HL Deb 10 July 1968 vol 294 cc939-41
LORD AYLESTONE

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether they will exempt all hospitals, whether National Health Service or private, from the payment of selective employment tax.]

LORD BESWICK

My Lords, the cost of selective employment tax paid by National Health Service hospitals is borne on Votes and therefore met from the Exchequer. Private hospitals that are registered charities qualify for repayment of the tax under Section 5 of the Selective Employment Payments Act 1966. Her Majesty's Government have carefully considered the matter, and have concluded that it would not be right to modify or extend these arrangements.

LORD AYLESTONE

My Lords, while thanking my noble friend for his reply, may I ask whether he is aware that I find little justification for the payment of S.E.T. by any hospital? While it is appreciated that there is some relief for those hospitals that are registered as charities, this leads to many anomalies.

For example, a hospital relying solely on the collection of a few pence a week from its members, usually through a trade union or in some other way, because it is not registered as a charity has to pay S.E.T., while a private hospital registered as a charity may charge considerable fees to some of their patients yet obtain relief from S.E.T. If I may say so, a further anomaly—

SEVERAL NOBLE LORDS: Question!

LORD AYLESTONE

My Lords, may I ask my noble friend whether he is aware that a further anomaly (this is my last example) is that under the new arrangement, arising out of the current Finance Bill, in some parts of the country you may have the position that a hospital is paying S.E.T. while the hotel next door is not?

LORD BESWICK

My Lords, I am aware that all taxation systems are riddled with anomalies, and the more exemptions one makes the more anomalies one creates. Understanding my noble friend's interest in one particular hospital, I have taken the trouble to look into the figures, and I find that the new taxation will amount to 1s. 3d. per member per year. I cannot really think that this is crippling.

LORD NEWTON

My Lords, is this not rather small-minded on the part of the Government? Does the noble Lord really think that we are prepared to accept that if you try to get rid of anomalies you will create still more? This is, 95 per cent. of the time, merely a hook-keeping entry. Would it not therefore be simpler to scrap it?

LORD BESWICK

My Lords, I agree with the noble Lord, Lord Newton, that it is a book-keeping entry because indirectly the overwhelming majority of these hospitals are paid for by the Exchequer.

LORD NEWTON

My Lords, to follow up from that, unnecessary bookkeeping costs the taxpayers money, does it not?

LORD BESWICK

My Lords, as a matter of fact we have gone into this in some detail before, I believe, and it has been shown, not by politicians but by statisticians, that it is much more economical to have a flat rate tax upon all, and then make a repayment in certain circumstances. This is much cheaper than having a separate system of stamps and exemptions in particular circumstances.

BARONESS HORSBRUGH

My Lords, if the Government got rid of the whole of the S.E.T., would they not also get rid of all the anomalies?

LORD BESWICK

My Lords, I think the argument of the noble Baroness, which I accept as absolutely impeccable, could also be applied to income tax.

BARONESS SUMMERSKILL

My Lords, in view of the fact that there is, I think, an outstanding injustice in this anomaly, could my noble friend assure the House that before the next Budget this particular point will be looked at?

LORD BESWICK

My Lords, I should be glad to discuss this with my noble friend. I am surprised that she raises the question of injustice. It is a question of the definition of a charity, and if one exempts all private hospitals, I think my noble friend would be the first to agree that one would be exempting some organisations that are of a very doubtful character indeed.

LORD MITCHISON

My Lords, is not Eton a charity?

LORD BESWICK

My Lords, the noble Lord is a greater authority on that than I am.