Tax rises to cure NHS ills

by DAVID HUGHES, Daily Mail

Gordon Brown signalled significant tax rises yesterday to haul the ailing NHS back on its feet.

The Chancellor lurched back to his Old Labour roots as he indicated taxes would have to increase to bring the health service up to standard.

In his Pre-Budget Report, Mr Brown said the considerable sums needed to end decades of under-investment would have to come from the taxpayer.

This effectively closed the door on any attempts to bolster health funding with more private insurance.

As Health Secretary Alan Milburn looked on, the Chancellor gave every impression of seizing personal control of NHS policy.

Mr Milburn, following the Prime Minister's lead, had championed greater private investment as the answer to the NHS's problems.

But Mr Blair's legendary pragmatism may be satisfied with less private involvement if the Chancellor's traditional high- tax route can deliver Labour's election pledge of big improvements in the health service.

Drawing on the findings of the first independent inquiry into the long-term future of the health sector, Mr Brown called for a 'national debate' to unite the country behind his tax-and-spend prescription.

It would, he claimed, determine not only the 'long-term future of the health service but the character of our country'.

He said he would pour another £1billion into the NHS next year, adding to the extra £5billion already committed.

The announcement dominated a Pre-Budget report in which an amazingly bullish Chancellor predicted the British economy would barely falter this year or next and grow strongly the year after - despite the growing worldwide recession.

He surprised the City by saying he was not revising his growth forecast of 2.25 per cent for this year and merely shaving next year's from 2.25 to 2 per cent. The following year, he predicted, it would kick back up to 2.75 per cent plus.

Mr Brown also offered his traditional pre-Christmas boost to Britain's 11million pensioners, setting out details of the new pensioners' tax credit. There will be a minimum £100 increase each year on the basic state pension and the £200 winter fuel allowance for each household is guaranteed until 2005.

In addition, the Chancellor unveiled a raft of measures to cut red tape for small businesses, boost enterprise, and invigorate inner cities.

He cheered up punters by scrapping the tax on football pools and delighted aid agencies by promising big increases in overseas aid.

But the future of Britain's rundown National Health Service remained his biggest pre-occupation.

Brandishing a 220-page report by former NatWest boss Derek Wanless on the long-term future of health, Mr Brown had all the ammunition he needed.

Mr Wanless has looked in depth at health services in Britain's competitor countries and investigated the benefits of private insurance and social insurance.

His verdict was clear - and the Chancellor seized on it with glee.

'Mr Wanless's view is that the principle of an NHS publicly-funded through taxation, available on the basis of clinical need and not ability to pay, remains both the fairest and most efficient system for this country,' he said.

But there would be a high price to pay. Mr Brown revealed the Wanless report had uncovered a 'history of under-investment over 50 years and a long-term lack of capacity.'

He pledged a steep change in the level of health spending.

'It will be right to devote a significantly higher share of national income to the National Health Service,' he said.

Later, the Chancellor's deputy declared Labour was ready to raise taxes for a better NHS.

While Mr Brown had been careful to avoid any mention of tax rises in his Pre-Budget Report, Treasury chief secretary Andrew Smith was more explicit.

'I do not rule out the need to increase taxes, and no responsible Chancellor would rule out the need to increase taxes, if that is what it took to keep the NHS as the people of this country want,' he told BBC2's Newsnight.

'I don't believe anybody who cares about the National Health Service - as I do, as the Labour Party does - would rule out taxation as an option.'

He also signalled that Labour would examine increases in National Insurance by insisting that ministers would keep to their election promise not to increase income tax.

Former Cabinet Minister Peter Mandelson also admitted taxes could rise.

'I do not rule out increased taxation to pay for seriously improved public services,' he told Newsnight.

Asked if this meant Labour might go into the next election committed to higher taxes, he replied: 'They could be.'

Although taxes will not rise next year, increases later in this Parliament are inevitable if Mr Brown's vision of the NHS is to be delivered.

Tory Shadow Chancellor Michael Howard was scathing about Labour's vision of Britain's health service.

'Gordon Brown has asked for a blank cheque for the NHS,' he said.

'But it is now clear to everyone except Gordon Brown that without fundamental reform of health care, more money will not deliver the results which the people of this country are entitled to expect.

'Today Gordon Brown turned his face against any fundamental reform of the NHS. It is a black day for health care in Britain.'

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