Charge VAT on private healthcare like independent school fees, Kinnock tells Reeves ...Middle East

The former Labour leader said that removing the VAT exemption on private healthcare would provide “vital funding” for public services and be “widely supported” by the public.

Reeves is spending her summer contemplating what taxes she will have to raise in the Budget. The hikes are needed to fill a hole in the public finances caused by weaker economic growth and U-turns on welfare reform and cuts to the winter fuel payments.

However, removing the VAT exemption which applies to most private healthcare services could provide Reeves with a loophole to get around the commitment.

And it has a precedent in its decision to put VAT on private school fees last January.

Now, Kinnock has intervened again to urge Reeves to remove the VAT exemption on private healthcare.

“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.

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The policy is supported by the Good Growth Foundation – a think-tank with close links to the government and run by the former Labour parliamentary candidate – Praful Nargund.

Applying 20 per cent VAT to private acute healthcare but excluding the use of private hospitals by the NHS could raise more than £2bn, the Good Growth Foundation believes.

The Good Growth Foundation argues that the impact of the Covid-19 pandemic on the NHS and the resulting increase in waiting times has driven up demand for private healthcare, giving the sector a “windfall” in profits which would merit additional taxation.

Data from private healthcare analysts LaingBuisson published at the start of 2025 suggested that 4.68 million people – or one in eight Britons – now has private medical insurance – the highest proportion since 2008.

Nargund stood as Labour’s unsuccessful candidate against Jeremy Corbyn in Islington North at the election, and previously ran a private healthcare company providing IVF services.

“The NHS is in a dire state: from 8am GP scrambles to months-long waits for cancer care, this is simply not good enough. People are being forced to go private for care they should get for free.

The Treasury declined to comment on whether it would consider applying VAT on private healthcare in the Budget, saying it did not comment on speculation around tax changes outside of fiscal events.

A Government spokesperson said: “Thanks to this government’s record investment, reforms and the hard work of NHS staff, we’ve cut the waiting list by over 260,000 since July 2024, which also fell for the first time in 17 years in April and May outside of the pandemic. On top of this, we have also delivered 4.6 million appointments – more than double the 2 million we promised.”

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