Patients ‘face NHS rationing' if Labour taxes private healthcare

Telegraph

4 days ago

NHS patients could face longer waits for appointments and 'rationing' of care if the Government adopts plans to charge VAT on private healthcare, it has been claimed.
Experts warn taxing private health insurance premiums would trigger a flood of policy cancellations and push 300,000 patients on to already lengthy hospital waiting lists – potentially delaying elective surgery such as hip replacements by months.
They said that an influx of middle class patients seeking free treatment instead of going private would leave the NHS 'struggling to cope' with extra demand.
Rachel Reeves has not ruled out taxes on private health, which could theoretically raise up to £4bn a year towards filling her budget black hole.
But privately, Whitehall sources have played down the idea and The Telegraph understands it has not been internally discussed within the Government.
Plan 'could raise £2bn a year'
Lord Kinnock, the former Labour leader, last week said that the Government should extend its VAT raid on private schools to health insurance.
He said that the move could raise around £2bn a year, which would provide 'vital funding' for the NHS as it looks to reduce long waiting lists.
However, International Private Medical Insurance (iPMI) Global, the industry body for private healthcare, warned that the policy would backfire.
It said increases in health insurance premiums as providers passed on the VAT would drive an extra 300,000 patients a year on to NHS waiting lists.
'Applying VAT to private healthcare services is expected to significantly increase pressure on the NHS,' the organisation said in a briefing note.
'The higher cost of private care would likely drive many patients, particularly middle-income individuals, back into the public system.
'This influx of patients could worsen already long waiting times for NHS services, increase strain on overstretched NHS staff and facilities, and potentially lead to service rationing or longer delays for elective treatments, as the NHS struggles to cope with increased demand.'
Elective surgery includes operations such as hip and knee replacements for patients who are experiencing discomfort.
iPMI said that middle class families who could not afford significant increases in their health insurance premiums would be 'most significantly affected'.
But wealthy customers who could absorb the cost would not be affected, leading to greater inequality and a 'deeper divide in access to timely healthcare'.
The body also said the move may deter companies from providing private healthcare for their staff, 'further shifting demand back to the NHS'.
Tax 'would increase health care inequality'
Christopher Knight, a global analyst at iPMI, said: 'While applying VAT to private healthcare services may appear equitable and fiscally beneficial, it presents multiple risks.
'These include added strain on NHS services, reduced access for middle-income individuals, administrative challenges, and limited net fiscal gain.'
The Tories also warned that any move to add VAT to private healthcare could lead to NHS patients facing months longer waits for routine operations.
Stuart Andrew, the shadow health secretary, said it would be users of the health service who would suffer most as they were stuck on longer waiting lists.
He said: 'Adding VAT to private healthcare is short-sighted and unfair, hitting ordinary families trying to access timely care where the NHS is failing them.
'This risks patients having to wait months for operations, consultations and life saving treatment. Many of these are middle-income households already under pressure.
'Labour's plan would punish them for going private and add even more strain to overstretched NHS services.
'These health taxes won't fix the NHS, they'll make it worse and as a result of Labour's choices, it will be patients will be paying the price.'
Government battling to hit list targets
Government sources said that Lord Kinnock had not discussed his plan with ministers and acknowledged that it would add to pressure on the NHS.
One added that it was not being seriously considered by the Government at a time when it is battling to hit its targets on reducing hospital waiting lists.
But the Treasury refused to publicly rule out the move, saying that it would not discuss tax measures ahead of the Autumn Budget.
A Government spokesman said: 'Thanks to this government's record investment, reforms and the hard work of NHS staff, we've cut the waiting list by over 260,000 since July 2024, which also fell for the first time in 17 years in April and May outside of the pandemic.
'On top of this, we have also delivered 4.6 million appointments – more than double the 2 million we promised.'