pounds 350m for NHS from perks purge;

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The Liberal Democrats would close a tax loophole which feeds City "cats", to raise an extra pounds 350m a year for the National Health Service, the party's spokesman Simon Hughes pledged yesterday.

Mr Hughes told the Liberal Democrats conference in Brighton that the party would make good its long-standing promise to close the loophole through which employers avoid paying National Insurance contributions on perk payments.

Of the pounds 350m raised by the move, he said, pounds 200m would be spent on recruiting and retaining much-needed staff, and the remaining pounds 150m would be used to bring down to six months the maximum waiting time between hospital diagnosis and treatment.

The loophole, Mr Hughes said, allowed some of the "cats", of whatever size, in the City and elsewhere to receive huge sums from tax-dodging employers "who should know better".

"Millions of pounds have been paid in gold bars, life policies, expensive wines and other valuables to avoid paying tax to the Exchequer. Responsible firms shouldn't spend their time thinking up tax wheezes, and we wouldn't let them. We'd close this illogical loophole for good," he said.

Unfortunately, the Inland Revenue later pointed out that parts of the loophole had already been closed, including those relating to gold bars.

Few believe that Mr Hughes would be in a position as the secretary of state for health, to deliver either the money or his promise, but nevertheless he said that money raised from such a move over the remaining six months of the financial year would be enough to fund the current year's pounds 178m NHS deficit. "With this additional sum, the forecast cuts in this year's services need not now go ahead," he said. "It will be possible to halt the current finance-driven reduction of beds, wards and other services."

Mr Hughes said that in many parts of the country, particularly in some urban areas, general practitioners were retiring, and not being replaced. There had also been a dramatic reduction in the number of nurses qualifying in the UK.

"In 1983, there were 37,000 new nurses. By last year, there were 13,000 new nurses. In 1998, there are likely to be only 6,000. It is little wonder that some hospital managers have had to fly to Canada to recruit."

Mr Hughes said that people no longer felt they were working for a single, coherent, and proud National Health Service. He called for three-year contracts to help health authorities to plan ahead, and also a return to national pay bargaining for nurses.

As for the Tories' "reform gone mad", Mr Hughes asked: "Who knows what is going on in our health service? Surely somebody knows how many hospitals there are? How many casualty departments are open? Where beds are available, and what are the real length of waiting lists?"

Mr Hughes said that no one had any answers as to what was really going on in the NHS. The market was not working in the health service, but it was impossible to find out how bad things really were. All further bed and hospital closures should be halted for a year while an independent national audit of health demand and provision was carried out, he said.

"The precondition to regaining national control of the National Health Service," he added, "is to regain public control of the facts."