Hospices (VAT)

Jim Shannon Excerpts

Tuesday 10th May 2011 Commons Chamber

[Bob Russell]

I am grateful to my hon. Friend for raising that point, which I was just about to mention. Let me be financially blunt about this: if the hospices did not exist, the excellent work that they do would fall to the NHS and cost the public two to three times more because of the considerably lower cost of hospices, brought about by the special working combination of professionals and volunteers, with fundraising and so on, which is the basis on which hospices were founded and have existed over the years.

I understand that, on average, charitable hospices receive about one third of their funds for the services they provide from statutory sources, which leaves two thirds to be raised to cover all the other costs. This already challenging target is not helped when it is realised that the taxman is helping himself to 20%. I am advised that most local hospices do not have three-year agreements with NHS commissioners, relying instead on year-on-year negotiations that are, by their very nature, subject to budgetary pressures within the NHS. Alarmingly, a survey of member hospices conducted by Help the Hospices last March found that 64% of primary care trusts had frozen NHS funding for hospices for the period 2010-14.

I will set out some statistics about the excellent job that the nation’s hospices do. Collectively, they provide more than 26 million hours of specialist care and support every year, 90% of which is provided through day care services and care in people’s homes, and 77% of adult palliative care in-patient units are run by hospices, with the voluntary sector providing 2,139 adult in-patient beds, compared with just 490 provided by the NHS. All children’s in-patient units in the UK are run by the voluntary sector. Independent voluntary hospice expenditure increased by a fifth between 2007 and 2009, which indicates the continuing growth and importance of hospices in the life of the nation. More than £1 million is raised every day for the nation’s hospices, from fundraising, legacies and donations.

The value of the voluntary work carried out by the 100,000-plus volunteers is estimated to be worth in excess of £112 million every year. Help for Hospices has told me:

“Hospices are unique among providers of healthcare because they contribute so significantly to the funding and provision of hospice and palliative care. In 2009, hospices spent £687 million. For every £1 the State invests in local charitable hospices, those hospices deliver £3 worth of care.”

It thus makes sense that the burden of VAT on hospices should be lifted so that they can do even more good for the benefit of the communities that they serve.

Help for Hospices also told me:

“Hospice care receives overwhelming public support in the UK. A recent survey showed more than 80 per cent of people believe everyone with a terminal illness should have the right to receive hospice care.”

My only observation is that I am amazed the figure is as low as 80%.

I would like to say a little more about the St Helena hospice in Colchester, which I visited on Saturday ahead of this evening’s debate and in order to inspect the newly extended Joan Tomkins day care centre, which was officially opened to coincide with the annual fete in the grounds of the hospice.

The original day care centre, named in memory of the late wife of local business man Mr Robin Tomkins, whose generosity made the building possible, was opened in April 1988 by the Princess of Wales. I remember that well, because my mother was in the nearby hospice and died a few days later. The princess spoke to my father at my mother’s deathbed, and he spoke afterwards of the warmth of compassion that she had shown.

St Helena hospice, the main building, was officially opened in April 1986 by Her Majesty Queen Elizabeth, the Queen Mother, so we have just celebrated its 25th anniversary. As an aside, I should have said that my mother was one of the volunteers in the early months after the hospice opened.

Like other hospices throughout the country, St Helena is rooted in the local community that it serves. It provides free medical and nursing care and therapy to adult patients with any diagnosis. Alongside the two day centres there is also one at Clacton, and there is in-patient accommodation in the purpose-built extension to the historic Myland Hall.

Services are also provided for patients in their own home. Indeed, in the past five years there has been a 58% increase in the services in patients’ homes. St Helena hospice also provides pre and post-bereavement support to family members, including children, and attached to the hospice is an education centre, providing education for health and social care professionals.

It will cost St Helena hospice more than £4.6 million in the current financial year to provide its valuable services, and it would be great if it did not have to pay value added tax, but could instead spend that money on the purposes for which people wish it to be used—supporting the work of their local hospice.

Help for Hospices told me:

“As the population ages and people approach the end of life with ever-more complex co-morbidities, a spectrum of highly flexible and adaptive hospice and palliative care services need to be available.”

[Jim Shannon (Strangford) (DUP)]

Not only the services and the care provided but also hospice-build should be exempt from VAT. Does the hon. Gentleman agree that the Minister should address that in his reply?

[Bob Russell]

The hon. Gentleman makes an exceedingly good point. We have the nonsense, right across the construction industry, whereby new-build is VAT-exempt, but when a building is added to or converted, as in the instance to which I believe the hon. Gentleman has just referred, VAT is levied. When a hospice wants to extend its building, as in the extension and modernisation of the Joan Tomkins day care centre that I mentioned, VAT is levied, as I understand it. That is wrong.

Help for Hospices also told me:

“The Government has committed to a ‘level playing field’ for all organisations delivering public services. However, charitable hospices continue to face extra costs that statutory and private providers do not.

Tax burdens should be removed from hospices where they can be. This is particularly necessary as hospices are providing public services and investing considerable charitable funds into the ‘health economy’ and, unlike other private and public providers of healthcare, are subject to significant funding and contracting challenges.”

I believe that the public would overwhelmingly take the view that the coalition Government should urgently introduce measures to deal with the unfairness of levying VAT on our hospices. I have put forward suggestions as to how that can be achieved, and I now invite the Minister to pursue these matters.