Health Bill [HL]

I shall address Amendment 127, tabled by the noble Lord, Lord Palmer. It is a long and well established principle that most personal private expenditure is not eligible for tax relief. Our tax system has to be fair to a very large number of people and relief is given only where it supports specific government priorities. Premiums paid for private medical insurance are treated in the same manner as other personal expenses and are not liable for income tax relief. Alongside general tax principles, there are several reasons why the Government do not allow tax relief for individuals paying private medical insurance premiums and why they do not support the amendment. The Government do not believe that public money should fund private healthcare. It is a longstanding and fundamental principle of the NHS that it provides a comprehensive, universal health service which is free to all at the point of use. For the Government to subsidise a minority of people who choose to take out private medical insurance would undermine the fundamental principle of equity in the NHS. It would reduce the money available to fund the NHS and other public services. I hope that noble Lords would agree that there must be no question of using tax breaks to subsidise a two-tier health system, which would discriminate against those who were not able to pay for their care. In addition, the level of coverage offered by private medical insurance plans varies widely. For example, it is very rare for them to cover emergency care and access to a private GP, and therefore no one taking advantage of the proposed amendment would be able to opt out of the NHS completely. We do not believe that the proposal would be a cost-effective use of taxpayers’ money. We have been sparing in our use of tax exemptions and have introduced them only where we are convinced that they offer the best-targeted and most cost-effective support for our objectives. If tax relief was given to the 1.7 million individuals who currently pay for private medical insurance, the cost to the Exchequer would be £810 million. It is also highly likely that the amendment would cause a behavioural change, with many individuals who currently receive taxable corporate care changing to pay for it personally to gain the benefit. If a quarter of those who currently receive corporate private medical insurance moved, it would increase the cost of the amendment to £1.32 billion. I hope that noble Lords agree that this would not be the best way of using funds available for health. As with all tax exemptions, the most benefit from the introduction of this proposal would be gained by higher-rate taxpayers, who would get 40 per cent tax relief on the premium paid. It would give little or no benefit to those on the lowest incomes who most need the support of our healthcare system, and those who are not taxpayers would obviously gain no benefit from the amendment whatever. It would be hard to justify granting relief for this expenditure and not for other expenditure which some might think equally deserving. Notwithstanding the support for the amendment of the noble Lord, Lord Walton of Detchant, I hope that, on reflection, the noble Lord, Lord Palmer, will feel able to withdraw it.