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Streeting rules out VAT on private healthcare Streeting rules out VAT on private healthcare
(about 3 hours later)
Health Secretary Wes Streeting has ruled out the UK government imposing VAT on private healthcare in the upcoming autumn Budget. Wes Streeting has ruled out introducing value added tax (VAT) on private healthcare at the forthcoming Budget.
Streeting told the BBC "it's not happening" and repeated that answer when asked if he could guarantee VAT would not be levied on private healthcare. It comes after newspaper reports that the Treasury was looking at bringing private healthcare services within scope of the sales tax.
In the UK, most private healthcare services are exempt from VAT, meaning patients don't usually pay the tax on treatments. But asked whether this was under consideration, the health secretary told BBC Breakfast: "it's not happening".
But Chancellor Rachel Reeves has faced repeated questions about the prospect of tax rises, including VAT, when she delivers her budget in November. It comes as Chancellor Rachel Reeves faces repeated questions about the prospect of tax rises, including VAT, when she delivers her budget in November.
Economists have said taxes will have to go up in the autumn Budget if the chancellor is to meet her self-imposed rules on borrowing to fund public services.Economists have said taxes will have to go up in the autumn Budget if the chancellor is to meet her self-imposed rules on borrowing to fund public services.
In her Labour conference speech on Monday, Reeves said the government was facing difficult choices and promised she would not take risks with the public finances.In her Labour conference speech on Monday, Reeves said the government was facing difficult choices and promised she would not take risks with the public finances.
The chancellor pledged to keep "taxes, inflation and interest rates as low as possible".The chancellor pledged to keep "taxes, inflation and interest rates as low as possible".
But hinting at further tax rises, she said the government's choices had been made "harder" by international events and the "long-term damage" done to the economy.But hinting at further tax rises, she said the government's choices had been made "harder" by international events and the "long-term damage" done to the economy.
In its election manifesto, Labour said it would not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT. Labour pledged in its election manifesto not to raise VAT, along with National Insurance, or the basic, higher, or additional rates of income tax.
But newspaper reports have suggested officials at the Treasury are examining broadening the scope of VAT to help raise further revenue.
VAT is levied at a standard rate of 20% on most goods and services in the UK, unless they are classed as reduced or zero-rated.
Most private healthcare services are currently exempt from VAT, apart from some procedures which are classified as being primarily cosmetic.
Private school fees were also previously exempt, but the government introduced VAT on school fees in January, estimating it could raise £1.7bn a year by 2029/30.
In an interview ahead of her conference speech, Reeves was asked if VAT could rise and she said: "The manifesto commitments stand."In an interview ahead of her conference speech, Reeves was asked if VAT could rise and she said: "The manifesto commitments stand."
That form of words has been echoed by senior ministers at Labour's conference, including Prime Minister Sir Keir Starmer.That form of words has been echoed by senior ministers at Labour's conference, including Prime Minister Sir Keir Starmer.
But when pressed over whether she would have to put up taxes, Reeves said "the world has changed" in the last year - pointing to wars in Europe and the Middle East, US tariffs and the global cost of borrowing.But when pressed over whether she would have to put up taxes, Reeves said "the world has changed" in the last year - pointing to wars in Europe and the Middle East, US tariffs and the global cost of borrowing.
"We're not immune to any of those things," she added."We're not immune to any of those things," she added.
VAT is levied at a standard rate of 20% on most goods and services in the UK, unless they are classed as reduced or zero-rated.
Former Labour leader Neil Kinnock has called for Reeves to put VAT on private healthcare to raise money for the NHS.Former Labour leader Neil Kinnock has called for Reeves to put VAT on private healthcare to raise money for the NHS.
The Labour peer told the i newspaper removing the VAT exemption on private healthcare would provide "vital funding" for public services and be "widely supported" by the public.The Labour peer told the i newspaper removing the VAT exemption on private healthcare would provide "vital funding" for public services and be "widely supported" by the public.
The policy is supported by the Good Growth Foundation think tank, which estimates putting VAT on private acute healthcare could raise more than £2bn.The policy is supported by the Good Growth Foundation think tank, which estimates putting VAT on private acute healthcare could raise more than £2bn.
The high cost of long-term government borrowing and weak economic growth has fuelled speculation the chancellor will need to increase taxes.The high cost of long-term government borrowing and weak economic growth has fuelled speculation the chancellor will need to increase taxes.
Last month, an independent think tank, the National Institute of Economic and Social Research (Niesr), estimated that the chancellor would need to plug a £50bn gap in the public finances.Last month, an independent think tank, the National Institute of Economic and Social Research (Niesr), estimated that the chancellor would need to plug a £50bn gap in the public finances.
But the chancellor played down the figure and criticised such forecasters, saying "a lot of them are talking rubbish".But the chancellor played down the figure and criticised such forecasters, saying "a lot of them are talking rubbish".