30/09/2025
Providers and patients alike will be eagerly following the headlines coming out of the Labour Party Conference this week and anticipating how these headlines might translate into policy implementation. The conference’s spotlight on health comes as no surprise given that some of Labour’s most notable announcements since coming into power last year have been in this area - the abolition of NHS England, the NHS 10 Year plan and joint working with the independent health sector to tackle NHS backlogs.
Chancellor Rachel Reeves’s hint about the status of VAT on private healthcare came under immediate scrutiny as Secretary of State for Health and Social Care, Wes Streeting, quickly responded to say that it was ‘not happening’. Is this mixed messaging just political posturing or perhaps a soft start to a broader campaign by the Chancellor to warm up people and businesses for a swathe of tax rises in November?
If, despite the Health Secretary’s protestations, VAT on private healthcare is a reality then the hit on individuals, businesses and employees is an economic gamble. Increasing the out-of-pocket costs may see some self-pay private patients being priced out and having to rely on NHS services, increasing the existing capacity pressures. The rising cost would also increase the costs of private medical insurance; an increase that businesses offering PMI as an employment benefit would have to address. Businesses will have to respond by either decreasing their PMI benefits or find cost savings elsewhere which could hit employee pay, benefits and recruitment.
The hospitals and clinics providing private patient services (including independent health care organisations as well as NHS private patient units) would also be negatively affected by an additional 20% charge on their services. Given the steady and strong growth in patients accessing private health services in recent years, an increase in the cost is unlikely to reverse the trend entirely. However, just as in many other sectors, organisations providing private health services are grappling with mounting operational costs while trying to deliver good quality, safe services for their patients. They will need to find ways of keeping costs down further in order to retain their customer base. A further 20% cost will pile on even more pressure and is likely to come at the expense of business growth, recruitment and investment in services. This pressure risks hampering business sustainability and growth for providers, whose services are ultimately provided to patients who are accessing the care they need, when they need it. Is this really what the Government wants, given the ambitions it has set out in the NHS 10 Year plan and the continuing backlogs in NHS elective care?
Meanwhile, it’s a tentative thumbs up from both patients and providers on the announcement of an online hospital by 2027. The objective is to deliver a patient experience initially involving a virtual consultation that may, if needed, result in a direct referral for a scan or test at a conveniently located diagnostics centre. This should inevitably free up access for face-to-face appointments and hospital-based care for those who need it most. The online hospital would neatly fit within the new NHS 10-year plan and its three key transitions for the NHS: from hospitals to communities, from sickness to prevention, and from analogue to digital.
While it is clear to see how it fits within the plan, more work is needed from the Government to show how this can be rolled out at scale in a meaningful way. Such an implementation requires several moving parts to work in tandem and at pace: rolling out the expansion of CDCs, buy-in from clinical staff, developing the digital infrastructure and a long-term plan to implement it in a more widespread way. It does at least give patients and providers a tangible – albeit virtual - example of how the Government is intends to implement the principles and ambitions of the 10-year plan.
As if they weren’t already, all eyes are on the 26 November budget to see how these Conference conjectures develop.
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