Reform UK’s policy of tax relief on private health insurance could cost the country £1.7bn, the health secretary, Wes Streeting, is expected to say on Saturday.
Streeting will make the claim at a conference organised by the Fabian Society, a socialist thinktank aligned to the Labour party, and will describe the Reform proposal as a “tax cut for the wealthiest”.
Before the 2024 general election, Reform pledged to offer tax relief of 20% on all private healthcare policies if it won power. The party claimed in its manifesto that this would improve the general standard of care by reducing demands on the NHS.
Its leader, Nigel Farage, appeared to double down on this commitment at a press conference last summer, saying: “Perhaps if we gave people a bit of tax relief on paying for private health care, we might just relieve the pressure off the National Health Service.”
Civil servants at the Department of Health and Social Care calculated the potential cost of the Reform policy using data from the healthcare consultancy LaingBuisson, which says that the UK private healthcare market is worth about £8.6bn.
Streeting is due to speak at the central London event on Saturday afternoon, with the energy secretary, Ed Miliband, and Labour’s deputy leader, Lucy Powell, also scheduled to attend.
It is expected the health secretary will tell delegates that the NHS will be a major focus for Labour in campaigns for May’s local elections, where Reform is predicted to make significant gains.
“Farage says he wants an insurance-based system of healthcare,” Streeting will say. “Just last year, he rejected the public funding model that survived since 1948, saying: ‘I do not want it funded through general taxation. It does not work.’
“And if you don’t believe his words, look at his actions. Reform is committed to spending £1.7bn, not on staff, buildings, or technology, but on tax relief for customers of private healthcare.
“This tax cut for the wealthiest would be the first step on the road to Farage’s insurance system. A system that checks your pockets before your pulse and asks for your credit card before your care. It’s alright for mister moneybags. We know he can afford it. But what about those who can’t?
“Reform poses as the voice of the people while working for the interests of the powerful. No wonder they are such an attractive destination for Boris Johnson’s Conservatives.
“We should be in no doubt that the founding principles of the NHS are now contested terrain. And it falls to Labour to defend them. A publicly funded public service, free at the point of use. Back on its feet and fit for the future. Those are Labour’s values, those are Britain’s values and this is a fight we will win.”
The majority of private healthcare plans are paid for by businesses and offered to employees as a benefit in kind. The LaingBuisson data estimates that company healthcare plans are worth about £5bn and individual insurance about £3.6bn.
Staff with company healthcare plans pay income tax on this benefit at their normal rate. The basic rate of income tax is 20%.
The government’s estimate assumes that Reform’s proposed 20% tax relief would be applied equally to company and individual private healthcare plans. Those taking out their own cover will normally already have paid income tax on the money used to fund it, but will usually be charged an additional insurance premium of 12%.
