12 JULY 1997, Page 27

Taxation by proxy

Sir: The decision to charge insurance com- panies for hospital treatment for victims of road accidents, like many populist gestures, has more implications than appear at first sight. Since costs must fall somewhere, the insurance companies will recoup these costs in the form of higher premiums. The Chancellor is thus delegating his duty to mop up consumer spending to the insur- ance companies. This taxation by proxy has constitutional implications; it also opens a breach in the principle of a health service free at the point of delivery, which I fear a puritanical government might exploit again. Russell

House of Lords London SW1