Health and Social Care Bill

Debate between Lord Noon and Baroness Finlay of Llandaff

Monday 14th November 2011 Lords Chamber

[Lord Noon]

My Lords, I wish to support the amendment moved by my noble friend Lord Patel of Bradford. I declare an interest as chair of the Noon Foundation, which has made significant donations to charitable organisations and others concerned with the care of those living with cancer and those in hospices or receiving palliative care in the community.

My noble friend has outlined many of the key issues faced by the charitable sector with respect to VAT exemptions. I do not want to repeat these arguments, but let me add further information on the scale of the services that we are discussing. The combined contribution of these services amounts to more than 26 million hours of care every year. In excess of 2,000 adult in-patient beds are provided by the voluntary sector and more than £1 million is raised in charitable donations every day.

Of course, these are voluntary sector services that rely on thousands of people who give up their time to ensure the work is done. In fact, the estimated value of the 100,000 volunteers is said to be more than £112 million each year. The value of this sector as a whole in providing hospices and palliative care is in the order of £3 worth of care for every £1 invested. This is an outstanding achievement that should make all of us very proud. It is also why we should be doing much more to protect the sector and ensure that it can operate and grow on a level playing field.

I am a businessman so I know something about VAT and the need for equality in financial arrangements when different providers are in the same market. I am perhaps less anxious than some about the use of competition as a driving force in healthcare. I believe that competition can be harnessed for good and that there are many benefits to be realised by opening up the healthcare sector to this kind of discipline. However, competition must be fair and the current arrangements on VAT between health services and the charitable sector are certainly not fair.

One of the charities that I have been most closely involved with, as a donor and a supporter, is Marie Curie Cancer Care. Marie Curie provides high-quality end-of-life nursing care throughout the UK and has more than 2,000 Marie Curie nurses, who care for half of all cancer patients who die at home. These nurses provide essential care for patients and their families at the most stressful time of their lives. I have met many of these nurses, and their dedication and passion is second to none. They not only provide essential practical support to people as they face the end of their lives but are an emotional support for the whole family.

In addition to a range of community and home nursing services, Marie Curie is one of the largest providers of hospice care outside the NHS in the country. It runs nine specialist hospices which deal with all the patients’ needs—physical, social and emotional—across in-patient and day-care services. These services are vital to those who use and need them but we should put them in this context: 65 per cent of people say that they would like the choice of being able to die in their own home, surrounded by family and friends, but the reality is that only 20 per cent manage to achieve this choice.

It is clear that we need more of these provisions, and the Health and Social Care Bill will help to extend them. The new arrangements for commissioning mean that other organisations can provide more health services. This will also mean that there will be much more competition from lower-quality commercial organisations, but we must support them to be able to do this. Part of that support must be to ensure that there is a level playing field in respect of VAT. We should not expect charities to take up an extra burden in providing these vital services by expecting them to take on costs that do not currently apply to the NHS. The amendment provides a way of achieving this social goal by placing a clear duty on the Government through the Secretary of State’s report to Parliament on the treatment of VAT provisions across the charitable sector. I hope the Minister agrees that it is an important move in the right direction and will support the amendment.

[Baroness Finlay of Llandaff]

My Lords, I declare all my interests in relation to hospice and palliative care services.

The amendment is particularly important because of the any qualified provider provision which seeks to bring in more charitable sector providers, working with NHS commissioners, to provide essential services where the NHS is not able to plug the gap. That is why there was a debate in the other place in May this year on the effect of VAT on hospices. However, it goes much wider than simply hospices.

The VAT gap means that the private sector can claim back VAT by passing on the cost to customers; the public sector pays VAT, which is then refunded by government; but the charitable sector can do neither—it fund raises. In the hospice world—I am grateful to Help the Hospices for the figures—an average hospital in the UK, supporting about 1,000 patients and spending £8 million on care, may receive about 30 per cent of its funding from the NHS but it will spend about £82,000 on irrecoverable VAT. So money has to be raised just to cover that VAT gap.

As the hospital takes on more and more responsibilities, the problems become greater. As we try to get hospices to work together on joint ventures and share services with other providers and other charities, one hospice has to recharge services to another—one voluntary sector provider to another—including VAT, and that cannot be recovered. It also cannot recover any VAT on the repair and construction costs of charitable buildings. As there is increasing use of its buildings and it needs to upgrade to meet more modern quality requirements, VAT becomes a problem because, for the hospital to provide the quality service that we need, it has to outlay on capital expenditure.

The other difficulty is that VAT is fairly complicated for charities and requires expertise to manage the VAT process for them, which of course also incurs a cost on them in terms of personnel, which again is irrecoverable.

This is an extremely important amendment and the principle behind it has to be tackled if the fundamental idea of any qualified provider is to work in practice in the long term and provide stable, quality clinical services.