Healthcare and Tourism

Jeremy Hunt's latest campaign is a xenophobic attack on foreigners, but even though the message is simple he has - typically - delivered it incompetently. Hunt claimed in the Press that "health tourism" cost the NHS £200m, but when challenged in the Commons, Hunt admitted that he did not know:

Steve McCabe (Birmingham, Selly Oak) (Lab): If we are to make this work, do not we need a clearer idea about the real cost? Is it the £200 million that the Secretary of State has been quoted as using, the £10 million suggested by the Prime Minister, or the £33 million that the Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), has cited in a parliamentary written answer?Mr Hunt: The truth is that we do not know the cost, which is why we are carrying out an independent audit this summer. The £12 million figure is the amount written off by the NHS each year because of unpaid overseas invoices, but many people think that the costs are much greater. We want an answer for the hon. Gentleman and everyone in the House, so we are carrying out that independent audit and we will publish the results later in the autumn.

So the figures given by various government ministers are either £10m, £33m or £200m. Even if the top figure is used, that represents only 0.2% of the NHS annual budget. However, £200m is still a significant amount of money - the income of the soon-to-be dissolved Mid Staffs Foundation Trust (pdf) was £156m in 2011/12.

In the Commons, Hunt said

"On 3 July, my Department and the Home Office launched co-ordinated consultations on a range of proposals on a new charging system for visitors and migrants in which everyone makes a fair contribution to health care. Those include making temporary migrants from outside the European economic area contribute to the cost of their health care, and introducing easier and more practical ways for the NHS to identify and charge those not entitled to free health care."

Hunt intends that illegal migrants and tourists should pay NHS charges, he calls it a "fair contribution" to the NHS. However, this conveniently ignores the fact that the NHS is paid for from general taxation.

It is a common misconception that National Insurance pays for the NHS. It cannot. In 2011 National Insurance contributions (NIC) for the entire UK was £101.6bn, yet the NHS for England alone was allocated £101.5bn, so NIC would not cover the cost of NHS across the entire UK, nor the other reputed responsibilities of the tax: pensions and unemployment benefits. National Insurance is simply a payroll tax that contributes to general taxation (about 22% of all tax revenues).

VAT and excise duty (fuel duty, duty on luxuries, alcohol, tobacco, etc) also contribute to general taxation, and anyone, of any nationality, purchasing goods and services in the UK will be paying these taxes and contributing to the NHS. In 2011, VAT revenue was £98bn (21% of total tax collected), fuel duty was £26.8bn (5.7%), and sin taxes (duty on tobacco and alcohol) were £19.6bn (4%). Foreign visitors, and illegal migrants, will be contributing these taxes and paying for our NHS, a healthcare system that few of them use.

In 2011 29 million foreign tourists visited the UK and according to the Tourism Alliance (pdf) income from tourism is equivalent to 8.9% of GDP, so tourists make a significant contribution to the country's wealth. Furthermore, the Tourism Alliance estimate that tourists paid £18bn of VAT (or about 18% of total VAT).

Compare these two figures: tourists contribute £18bn of VAT but "healthcare tourism" costs the country £200m (or £33m or £10m, take your pick). It looks like we get far more from tourists than "healthcare tourists" get from us.