Health and Social Care Bill

My Lords, I declare all my interests in relation to hospice and palliative care services. The amendment is particularly important because of the any qualified provider provision which seeks to bring in more charitable sector providers, working with NHS commissioners, to provide essential services where the NHS is not able to plug the gap. That is why there was a debate in the other place in May this year on the effect of VAT on hospices. However, it goes much wider than simply hospices. The VAT gap means that the private sector can claim back VAT by passing on the cost to customers; the public sector pays VAT, which is then refunded by government; but the charitable sector can do neither—it fund raises. In the hospice world—I am grateful to Help the Hospices for the figures—an average hospital in the UK, supporting about 1,000 patients and spending £8 million on care, may receive about 30 per cent of its funding from the NHS but it will spend about £82,000 on irrecoverable VAT. So money has to be raised just to cover that VAT gap. As the hospital takes on more and more responsibilities, the problems become greater. As we try to get hospices to work together on joint ventures and share services with other providers and other charities, one hospice has to recharge services to another—one voluntary sector provider to another—including VAT, and that cannot be recovered. It also cannot recover any VAT on the repair and construction costs of charitable buildings. As there is increasing use of its buildings and it needs to upgrade to meet more modern quality requirements, VAT becomes a problem because, for the hospital to provide the quality service that we need, it has to outlay on capital expenditure. The other difficulty is that VAT is fairly complicated for charities and requires expertise to manage the VAT process for them, which of course also incurs a cost on them in terms of personnel, which again is irrecoverable. This is an extremely important amendment and the principle behind it has to be tackled if the fundamental idea of any qualified provider is to work in practice in the long term and provide stable, quality clinical services.