The House of Lords has voted for an amendment to the Health and Social Care Bill requiring government to report to Parliament on the VAT treatment of supplies used by charities providing healthcare services on behalf of the NHS.
The amendment, which just passed with 195 votes to 183, was proposed by Labour’s Lord Patel of Bradford, and requires the government to provide a report within one year of the Health and Social Care Bill passing. Hospices in particular claim the current VAT system puts them at a financial disadvantage to NHS providers.
However, the Bill has four further stages to go through Parliament, and is still subject to change.
Lord Patel said he tabled the amendment “after Sue Ryder brought this inequality in tax treatment to his attention”.
Sue Ryder has been campaigning for the government to cut red tape on VAT for charities and the care they provide since January 2011. CFDG and Help the Hospices have also been lobbying HM Treasury on the issue, and too are claiming the vote as a victory.
As part of the Government’s health and public service reforms, more NHS services will transfer to the charity sector, so Sue Ryder is encouraging the government to put charitable healthcare providers on an equal footing with the NHS in relation to VAT recovery. Currently, when a hospice provider such as Sue Ryder takes over an NHS service, it will end up with a bigger tax bill as, unlike the NHS, it is unable to claim tax on certain items. In order to meet these added costs, the charity has to use funds raised locally, which should be going on front-line care.
Paul Woodward, chief executive of Sue Ryder, said the charity is "delighted" at the vote in the Lords. “It marks a significant milestone in our campaign and is a victory for all charitable healthcare providers. We whole-heartedly support the idea of charities delivering more high quality, innovative and cost-effective public services but this is only possible if we are afforded the same VAT benefits that the NHS and local authorities are given."
Woodward described VAT as "a significant burden on all our care services". One of the Sue Ryder hospices, he said, incurred an annual VAT bill of £44,000, 57 per cent of which would be recoverable if the service was provided directly by the NHS.
“These funds would allow the hospice to employ a nurse for around 44 weeks, provide 1,500 bereavement sessions for families who have lost a loved one or provide 2,500 hours of support from a carer.”
One of the hospices campaigning as part of the CFDG/Help the Hospices push said that its VAT bill amounted to the equivalent of 200 days of individual care.
A statement from CFDG on the House of Lords vote said that the current VAT situation puts charity hospices at a "huge disadvantage".
"It is important that the government look at this issue with urgency given the increasing demand for hospice and palliative care, and as more services are contracted out to the voluntary sector," the CFDG statement said.