Reform UK’s proposal to offer tax relief on private health insurance would cost the country £1.7bn, the health secretary, Wes Streeting, is expected to say.
Streeting will make the claim at a conference organised by the Fabian Society on Saturday, where he is due to describe the policy as a “tax cut for the wealthiest”.
Ahead of the 2024 general election, Reform UK pledged to introduce 20% tax relief on all private healthcare insurance policies if it won power. The party said the move would improve standards of care by easing pressure on the National Health Service.
Reform leader Nigel Farage reinforced the pledge 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.”
According to government estimates, civil servants at the Department of Health and Social Care calculated the potential cost of the policy using figures from healthcare consultancy LaingBuisson, which values the UK private healthcare market at around £8.6bn.
Streeting is due to speak at the central London event alongside the energy secretary, Ed Miliband, and Labour’s deputy leader, Lucy Powell. He is expected to tell delegates that the NHS will be a key issue for Labour in campaigning ahead of May’s local elections, where Reform is forecast to make gains.
“Farage says he wants an insurance-based system of healthcare,” Streeting is expected to 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.”
Most private healthcare policies in the UK are paid for by employers and provided to staff as a benefit in kind. LaingBuisson estimates that company-funded healthcare plans are worth about £5bn a year, while individual policies account for around £3.6bn.
Employees with workplace healthcare benefits pay income tax on the value of the cover at their usual rate, with the basic rate set at 20%. The government’s assessment assumes Reform’s proposed tax relief would apply equally to both company-backed and individually purchased policies.
Those who buy their own private healthcare typically pay income tax on the money used to fund it and are usually charged an additional insurance premium of around 12%, meaning the cost to the Treasury could be substantial if the relief were introduced.