Prescription charges set to rise by another 25p

PRESCRIPTION CHARGES are expected to rise by another 25p to pounds 4.50 per item in the annual spending review by Michael Portillo, the Chief Secretary to the Treasury.

Fifty per cent of prescriptions already exceed the cost of the item prescribed, according to figures given to Labour MPs, who protested that the prescription charge already represents a tax on the sick. Ian McCartney, a Labour health spokesman, said: 'It shows a fundamental shift in the commercialisation of the health service. The Government is now using the prescription charge to raise revenue. It's a tablet tax.'

Mr Portillo has ordered fundamental reviews of spending by the Departments of Health (15 per cent of total expenditure in 1991-2), Education (12 per cent), Social Security (29 per cent), and the Home Office (5 per cent) in addition to the annual spending review.

The pounds 2.3bn NHS drugs bill - 10 per cent of the total NHS budget - is the Treasury's main target. Prescription costs have grown by 87 per cent since 1980, according to figures published this week by the Parliamentary Office of Science and Technology. Virginia Bottomley, the Secretary of State for Health, is resisting any move to cut exemptions in prescriptions. She regards it as likely to cause more trouble than it is worth. Pensioners account for a large part of the pounds 2.3bn NHS drugs bill, and many would continue to receive free prescriptions, even after targeting.

There are bigger savings to be achieved on the capital programme for the NHS, she believes, allowing the private sector more scope to invest in hospital sites.

The options for health cuts include: New charges such as charging patients for bed and breakfast accommodation in hospitals, or for calling out the family doctor late at night - unlikely because it would break the Tory commitment to free NHS care;

Encouraging more patients to take out private insurance. But tax breaks would cost more than they save;

Cash limiting all GPs' drugs budgets. However, this would leave patients to shop around when their doctor exceeded his drug budget;

Generic prescribing, allowing chemists to substitute equivalents for expensive drugs. This would cause a row with the drugs industry;

Rationing. Some procedures, such as the removal of varicose veins and tattoos, or in-vitro fertilization may be banned on the NHS;

Pay Curbs. The 1.5 per cent limit could be extended, in spite of promises that it was a 'one-off';

Law and Order. Kenneth Clarke, the Home Secretary, is planning changes in police pay structure, long-term cuts in the number of police forces, and moving budgets down to station level. Prison building could be cut. The privatisation of prison management could be speeded up. But he does not see large-scale savings.

Education. Charges could be imposed for courses in higher education and tuition fees for university studies for the better-off, which students could pay back later, like the existing loans system. Highly unpopular.