No tax break for private providers

Earl Howe gave his assurances following reports that the health service’s economic regulator, Monitor, was proposing to suggest that firms should receive tax breaks to level the playing field with NHS providers.

Monitor later ruled out making the recommendation as part of a review into NHS competition, but fertility expert and television presenter Lord Winston on Monday called for further clarification.

Lord Howe told him: “The government will not be exempting private providers of NHS services from corporation tax.

“The purpose of Monitor’s Fair Playing Field Review is to ensure that any providers be they NHS, for profit, community or voluntary sector organisations who are able to improve the services offered to patients are given a fair opportunity to do so.”

Private sector providers have argued that NHS hospitals have an unfair advantage as they are not burdened with corporation tax, but opponents say it is unfair for firms not to pay tax on profits earned through doing NHS work.

Lord Winston said he was “deeply reassured that corporation tax will not be in the equation”.

But he asked Lord Howe: “Given that the NHS is not good at costing out its actual treatments, how it can be sure that the private sector will not charge what it thinks the market will bear rather than the actual cost of the treatment it is delivering?”

Lord Howe said competition should be on the basis of quality and not price.

“We need to arrive progressively at a system of tariffs which fairly reflect the value and cost of the work providers do and all providers should compete equally on that basis,” he said.