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Tuesday, 4 January 2011

Broken Promises Cost The NHS An Extra £250 Million

It was trumpeted widely by both arms of the ConDems at the recent election, that VAT would not rise. That was a lie, because today it has. The vacuous Osborne, has increased it to 20%. It is also significant to remember that only Tory Chancellors have done so, Geoffrey Howe in 1979 raised it from 8% to 15% and Norman Lamont then increased it to 17.5%. It has been the 'milche cow' of successive Tory Governments since it's inception, who in general, and quite wrongly view it as 'progressive'. As the poorest will be hit hardest, it is difficult to see it as anything other than regressive.

Osborne has stated, that he views this increase as "unavoidable", so as to raise £13.5bn towards the deficit, but this is due to the reluctance of this and the previous Government, to increase Corporation Tax or a levy on the Banks who caused the deficit (largely) in the first place. This increase will cost the average household in the UK some £425 per year and likely cost an additional 47,000 jobs in the retail industry. As we have been hit hard by recent increases in the cost of energy, just at the time of the worst winter since records began, together with ever rising cost for motor fuel, partly due to the rise in duty, which in turn then has Vat applied to it (a tax on a tax?), which will now rise again with this increase, it is somewhat hard to see any economic logic, in the increase.

This rise will also add an estimated £250m to the costs of the NHS at a time when they are supposed to be looking for a saving of some £20bn over the next few years. In addition the issue of VAT in general, is going to figure quite highly in the proposal to allow GP's to commission all NHS services in the future. Most GP's are not VAT registered because their Practises are exempt, unless they are dispensing practises (with a pharmacy attached) and even then, most of their output is exempt. This will change however when then they become commissioners of services and providers of that same service, because they will have to bill it somewhere and be billed for many aspects of it themselves. This of course creates an opening for the need for more 'bean counters', to assist in this endeavour and the 'big four' accountants, who already have a stranglehold on both NHS and Government accounting and audit, will no doubt be ready to fill this gap (despite their piss poor record). NHS Trusts and PCT's seem to find it impossible to account for their money, especially VAT, so they employ outside bodies such as these to do it for them and pay the exorbitant fees for the privilege.

So then, the 'law of unintended consequences' comes into play. Costs will rise in the form of VAT that cannot be reclaimed, and the 'big four' will flourish as a result, GP's will flounder in a welter of bureaucracy and the Government will reap the consequent tax benefit. And, of course the poor old taxpayer will be caught in the middle, paying for it all, at a time when they can ill afford it. Cameron and his millionaire cabinet will not even notice.  Maybe that was the plan?

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