Health Secretary Wes Streeting has dismissed suggestions that private healthcare services could soon be subject to VAT, despite reports that the Treasury was exploring the option. Asked directly whether the idea was being considered, he replied firmly: “It’s not happening.” His remarks come as Chancellor Rachel Reeves prepares for her first Budget in November, under pressure to balance public finances without breaching Labour’s election pledges.

Reeves has faced mounting speculation over potential tax rises, with economists warning additional revenue will be needed to meet her borrowing rules. While Labour’s manifesto ruled out increases to VAT, National Insurance and income tax bands, ministers have stopped short of ruling out changes to how VAT is applied. At present, most private healthcare services are exempt from the 20% sales tax, aside from procedures deemed primarily cosmetic. By contrast, VAT on private school fees was introduced in January, with forecasts suggesting it could generate £1.7bn a year by 2029.

Although Reeves has repeated that her manifesto commitments remain, she has also warned that “the world has changed,” citing global conflicts, trade tensions and higher borrowing costs as factors making tough decisions inevitable. Critics, however, say Labour risks leaving itself little room to manoeuvre.

Some voices within Labour, including former leader Neil Kinnock, have urged the government to remove VAT exemptions from private healthcare, arguing it would provide much-needed NHS funding. Think tanks have suggested such a move could raise up to £2bn annually, though Streeting’s intervention indicates the policy is not on the table for now.