Tories to drop tax breaks on private health

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The Tories have taken a major step in their attempts to shake off their reputation as the party that wants to abolish the NHS, by promising not to use the tax system to subsidise private healthcare.

The Tories have taken a major step in their attempts to shake off their reputation as the party that wants to abolish the NHS, by promising not to use the tax system to subsidise private healthcare.

The U-turn was announced without any accompanying publicity during a speech in the Commons early last week, by Tim Yeo, Conservative spokesman on Health and Education.

It marked a victory for Mr Yeo - a one-nation Tory - over the party's Thatcherite chairman, Liam Fox, a former GP who believes that the NHS is virtually incapable of being reformed and will have to be largely replaced by private medical insurance.

Mr Yeo told MPs: "I can announce that it will not be the policy of the next Conservative government to offer tax relief to people who take out private medical insurance."

He also asserted that the Tories are "utterly committed" to the founding principle of the NHS that "there should be equal access to all, free at the point of delivery."

It means that there will be no return to the practice of the last Conservative government, which gave tax breaks to elderly private patients that were abolished when Labour came to power.

The Tories have also abandoned a promise made by William Hague at the last election, to encourage firms to provide private medical insurance for their staff by making them tax-free for the employer and employee alike.

At last autumn's Tory party conference, when Dr Fox was health spokesman, a policy document published by the Tories claimed that "it is now clear that no matter how much money is poured into an unreformed NHS, it will not deliver the standard of healthcare that many of our European neighbours take for granted".

Iain Duncan Smith's last conference speech as party leader promised to "give every patient the right to the treatment they need anywhere in the NHS - and if they have to go outside the NHS, we'll help them."

But despite Mr Yeo's declared commitment to "equal access", the Tories have not completely dropped the idea of subsidising private patients. They now prefer to do it upfront, through the "patient's passport", rather than through tax breaks.

Under a Tory government, all forms of NHS treatment would be given a nominal price tag; anyone who chooses private healthcare will be able to use the "patient's passport" to reclaim a proportion - probably 60 per cent - of what it would cost the NHS to supply the same treatment.

The idea has been attacked by the Secretary of State for Health, John Reid, who claims that it contravenes the principle that all patients should have equal access to the treatment they need - because the financial benefits of a patient's passport would be available only to those who can afford private care.

But Mr Yeo claims that the scheme will cut waiting lists and save money for the NHS.

The Tories also propose to issue "pupil's passports" to make it easier for parents to send their children to the school of their choice. But parents will not be allowed to use the passports to reclaim part of the cost of sending a child to a private school.

Mr Yeo ruled this out in a recent radio interview, explaining: "Everyone who is already sending their children into the independent sector would simply collect a state subsidy. We don't think this is particularly fair to the taxpayer."

Alan Milburn, the former health secretary, accused Mr Yeo of contradicting himself, by recognising that subsidising private education is unfair, while still being prepared to subsidise private healthcare.

But Mr Yeo claimed: "The difference is that there are long waiting lists in the NHS, but there aren't any waiting lists for schools."

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