HC Deb 31 October 1996 vol 284 cc774-5
5. Mr. Cousins

To ask the Chancellor of the Exchequer what additional revenue he forecasts will be raised in the next two financial years as a result of the recent customs ruling on input VAT reclaims by NHS hospitals. [312]

Mr. Oppenheim

None.

Mr. Cousins

Is the Minister aware that 200 NHS hospitals expect to be cheated of £140 million out of those VAT changes? Have the Government got themselves to the point where they need to sent VAT inspectors into nursing homes to levy VAT on incontinence pads? Are not those Tory tax rises too far?

Mr. Oppenheim

I understand that the hon. Gentleman's concern about the NHS is genuine, but he has got it wrong. There is no change in hospitals' or hospital trusts' ability to reclaim VAT for contracted-out services, which is what the question was about. NHS trusts are treated in exactly the same way as NHS hospitals and other Government Departments. They pay their VAT in the year in which the expenses are incurred. Customs and Excise has given them a little leeway at the end of each year to ensure that they can get their payments in on time. There is no change, and the hon. Gentleman is running a rather unpleasant scare story.

Mr. Richards

Will my hon. Friend confirm that the only time during the past 20 years that the national health service has not received a real increase in resources was under the last Labour Government?

Mr. Oppenheim

My hon. Friend is absolutely right—not only that, but nurses' pay was cut under the last Labour Government. Under this Government, spending on the NHS has increased by 70 per cent. in real terms—a record that no Labour Government have ever matched or could match.

Ms Primarolo

May I again ask the Minister to look at the representations that he will have received from NHS organisations confirming that, as a result of this Government's change of policy, £140 million of patient care money will be removed from the NHS? Is that not another example of the Government's addiction to 'VAT which makes them blind to consequences, the existence of which they continually deny?

Mr. Oppenheim

I had thought that Labour Front Benchers had cleansed themselves of any connection with any lobbying organisations. The fact is that the so-called NHS VAT forum, which has been running this scare story, is run by one organization—an organisation of VAT and tax avoidance lawyers called VAT Liaison Consultancy Ltd. [Interruption] I suggest that, instead of shouting at me across the Chamber, the hon. Lady should go back and do her homework. If the Labour party is going to allow every VAT loophole to be charged through when—if ever—it is in government, it will find that it has no money at all to put into the health service.

Mr. Wilkinson

What additional revenue does my hon. Friend forecast will have to be raised in the next two financial years to make good the deficiency in VAT caused by the European Court of Justice ruling against Customs and Excise on the sale of discounted goods in this country?

Mr. Oppenheim

The revenue lost in that case was £70 million.

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