Former Labour leader Lord Kinnock has called on Chancellor Rachel Reeves to introduce VAT on private healthcare services, suggesting the measure could raise billions to support NHS reform and funding.
Kinnock argued that removing the current VAT exemption on private medical services would be a politically deliverable step at a time of mounting pressure on the NHS.
Polling commissioned by the Good Growth Foundation shows strong public support for targeted taxation of the private healthcare sector. The research finds 55 per cent of adults back a windfall tax on private healthcare firms, with 25 per cent strongly supporting the proposal. Just 17 per cent oppose it. In addition, 43 per cent of respondents favour a general tax on private healthcare, while only 37 per cent support means-tested charges for NHS patients.
The poll also indicates that 59 per cent of the public believe the NHS requires both increased funding and reform to modernise and improve efficiency. Meanwhile, 80 per cent agree that the NHS needs to change in order to remain sustainable and 71 per cent say they are concerned about the potential for future charges for NHS services.
A majority, around 55 per cent, favour maintaining a tax-funded system free at the point of use. Only 33 per cent support a mixed insurance-based model and just 7 per cent favour a fully private alternative.
The proposals come ahead of the Autumn Budget, where the Treasury is expected to consider a range of funding options. The Good Growth Foundation argues that taxing private healthcare, either through VAT or a windfall levy, offers a targeted route to increase NHS investment without shifting costs to patients or general taxpayers.
Former Labour Party leader Lord Neil Kinnock says: “Introducing VAT on private health provision could provide vital funding for the NHS and social care. After 14 years of underinvestment, many people are turning to private healthcare not out of choice, but because they cannot afford to wait. This has increasingly led to unequal access to care. Ending the VAT exemption to generate much-needed revenue is a reasonable and widely supported step.”
Good Growth Foundation director Praful Nargund says: “We have sleepwalked into a two tier-healthcare system, and we have to back the NHS. It is in a dire state: from 8am GP scrambles to months-long waiting lists. It’s simply not good enough. People are being forced to go private for care they should get for free. That’s not a system in need of tweaks, that’s a system on the brink and in need of major reform. A windfall tax on private healthcare would be a bold, fair first step to fund an NHS the British public deserve.”
Healix Health CEO Ian Talbot says: “While Lord Kinnock’s proposal may be well intentioned, it risks making healthcare access harder at a time when we should be focused on improving it, not restricting it. Employer-backed private healthcare is a hugely valued benefit. Driving up costs will likely mean fewer businesses offer it, fewer employees can access it, and more pressure ends up back on an already overstretched NHS.
“For businesses, it’s déjà vu. We saw the same with the National Insurance hike earlier this year leading to higher costs for employers, and employees feeling the squeeze. As businesses weigh up their options, healthcare trusts give employers more control over the benefits they offer, avoid the 12% Insurance Premium Tax on PMI, and let forward-thinking companies support their people in a way that genuinely works for them.”
