Below is the text of Mr Major’s response on Private Medical Treatment (Tax Relief), made on 4th May 1989 in the House of Commons.
Mr. Allen McKay To ask the Chancellor of the Exchequer what recent representations he has received concerning his proposal to offer private medical tax relief.
Mr. Major A number.
Mr. McKay If the word “targeted” is not to appear as an emotional word giving the appearance of efficiency coupled with compassion, will the Minister explain to the House – and possibly to Back Bench Conservative Members, to whom it has not been explained sufficiently – how, under the guise of cutting child benefit and targeting those in greater need, he can logically at the same time advocate a policy of giving tax relief to those on medical insurance, as that seems to be targeted to the better off?
Mr. Major The hon. Gentleman is entirely wrong about the proposal being targeted to the better off. The proposal before the House that I have no doubt we will debate shortly in Committee on the Finance Bill, to provide tax relief for medical insurance premiums, tackles a real problem. In a ring fence way it will help many elderly people who wish to continue medical insurance cover on retirement but who are unable to do because they have lost the benefit of the employer scheme. At the moment of retirement their income tends to fall and their premium tends to rise. We are seeking to retain the capacity for these people to sustain and retain the medical insurance they have previously had. That is entirely fair and reasonable, and I support it thoroughly.
Mr. Neil Hamilton Will my right hon. Friend confirm that the likely savings in public expenditure will exceed the cost to the Treasury of the tax relief itself when it is fully running? Has my right hon. Friend noticed that the Labour Members are celebrating a decade of Thatcherism by trying to ditch their own vote-losing policies and adopt a pale pink version of ours? How long will it be before they adopt this policy also?
Mr. Major It is certainly true that, as my hon. Friend said, the Opposition have learnt that there is a sea change in attitude in this country, and they tend to tack behind it. It will certainly be another decade or more before they are remotely likely to form a Government of any sort. I reiterate what I said a moment ago. I agree that this measure is likely to prove a very good bargain for the taxpayer.
Mr. Madden How can the Chief Secretary justify poor pensioners having to apply for means-tested benefits when rich pensioners who apply for medical tax relief will not even have to fill in an application form?
Mr. Major The justification is that we provide benefits for those pensioners who need them. The hon. Gentleman should welcome that.
Mr. Robert G. Hughes Will my right hon. Friend confirm that this move affects a relatively small number of people who have been receiving tax relief on private medical insurance? Does he agree that they with to continue with private medical insurance, but are mystified about why Opposition Members wish to deny it to them, and regard the Opposition’s announcements as mean-minded and rather tawdry?
Mr. Major It is certainly true that, at the moment, a small number of pensioners are eligible to benefit – about 600,000 to 700,000. There is no mystery about the Opposition’s hostility to private provision and self-provision. It is traditional.
Mr. Chris Smith Has the Chief Secretary seen the response of the Royal College of Nursing, which describes the proposal as having no economic, social or medical justification? Instead of providing tax subsidies to those few who are rich enough and well enough to benefit from private medical insurance, should not the Government spend the money on basic, desperately needed improvements to the Health Service as a whole, for the benefit of all pensioners?
Mr. Major The hon. Gentleman might have been on a different planet for the past year. He may not have noticed that, in the last public expenditure round, the National Health Service had its largest ever increase in resources, of £2.5 billion. A further £2.5 billion was agreed last year for next year’s increase in the National Health Service provision, and that is before we re-examine the matter in the public expenditure round next autumn. The Labour party never provided remotely the same amount of facilities for the National Health Service.