Labour Members have ridden roughshod over suggestions to adapt the scheme. They have made no attempt to suggest how we might broaden the age band, if the Government are really determined to change the current tax relief. There has been no attempt to suggest that the tax relief rates should be reduced.
Mr. Murphy:
Will the hon. Gentleman give way?
Mr. Loughton:
I shall give the hon. Gentleman a chance.
Mr. Murphy:
I thank the hon. Gentleman. I wish to raise a different point, as he has moved on. I understand that, in 1994, the previous Government brought about changes. Did the previous Government have consultations such as those identified in the amendments this evening, or did they simply ride roughshod over the opinion of the constituents whom the hon. Gentleman now represents? I would appreciate an answer.
Mr. Loughton:
There is a considerable difference between adapting the rates of tax relief that are available--that has happened in many other contexts; we were talking about MIRAS yesterday--and, in one fell swoop, abandoning it altogether, with no prospect of its return under the present Government and no possibility of pensioners' being able to make up the amount from other sources. There is a heck of a lot of difference between a marginal change and abandoning tax relief altogether. I think that the hon. Gentleman knows that full well.
Mr. Murphy:
Will the hon. Gentleman give way?
The First Deputy Chairman:
Order. The hon. Member for East Worthing and Shoreham (Mr. Loughton) is not going to give way.
Mr. Loughton:
I detect in the hon. Member for Eastwood the qualities of a pretender to the throne of the architect of the endogenous growth theory, one Ed Balls. It seems that a missive has gone out from Mandelson
Mr. Murphy:
Will the hon. Gentleman give way?
Mr. Loughton:
I shall be delighted to give way to the hon. Gentleman if we are to hear yet another version of what I have just alluded to.
Mr. Murphy:
I only rise to speak when the hon. Gentleman's comments bear some comparison with the name of the colleague of mine whom he mentioned earlier--Mr. Balls.
Mr. Loughton:
I am afraid that I am entirely lost. I shall continue with my speech before the entire Committee goes to sleep.
The Government have made no attempt to broaden the age bands. They have made no attempt to come up with a compromise in the form of a reduction in tax relief rates; we did that. They have made no attempt to phase out the current arrangements gradually. People are being left in the lurch as the Government introduce this measure by means of one of their familiar guillotines.
There have been further inconsistencies. The Government are prepared to subsidise false jobs--jobs that will no doubt turn out to be short term and ineffective--through the windfall tax, but they are not prepared to give a tax subsidy to those who are happy to put up the money themselves and, indeed, do the NHS a service by making their own arrangements. The measure will only exacerbate the problems of the NHS, while depriving people of choice and undermining their self-reliance and independence.
This is a mean, dogmatic measure. It is another case of cutting off the nose to spite the politically correct face, and--as I said at the outset--a further onslaught on minority interests. I firmly support the amendment.
Charlotte Atkins (Staffordshire, Moorlands):
There are more than 15,000 pensioners in my constituency. That is a high proportion. I have had many meetings with those pensioners, and have received many letters from them; but only one couple have ever spoken or written to me about this issue.
What concerns pensioners in my constituency is having to eke out an existence on a pittance. A third of pensioners are on means-tested benefits; that is a legacy of the last Government. What concerns them is that the NHS should be there when they need it, but the last Government's market policies have helped to destroy the NHS. Pensioners also live in fear of losing their homes because they cannot meet the cost of their long-term care needs without giving up those homes.
Why is tax relief not the burning issue that Conservative Members suggest it is? Why is my postbag not bulging with letters? Why have I not been telephoned every day about this issue, both before and after the Budget? Is it because it was only relatively recently--in April 1990--that tax relief was given to both basic and higher-rate taxpayers? As some of my hon. Friends have pointed out, that did not last long: by April 1994, tax relief at the higher rate was withdrawn.
Does that constitute a ringing endorsement of the scheme by the former Government? I think not. Does it demonstrate serious reservations on their part? I think that it does. We are seeing crocodile tears.
Between 1990 and 1997, the number of contracts increased by only 25,000, from 350,000 to 375,000. The Financial Secretary gave those figures earlier. The number of people covered by the contracts increased by 50,000 at the most. That is an increase of just 10 per cent. The last Government stated that tax relief was intended to encourage the elderly to take up medical insurance, but the 10 per cent. increase signifies not success but failure in those terms.
The situation must be seen in the context of a national health service that was being run down--a national health service that was consumed by stories of agism featuring elderly people who could not get the operations that they needed, and were not considered worth treating. An atmosphere of fear was created. In such a climate, if the number of people covered by contracts increased by only 10 per cent., I do not think that that was down to tax relief. The fear that the NHS was incapable of providing care from the cradle to the grave became an increasing reality during the 18 years of Conservative rule--yet the figure increased by only 10 per cent.
That suggests that the cost of tax relief is largely dead weight, benefiting people who had already taken out medical insurance or who would have done so anyway, rather than those who were encouraged to do so by tax relief. I understand that the cost of the relief last year was £110 million, and that it will rise to £120 million in the next full financial year. That amount cannot be justified--as I have said, it is largely dead weight--when schools and the NHS are crying out for funds. If the elderly decide that they want to be treated privately, that is fine, but the state should not have to foot the bill.
I appreciate that, in opting out of the NHS, the elderly are exercising their right to choice, but many elderly people decide to go private. A number of hon. Members on both sides of the Committee have talked about their parents. I will talk about mine, and, in particular, about my mother. She paid for a hip replacement operation some three years ago. Because of the excruciating pain that she was experiencing, she managed to raise the money to go into a private hospital. She had to wait for well over a year, and, at the age of 81, faced the prospect of having to wait for a further two years. She therefore decided to raise the necessary funds as best she could, and to meet the bill herself.
My mother did not get any tax relief. She received no benefit from the state. She decided to pay the bill herself: that was her choice, and I applaud it. It was her decision, backed by her family. We could see that she was in pain, that she was confined to her home and that she could not enjoy life. She could not go out for the walks that she had enjoyed every day of her life, because she could not walk. She therefore decided to find the money for the operation, but there was no subsidy from the state. My mother had to make the choice between finding the money and suffering the pain, because the NHS had failed to provide the service that she needed.
6.15 pm
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