NEW CLAUSE.—(Exemption for hospitals.) (Hansard, 8 August 1940)

§ Mr. Storey (Sunderland)
I beg to move, "That the Clause be read a Second time."
I move this new Clause with the support of the British Hospitals Association, the King Edward's Hospital Fund and the Nuffield Provincial Hospitals Trust. To justify the acceptance of the new Clause, particularly in view of what the Chancellor has already said, I must show that the achieving of the purpose of the Purchase Tax, the raising of revenue and the restriction of consumption, by its application to goods for the use of hospitals, would be contrary to the public interest. I cannot believe that the Chancellor can wish to raise revenue by appropriating a substantial part of the voluntary subscriptions which are given to the hospitals for the treatment of the sick poor. Nor could I believe that he wishes to appropriate a substantial proportion of the voluntary contributions of those who wish to pay something towards the cost of their treatment, particularly when those contributions, in the majority of cases, are based on the patient's means rather than on the cost to the hospital.
If we can agree that revenue should not be raised at the expense of the sick poor or sick persons who can only afford to pay something towards the cost of their treatment, we are left with three other categories of patients from whom revenue can be obtained: those who can afford to pay the whole cost of their treatment, those whose treatment is paid for out of the rates, and those whose treatment is paid for out of national funds—and that is a category which may become a huge one if air bombardment reaches the proportions for which we are prepared. About those who can afford to pay the whole cost of the treatment—and it is not a large class—I would only say that the time when a man is sick is not the time to extract additional contributions to 567 wards the revenue from him, while to increase the charge upon ratepayers by a tax upon purchases for local authority hospitals is only to transfer the raising of revenue from the taxpayer to the ratepayer. There remain, therefore, only those whose treatment is paid for out of national funds, and here an attempt to raise revenue by a Purchase Tax upon goods for hospitals would fail, because it would merely be transferring money from one of the Chancellor's pockets to the other.
I turn next to the second purpose of the Purchase Tax, the restriction of consumption. I submit that the proposed charge upon goods for hospitals cannot be sustained. Hospitals, particularly the voluntary hospitals, are of necessity economically-run units. All purchases are used in the essential public service of alleviating sickness. To restrict that service would be a disservice to the State. Ill-health at any time is wasteful, and at a time when all the energy that the country possesses is needed for the prosecution of the war, to restrict the alleviation of sickness is the worst kind of folly. I hope I have shown that both for raising revenue and for restriction of consumption the Purchase Tax on goods for use in hospitals fails. Indeed, such a tax would be disastrous. All the hospitals are suffering from rising prices, a process which is likely to be intensified, and voluntary hospitals are having the gravest difficulty in maintaining their income on account of the heavy strain of taxation upon subscribers. Their continued failure to balance revenue with expenditure can have only one result—curtailment of the services which they give to the sick. Unless the health of the people is to suffer, such a curtailment must be made good out of public funds, and a consequent charge upon public funds might well exceed any revenue gained from the tax.
There is another question which I must answer. Is the exemption a practical one? I submit that it is. In Canada, where they have a consumption or sales tax of 8 per cent, on the sales price of goods, articles and materials which are for use in bona fide hospitals are exempt and have been since 1931. During past months Canadian hospitals have feared that on account of the urgent need for revenue 568 the privilege might not be continued, but in a recent Budget the Canadian Government have decided that even in the financial emergency at present existing the work of hospitals must not be hampered. What Canada can do I submit that we in this country can also do. On the actual wording of the Clause, I would only say that it follows the example of the Canadian provision exempting goods purchased on the order, and for the use, of hospitals; and the definition of a hospital follows the definition which has been accepted and found practicable under the Road and Rail Traffic Act, 1936.
I conclude with a special plea for the voluntary hospitals. The Clause will exempt both voluntary and local authority hospitals. It is right that it should do so, not only for the reasons I have already stated, but also because there should be no differentiation between them at a time when, through the Nuffield Hospitals Trust, and through their co-operation in the Emergency Medical Service, there is a greater realisation on both sides of the part which each can play in building up a nation-wide hospital service. But, for the voluntary hospitals, the exemption is a much more vital thing. The existence of the voluntary hospitals system is at stake. If anyone should ask, "Is the voluntary system worth saving?" I answer confidently that it is. If anyone wants to see the reasons, he will see them fully stated in the report of the Cave Commission of 1931. There they will find why on financial grounds, on account of the welfare of the sick, the training of the medical profession, the progress of medical research, and the value of the care and time expended in voluntary management and support, the Commissioners were led to conclude their report with these striking remarks: The voluntary hospitals system, which is peculiar to the English-speaking race, is part of the heritage of our generation, and it would be lamentable if, by our apathy and our folly, it was suffered to fall into ruin. I know that the Chancellor, with his great experience as Minister of Health of the hospital services of our country, and in view of the striking lesson which he has had in recent months of the value of voluntary effort through the National Savings Movement, would not be guilty of such apathy and folly, and I ask him to reconsider this plea for the hospitals of our country.

Captain Ellisron (Blackburn)
I want to say a few words in support of this Clause. I feel that there is no one in this House with such a lack of responsibility that he would ask concessions from the Chancellor at this time unless he was convinced that he had an unanswerable case. All who have any experience of the hospitals of the country know that most of those institutions are bordering on insolvency. One has only to read the local newspapers to see the same story from all parts of the country. The boards of management are absolutely at their wits ends at the present time to maintain those institutions. We believe that this Purchase Tax, superimposed on their other burdens, is in real danger of proving to be the last straw which will break the camel's back. On those grounds, we make this strong plea to the Chancellor to reconsider his avowed intention to harden his heart against all appeals that are being addressed to him. This proposed tax comes at a most unfortunate time, when there was some prospect of the scheme of the Nuffield Hospitals Trust, securing co-ordination between the voluntary and the municipal hospitals, and putting the hospitals on a sound financial basis. We cannot forget that it is the voluntary and municipal hospitals of this country that provided the medical schools where were trained the generations of medical men who built up the reputation of British medicine.
Is it right that these institutions should be placed in such a position that their very existence is threatened? We know what the effect must be upon every hospital authority. Speakers have already told us of the expenditure of the London County Council. I believe that the drug bill alone of the London County Council hospitals is something like £280,000 a year, and you are going to increase that amount by something like £45,000 represented by the Purchase Tax. I know as a Member from Lancashire that that will apply with equal force in the great hospital schemes in Liverpool, and Manchester and throughout the county of Lancaster. They are to have this extra burden imposed upon them at a time when the position is extraordinarily difficult. Everything that can be said about drugs applies equally to the various expenses for appliances and equipment necessary for a modern hospital. The 570 Financial Secretary told us the other day that there is no intention to impose the Purchase Tax on spectacles or lenses. I rejoiced when I heard that, as it was the concession of a principle. Physical disability and sickness are not proper things for taxation, and if it is right that spectacles and lenses should be relieved of the tax, it is also right that the equipment for the modern treatment of diseases should also be freed from taxation.
The hon. Member for Sunderland (Mr. Storey) told us that Canada has given the Chancellor of the Exchequer a precedent which might justify him in exempting hospitals from this burden. It cannot be denied that the hospitals are an essential part of the health services of this country. The Lord President of the Council, when he was Chancellor of the Exchequer and was hard driven to enforce economies, told us every time that, whatever we had to cut and save, there should be no reduction in the essential health and social services of the country. We contend that hospitals are vital to the wellbeing of the community, and at this time when we are driven to every possible resort to secure the necessary funds for victory, the national interest demands that we should maintain the health services intact so that the people may be assisted to face any hardships that may be imposed upon them by the war. No one knows better than the Chancellor of the Exchequer—who gave such outstanding service when at the Ministry of Health—the very great contribution that hospitals make to the maintenance of our national health. Therefore, in spite of his urgent need of revenue and his determination, which we all share, to secure all the funds necessary for the successful prosecution of the war, we appeal to him with confidence to avoid making the position of these charitable and municipal institutions more difficult than it is at present.

§ Sir K. Wood
My hon. Friends have made strong and powerful speeches, and were it not for the fact that I felt that I had a good case in reply to them I would have accepted the new Clause. But I do not think they realise the extent to which we have already gone to meet the hospitals. In the first place, ordinary medicines and drugs are taxable at reduced rates and expensive medicines— which are a considerable matter for 571 hospitals in the country—are to be free of tax. Medical and surgical instruments are exempt, as also is the specialised hollow-ware which is used by hospitals. Hospital equipment such as dentists' chairs, operating tables, special furniture, clinical thermometers, surgical glassware and surgical bandages are exempt. The taxable goods of a hospital represent less than 10 per cent, of their annual expenditure, and I do not think it would be unreasonable, in the circumstances of to-day, to ask hospitals to make this Contribution. My hon. Friends will appreciate that if hospitals are exempt, orphanages, and other such institutions, must also be exempt. I suggest to my hon. Friends that, having made their case, they should not press the clause further to-night, but regard the contribution we are asking from hospitals as something which will undoubtedly help us to achieve the object we have in view at the present time.

§ Sir J. Lamb
May I ask whether this will exclude the calling of my Amendment to the Seventh Schedule, in page 44, line 14, which deals with this particular point?

§ The Chairman
That is quite a different point.

§ Sir J. Lamb
But it deals with the same matter. If the Amendment will be called then, I will reserve my remarks until later.

§ The Chairman
I can give the hon. Member no such assurance.

§ Sir J. Lamb
In that case I must safeguard myself by asking a question. The Chancellor mentioned that expensive drugs are to be excluded. What is an expensive drug? You may get a cheap drug which is used for a long time at great expense.

§ The Chairman
Now I think the hon. Gentleman is anticipating the Schedule.