Private Healthcare Faces Possible VAT Tax Imposition under Labour's Proposal, According to Lord Kinnock

The Association of British Insurers (ABI) has voiced its concerns about former Labour leader Lord Kinnock's proposal to charge Value Added Tax (VAT) on private healthcare providers. This stance comes in response to Lord Kinnock's calls to revoke the VAT exemption currently enjoyed by private healthcare providers, a move aimed at raising funds for the National Health Service (NHS).

Lord Kinnock's proposal is driven by concerns over the growing number of people turning to private healthcare due to long NHS waiting times, leading to unequal access to care. After 14 years of underinvestment, many people are finding it difficult to access timely care through the NHS, prompting them to seek private healthcare services.

The ABI, representing over 200 insurers, argues that the insurance sector plays a vital role in supporting a healthy and productive workforce. By offering health prevention and treatment services through workplaces, the sector helps people stay well and return to work sooner after illness, thereby reducing economic inactivity.

Tax expert Dan Neidle supports the ABI's concerns, stating that scrapping the VAT exemption would increase costs for opticians, dentists, osteopaths, among others. Neidle also notes that some of the £2 billion raised could be for private services supplied to the NHS, which would be an extra cost for the already strained healthcare system.

The British Medical Association (BMA) previously opposed similar proposals by Lord Kinnock, arguing that such a move would increase costs for patients and reduce access to private healthcare services. The ABI's position is contrary to Lord Kinnock's proposal, with the ABI's spokesperson concerned that introducing such measures might create a barrier to health support.

The latest figures from PHIN reveal that private hospital admissions reached their highest rate in Q3 of 2024, reflecting the growing reliance on private healthcare services. As of May, the waiting list for planned hospital treatment in the NHS has a backlog of over seven million cases, further highlighting the need for alternative healthcare solutions.

Lord Kinnock, however, believes that removing the VAT exemption on private healthcare would provide "vital funding" for public services, helping to alleviate the pressure on the NHS. This viewpoint adds to the ongoing debate about the role of private healthcare in supporting the NHS.

The ABI's statement was made to City AM, underscoring the importance of this issue in the current healthcare landscape. As the debate continues, it is clear that finding a balance between public and private healthcare is crucial for ensuring accessible and affordable healthcare for all.