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Jacqui Smith: The hon. Member for Daventry (Mr. Boswell) described himself as "modest and diffident" in discussing amendment No. 1. To be fair, he attempted to discuss the minutiae of the amendment. The gaff was blown, however, by the hon. Members for Guildford (Mr. St. Aubyn) and for Bognor Regis and Littlehampton (Mr. Gibb), who made it quite clear that the intention of their group of amendments is not to deal with small anomalies but to have another go at the principle of removing relief on private medical insurance.

Today, we have debated the principle of removing relief in greater detail than we did in the debate on Second Reading, in which I and several other hon. Members in the Chamber spoke. In this debate, Conservative Members have gone so far as to suggest

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that people who take out private health insurance are not so much exercising freedom of choice in the market as performing an altruistic function--helping the rest of us to get more out of the health service by spending their money on what they think is better service in the private sector. Such an assertion is ridiculous. Moreover, as I said in the previous debate, for Opposition Members to believe that the NHS can operate effectively only if people are bribed to leave it and to take out private medical insurance is an indictment of their views.

Mr. Flight: If 600,000 people simply left the private sector and received treatment in the state health sector, a massive increase in NHS funding would be necessary and taxes would have to be raised. The very crude point is that people, to the extent that they take out private insurance, are saving the NHS a major bill.

8.45 pm

Jacqui Smith: The hon. Gentleman's point is extremely crude, and it was dealt with on Second Reading when we said that, despite the introduction of relief on private medical insurance, there was no significant increase in the number of people over 60 taking out private medical insurance. Conversely, therefore, removing the relief--in order to use that money for something much more worthy--will not result in a flood of people returning to the NHS. The hon. Gentleman not only made a crude point: he was inaccurate in the facts.

Conservative Members have made it clear that they are concerned only about the principle of relief on private medical insurance. As we said in the previous debate, trying to persuade people to take out private health insurance is not the way in which to defend the NHS--if that is what Conservative Members are interested in, although I doubt whether it is. Even if that were the best way of defending the NHS, the relief that we are debating has not proved to be particularly effective. As I said before, even William Waldegrave, the Chief Secretary to the Treasury in 1991, admitted that the relief was not especially effective. As Labour Members have said, and as the previous Government admitted, the relief was not effective because the Conservative Government removed it at the higher rate. The relief, therefore, is not only unjust but it does not work.

Conservative Members should be honest. They are not concerned about the minutiae of the amendment.

Mr. Damian Green (Ashford): The hon. Lady persists in mentioning that William Waldegrave was Chief Secretary to the Treasury in 1991. He was not Chief Secretary in 1991. That throws some doubt on her argument, which she is basing on something that is not true.

Jacqui Smith: If he was not Chief Secretary, I apologise. Nevertheless, the Conservative Government's reduction at the top rate gives credence to the belief that they did not think that the relief was working.

The basic point is that the group of amendments are not about the minutiae that the hon. Member for Daventry--but no other Conservative Members--

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mentioned. To be fair, in Committee Conservative Members often raised very boring, but legitimate, points on the minutiae of the Bill.

Mr. Woodward: I am struck by the hon. Lady's comments. I should like to ask her to clarify one matter for Conservative Members. Is she saying that she is against private medicine in principle--yes or no?

Jacqui Smith: At no point have I said that I am against private medicine. I said--I will repeat it for the hon. Gentleman, almost word for word--that if people choose to go into the private market to buy private medical insurance for themselves, that would be fine by me, but I do not believe that it is right--

Mr. Woodward: Will the hon. Lady give way?

Jacqui Smith: No.

It is not right that the vast majority of taxpayers should fund the private decisions of a few people to buy private medical insurance, because the money could be used in better ways. The money saved could be used in a progressive, not regressive, manner by funding the reduction in VAT on fuel--which, as my hon. Friend the Member for Dudley, North (Mr. Cranston) pointed out, the hon. Member for Guildford said is not regressive.

As we said on Second Reading, we have a clear choice: we can allow the many to subsidise the few in their private decision on private medical insurance, or we can use that money to reduce VAT bills for the many. The Government have made the choice, and Opposition Members will not get very far by haggling over the minutiae of the Bill as a cover for disagreeing with its principle.

Mr. Clifton-Brown: I am delighted to follow the hon. Member for Redditch (Jacqui Smith) who made a speech from good old Labour, which opposes choice in the health service or any of our other great public services. Old Labour would really like to abolish all private medical facilities.

I would chastise my hon. Friend the Member for Guildford (Mr. St. Aubyn) as his amendment does not go nearly far enough. I would have tabled an amendment to extend tax relief for at least another 10 years--then we would have been getting somewhere. The acid test is whether the clause benefits the national health service. Patently, the national health service will suffer as a result of its implementation.

I wonder whether Labour Members remember that one of the pledges on which they fought the general election was that to reduce NHS waiting lists by 100,000 people. Does the clause do anything to meet that pledge? No; it almost certainly makes it much more difficult to achieve.

Mr. Bennett: Will the hon. Gentleman give us an assurance that, this time, he will stay to listen to the answers to his questions? Some of us were a bit shocked that in an earlier debate he made a strong point but did not bother to remain in the Chamber to hear the answer.

Mr. Clifton-Brown: That is a petty point from the hon. Gentleman, who has attended hardly any of

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the Budget debates. He pops in to make silly interventions and then pops out again. That cannot be a sensible way to proceed.

Mr. Woodward: Had my hon. Friend remained in the Chamber, he would have discovered that a number of questions that had been put to the Financial Secretary, not least about whether the Government intend to scrap MIRAS next May--although that is now absolutely clear--were not answered. Had my hon. Friend been able to stay in the Chamber, he would have had rather an unsatisfactory time.

Mr. Clifton-Brown: I thank my hon. Friend for enlightening me. Perhaps that was a good reason not to remain in the Chamber--I did not expect to get any answers--but I should be most grateful if the Financial Secretary would give me one positive answer this evening. We know how much money the measure will raise, as the figure is in the Red Book. I should like to know what the net costs to the health service will be.

We know that 13p in every pound paid out by PPP goes to the national health service. That amounts to about £220,000 a day or some £55 million a year. According to my local NHS trust, when private patients are treated in the national health service the marginal cost to the trust is about 20 per cent. That means that PPP alone is giving the national health service a profit of £11 million a year. Taking into account BUPA and all the other private health care providers, I suspect that the figure will equal, if not exceed, the £135 million that the measure will raise.

What on earth is the point of introducing a Budget measure that will cost the country and the national health service money? It is political dogma and hypocrisy at its absolute worst. It is absolute nonsense.

We have already heard from my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) that 80 per cent. of medical insurance premiums are paid out in treatment costs. The private sector now treats 28 per cent. of all hip operations, 20 per cent. of all heart conditions and 20 per cent. of all acute conditions. It also treats a huge and increasing range of other ailments and conditions.

As people are living longer and are more affluent, perhaps we should give them a little more encouragement to use the private sector. The people who will be affected by the changes are those at the margins; it will not be right hon. and hon. Members who will retire on a parliamentary pension, but those who, throughout their lives, have saved a little bit of occupational or personal pension who will either trade down their policies and buy less expensive and less extensive cover so that when something serious goes wrong such as a heart condition they will be forced back to the national health service, or cease taking out a policy. That is much more serious for the country as, come what may, those people will be forced back to the national health service. When people are living longer and the previous Government introduced measures to encourage people to take out private pensions, it seems perverse to proceed with this policy.

There will be another serious effect on all private medical policies. As the numbers involved drop, the administration costs for those who are left will rise. When premiums rise because of the withdrawal of tax relief and

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the increased administrative costs, even more people will drop out of the private sector and the national health service will be further disadvantaged.

I urge the Government to think carefully about the policy. It will hit a number of people at the margin, as has the reduction in MIRAS and the measures that affect savings accounts. All those measures will affect the middle classes--precisely the people who elected Labour to office. If the Government have any listening ear--which I doubt--I urge them to consider the measure very carefully.

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