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Mr. St. Aubyn: I can assure the hon. Gentleman that according to the Inland Revenue's own figures--indeed, those who read the explanatory notes will know this--

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about 600,000 individuals have policies. According to the industry, typically, the number of people affected by a policy is two so we are talking about upwards of 1 million people who benefit from medical insurance policies. The industry's further estimate is that withdrawing the relief entirely will mean that almost half those individuals will give up the health insurance that they have today. If the figures are even a fraction of that, the savings from abolishing the relief will be wiped out by the increased costs loaded on to the national health service. What makes this measure particularly painful for the health service is that none of the savings will be channelled into the health service. They will be channelled into a reduction of VAT on fuel.

The manner in which the Financial Secretary has dealt with our objections has smacked of pride. The manner in which the clause has been introduced smacks of prejudice. I am afraid that not even Jane Austen could easily write a happy ending to this tale. Let us, however, try.

Despite my criticisms of the Financial Secretary--I know that she is new to her post and I realise that it is difficult to get to grips with such a big job--I am grateful for her letter to me of 25 July. The letter, although it patronises me, is nevertheless helpful in clarifying the situation and I am only sorry that it did not come earlier. I should like to clarify one or two points in the letter and if the understanding I have reached is correct, having heard from her and from others in the debate, I may be prepared not to press some of my amendments.

The first point that the Financial Secretary makes is that the transitional provisions of clause 17, which phase out the relief during the year as annual contracts come to an end,

That is a very significant statement because the letter goes on to say that

    "the relief is withdrawn . . . in respect of all contracts made on or after Budget Day. Contracts made before then are not affected."

If I understand the Financial Secretary correctly, her letter means that the significant date is not the date from which the next contract runs, which might be after 2 July, but the date on which the contract was agreed. That is the type of contract we are talking about when we refer to telephone confirmations of contracts that were made before 2 July, but for which the documentary evidence was not completed until afterwards. The letter would appear to cover that.

The letter also appears to cover the case where a renewal has been put through to a client of an insurance company and the renewal has been confirmed by the client before 2 July. The contract is made, but the start date of the contract may be some weeks after 2 July.

The third and most important group, because it is the largest group of contracts about which we are concerned in our questions to the Financial Secretary, is monthly contracts. In her letter, the Financial Secretary states

The problem we have is that the way in which some monthly contracts are written by some insurers, including Prime Health, an insurer in my constituency and one of the largest, does not marry up with the way in which the clause is written.

Since I and my hon. Friend the Member for Daventry raised the matter in the House on 16 July, Prime Health and others, I am delighted to say, have had verbal

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assurances from the Inland Revenue that all their monthly contracts, however they are written, will be treated like annual contracts and that the relief will continue until the end of the series of contracts is completed because they have been approved by the Revenue. That is extremely good news.

There is, however, an extremely important principle here. Shall we see the regulation of taxation carried out by regulatory, bureaucratic fiat--by verbal assurances behind closed doors--or shall taxation rules be decided on the Floor of the House in open debate? That is what amendment No. 4 is about. Whether the matter is agreed by the Inland Revenue by verbal assurance or whether it is agreed here affects not only the certainty of the agreement, but the way in which we conduct business.

Mr. Nick Gibb (Bognor Regis and Littlehampton): Another, wider, point is that the verbal assurances were given to only one taxpayer. Those verbal assurances are needed by other taxpayers who face a similar problem. We are discussing a fundamental principle of the rule of law and my hon. Friend was absolutely right to table his amendments.

Mr. St. Aubyn: I am grateful to my hon. Friend. I shall listen with great interest to what the Financial Secretary says in due course. I know that she is uncomfortable about the idea, but it may help her to realise that we feel that on two occasions, we were misled by her during the debate on 16 July. Opposition to the amendment would not only be highly misleading in the light of the assurances from officers of the Inland Revenue, but would, more importantly, for the reasons that I and my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) have explained, be an abuse of the process by which we determine statute on financial affairs in this Chamber.

If the Financial Secretary is willing to accept the amendment and to give the assurances that we seek, all will be forgiven, all will be sweetness and light, and the insurance industry will have come to a happy understanding. The ball is firmly in her court.

Mr. Tim Boswell (Daventry): The whole House owes a debt of gratitude and admiration to my hon. Friend the Member for Guildford (Mr. St. Aubyn) first, for his pursuit of this matter in such detail, secondly, for his elegance and lucidity in bringing it to the attention of the House tonight and thirdly, for his pointing out the salient issues raised by the amendment.

The purpose of the amendments has already been admirably explained by my hon. Friend. It is, essentially, to elucidate and, if possible, correct aspects of the Government's proposals on the implementation of the withdrawal of private medical insurance relief. Those issues, as well as the general ones, were the subject of exchanges in the House between the Financial Secretary and us on Wednesday 16 July. I shall come back to those points of detail later.

On the wider issues of private medical insurance, suffice it to say, particularly as my hon. Friend the Member for Guildford has spoken most eloquently, that we simply do not believe that the Government have

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succeeded in proving their argument that there will be real savings to the Exchequer from these proposals. We believe that savings will be substantially nullified by a significant return of policyholders to the national health service. We believe also that those arguments are well advanced in the economists advisory group report. If there are savings, and even to the extent to which they are borne out in practice as a result of the Government's measures, there will be a loss of revenue to the Exchequer, an increased load on the NHS and ultimately a detriment to those who have to rely on the NHS because they currently hold no private medical insurance.

Be that as it may, and given that the Government are bent on the withdrawal of private medical insurance, it is clearly desirable that the withdrawal of relief should be fair in its implementation and that every effort should be made to get things right. That is surely the right approach.

Our earlier exchanges sadly revealed what is being seen to be the Government's characteristic approach to matters of detail. I do not know whether they adopt such an approach because they are careless of the consequences on individuals. Perhaps, to be less charitable, they are themselves uncertain of detail. If they are, I shall be charitable to them in this instance because I recognise that we are dealing with complicated issues.

I have noticed more than once, however, during the passage of the Bill that we have been told by Ministers that it is all entirely clear--usually in the new clauses because not even a tax expert could possibly say it was perfectly clear from the Bill. Even my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) has had some difficulty with certain aspects of the Bill.

Having been told that everything is perfectly clear, we poor souls have to admit that it is not entirely clear to us and that we still do not understand it. That was the way in which the Financial Secretary, for whatever reason, chose to respond to points made with a degree of modesty and diffidence by my hon. Friend the Member for Bognor Regis and Littlehampton and myself in Committee on the Floor of the House. Indeed, that is why we are returning to these matters this evening.

I do not know how the occupants of the Treasury Bench saw their role as the Labour party in opposition. We, the present Opposition, however, are prepared, up to the limits of our ability, to tackle the Bill and to listen to advice and expressions of concern from professional persons, given the impact of the Bill. We shall then seek to query details and offer improvements.

If I have one piece of advice for the Government, it is that they should not raise their hackles and assume on principle and in advance that all Opposition amendments are necessarily wrecking in nature and always wrong. Given the Government's haste in the sorry business of the Bill, we from time to time--I say this assuredly to the Financial Secretary--are trying to help the Government to get their legislation right. To be more accurate, perhaps I should say that we are doing our best to protect our constituents from the collateral damage that the Government's carelessness and haste have inflicted in general.

It is in that context that the three detailed issues brought forward by my hon. Friend the Member for Guildford should be carefully considered. As my hon. Friend has explained, they relate to three specific categories of private medical insurance. First, there is the category of

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policy taken out in sequence as a series of discrete policies over 12 months, but not as one period with monthly payments. I believe that the reason for that approach in some instances may be the operation of consumer credit legislation. For all practical purposes, however, they are annual policies or, if we must so describe them, quasi-annual policies.

The second category features those insurances that are covered by verbal contract without a confirmation in writing at any particular time, and certainly not at the time of the conclusion of the contract. The contract takes effect before it is confirmed in writing.

The third category features those insurances where renewal has been notified by the policyholder in advance of the deadline of 2 July, but the contract did not enter into force until after that date.

My hon. Friend the Member for Guildford has explained the details of these implications extremely carefully and I do not need to take up his arguments. I shall make three detailed comments, however, before inviting the Financial Secretary to consider the position with me.

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