NHS hospitals face vital vote to free them of £400m a year tax bill

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Under-pressure NHS hospitals are waiting on a crucial MP vote on Friday on a Bill that could free them entirely from business rates – saving them nearly £400 million a year.

Tory MP Peter Bone, who has proposed the Bill, wants to make all NHS hospitals across England and Wales exempt from crippling business rates, it has emerged.

In details of the Bill only published for the first time last Friday, it confirms that MPs will be voting not only to abolish controversial car parking charges for patients and visitors at NHS Hospitals, but also on the complete rates exemption.

It marks the latest twist in an ongoing dispute over hospitals and business rates, with a group of 20 NHS hospital trusts having separately launched a legal bid for charitable status relief.

The trusts began High Court proceedings against 49 local authorities earlier this month seeking to be treated the same as private hospitals for tax relief, which would allow them to save 80% off their rates bills.

If the parking and rates Bill is passed into law, it will free them entirely of the tax burden, saving NHS hospitals in England and Wales more than £399 million a year – or £1.6 billion over the next four years, according to real estate adviser Altus Group.

The Royal London Hospital, which has the highest rates bill among NHS hospitals in England and Wales, would save £9 million a year, while the University Hospitals Birmingham NHS Trust would save £7 million.

But the Bill is set to stoke fears over council funding, with the Local Government Association (LGA) already warning over the threat to the financial viability of some local authorities if hospital rates are slashed.

Alex Probyn, president of Altus, said a total exemption could see businesses shoulder the extra tax burden in the years ahead.

He said: “For many people, it is iniquitous to treat NHS hospitals like businesses and expect them to pay normal business rates, but exempt hospitals and you simply rob Peter to pay Paul.”

“Exempt large land-hungry parts of the public sector and the burden of funding local services simply has to shift to businesses under the next revenue neutral revaluation,” he added.

Figures from Altus show there are 1,544 NHS hospitals in England and Wales, which collectively will pay £399.2 million in business rates for 2018-19, up £81.2 million since the property revaluation came into effect last year.

Over the current four-year tax regime, this will see them pay £1.62 billion in business rates – a four-year tax increase of £344.4 million.

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