Now Rachel Reeves is urged to slap VAT on private healthcare as ex-Labour leader Neil Kinnock sets out plans to raise billions more for the NHS
Lord Neil Kinnock, the former Labour leader, has called on the Chancellor to remove the VAT exemption on private healthcare at her autumn Budget.
The Labour peer - who also recently told Ms Reeves to introduce a 'wealth tax' - claimed this would 'generate much–needed revenue' for the NHS and would be 'widely supported' by the British public.
The Government's recent U–turns on welfare reform and winter fuel payments have left Ms Reeves with a multibillion–pound black hole to fill in the nation's finances.
This has fuelled expectations she will opt for further tax rises in the autumn.
Ms Reeves has insisted she will stick to Labour's manifesto commitment not to hike taxes for 'working people'.
Prior to last year's general election, the party said this involved not raising 'National Insurance, the basic, higher, or additional rates of Income Tax, or VAT'.
But Labour could see removing the VAT exemption on private healthcare as a loophole to get around their manifesto pledges.
After winning power in July 2024, Labour moved swiftly to charge 20 per cent VAT on private school fees.
Analysis by the Good Growth Foundation found that charging 20 per cent VAT to private acute healthcare – but excluding the use of private hospitals by the NHS – could raise more than £2billion.
The think tank, which has close links to Labour, also conducted polling that found support for greater taxation on public healthcare in order to help fund the NHS.
A survey of more than 2,000 adults, conducted in June, showed that more than half (55 per cent) supported a windfall tax on private healthcare firms.
Lord Kinnock said: '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.'
Praful Nargund, director of the Good Growth Foundation and a Labour parliamentary candidate at last year's general election,said: '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.'
Last month, Lord Kinnock - who led Labour between 1983 and 1992 - outlined his plans for a 'wealth tax' on Britons.
He said a two per cent levy on assets worth more than £10million would raise up to £11billion a year and be popular with a 'great majority of the general public'.
The Tories condemned such a tax as 'the worst thing to do' as they warned of a fresh exodus of wealth-creators from Britain.
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