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Higher National Insurance 17/4/02

Gordon Brown
After five years in office, the Labour party has thrown away the fig leaf that it doesn't believe in raising tax on people's income.

In the budget, the Chancellor of the Exchequer reached directly into our pay packets.

Just before the last election, the Trade Secretary, Patricia Hewitt said, 'Tony Blair and Gordon Brown have made it quite clear they've got no plans whatsoever to raise the ceiling on National Insurance.'

And he didn't. Gordon Brown did something to National Insurance which took even more money from the citizen: he raised the rate, and he invented a new tax for wealthier people.

Jeremy Paxman discussed if Labour had misread the public's tolerance for higher taxes on income with Alistair Darling, Michael Howard and Matthew Taylor.

JEREMY PAXMAN:
We are joined by the Working Pensions Secretary, Alistair Darling, the Shadow Chancellor, Michael Howard, and the Liberal Democrats Treasury spokesman, Matthew Taylor. When precisely, Alistair Darling, did you decide to raise income taxes?

ALISTAIR DARLING:
(Work and Pensions Secretary)
We decided as part of the Budget judgement that if we were going to spend more, substantially more, on the NHS, that we would have to raise National Insurance. The key issue that we face is that all of us are agreed, there¿s an all-party consensus on the fact we need to spend more on the Health Service. The key issue was whether to do this through National Insurance increases or the Tory alternative of charges and fees, as the Shadow Health Secretary has clearly set up.

JEREMY PAXMAN:
So you are asking us to believe that Gordon Brown, Tony Blair and Patricia Hewitt, and all the others, were telling the truth at the election when they said you weren't planning to muck around with National Insurance, despite the fact that the Wanless Report was commissioned before the election.

ALISTAIR DARLING:
We made it very clear at the general election, and I know this very well, because I spent 45 minutes one day in a press conference, making it very clear that no Chancellor was ever going to go through allowance and tax, and say, "We are never going change them". So we made that very clear, we made an explicit promise¿

JEREMY PAXMAN:
The Prime Minister more or less did.

ALISTAIR DARLING:
No, he didn't. The Prime Minister you saw in the film there, saying he wasn't writing a Budget at that time of the interview. Jeremy, the central issue is firstly, does the Health Service need more money? Secondly, if it needs more money, does it get funding from taxation?

JEREMY PAXMAN:
That's common ground.

ALISTAIR DARLING:
No, it¿s not.

JEREMY PAXMAN:
It¿s common ground that the NHS needs more money, is it not, Michael Howard? Even you want the spend more money on the NHS.

ALISTAIR DARLING:
The difference between us is do you fund it through taxation, increase the National Insurance, or, as Liam Fox the Shadow Health Secretary has made very clear, do you do it through health insurance, fees and charges of what he calls self-pay.

JEREMY PAXMAN:
Michael Howard, you have a problem, because Liam Fox also said that taxes may need to rise in order to improve the NHS.

MICHAEL HOWARD:
We certainly agree that you need to spend more money on health. Unlike the Government, we don't have a closed mind about learning lessons from other countries. We think there are things they do better elsewhere. They clearly have better health care than they do in this country. Some of my more fortunate constituents are being taken by the NHS to France for operations which they would have to wait years for if they stayed at home.

JEREMY PAXMAN:
Which taxes would you have raised?

MICHAEL HOWARD:
What we are going to do is examine how we can best provide the ideals of the NHS, which is first-class health service for the people of this country when they need it, regardless of ability to pay. When we have come up with how we can best deliver that, we'll make sure it's properly funded.

JEREMY PAXMAN:
So as of now, you haven't a clue?

MICHAEL HOWARD:
Look, it's ten months after the election. It might as well be ten minutes after. If we had come up today with a properly worked through scheme, you would laugh me out of this studio.

ALISTAIR DARLING:
Liam Fox has already come up with a scheme. Self-pay means charges.

MICHAEL HOWARD:
This is absolutely serious. It is not a political gimmick. We're engaged in a serious exercise of how we can best deliver world class health care for the people of this country.

JEREMY PAXMAN:
We'll explore the economics of that a little later in another discussion. Let's look at the politics of this. Matthew Taylor, Gordon Brown clearly thinks this is an epochal Budget, if that word exists. He believes that people are willing to be taxed more for directly to fund better public services. If that's so, why didn't more people vote for you at the last election?

MATTHEW TAYLOR:
First of all, people have consistently voted, the majority of people, for parties that have talked about that kind of investment. Contrary to your report earlier, the majority of people haven't voted for tax-cutting parties. That is one of the big problems that the Conservatives have had. I think that people are willing to pay. The evidence is that in 1997, all polls showed that people thought Labour would raise taxes to spend on NHS and education, despite Labour's promises. What they actually got was Conservative tax-cut plans implemented for two years. That's why we're in the mess we are. What Labour have now done, it is a decisive turning point in Labour's approach is to public services and the Health Service in particular, Labour have now accepted the argument we made all along. You can't get something for nothing. They are going to employ more doctors, nurses, provide those residential and nursing home places for the elderly, so they don¿t have to stay in hospital beds that patients need, when actually what they need is Care in the Community. That change costs money. Now, I believe it can win the public over, but only if the money is well spent, and only if it's guaranteed that that money will stick with the Health Service.

JEREMY PAXMAN:
Do either of you think that it was either realistic or perhaps hubristic of Gordon Brown to be talking about a third term? He is apparently extremely confident.

MATTHEW TAYLOR:
They have to start telling the truth. As is perfectly obvious, they didn't tell the truth at the last general election. If they expect people to be taken with them, they do actually, I think, need to spell it out. They¿ve started today, it's a bit late, but at least we might make some progress. What's certainly the case is people won't vote for the Conservative alternative.

JEREMY PAXMAN:
We don't know what it is yet!

MATTHEW TAYLOR:
What we know is Michael Howard has described the NHS as Stalinist. It was actually invented by a Liberal, but never mind. We know that Liam Fox, their health spokesman, has committed them to what he calls self-pay, which is charging you for your care.

JEREMY PAXMAN:
Look, he¿s already ¿fessed up on this. He says they don¿t know what they¿re going to do yet.

MATTHEW TAYLOR:
Michael Howard doesn¿t but Liam Fox does.

JEREMY PAXMAN:
Since when have you known the inner counsels of the Conservative Party better than the Shadow Chancellor?

ALISTAIR DARLING:
Let me answer that question. There¿s two things you need to bear in mind. Firstly, Michael is on record as saying that he believes that the Government share of income spent should be 35%.

MICHAEL HOWARD:
No, not this again!

ALISTAIR DARLING:
You¿re on record, Michael.

MICHAEL HOWARD:
I said that in 1997. What were you saying in the 1980s? Things have moved on.

ALISTAIR DARLING:
Michael, do you not believe that any more?

MICHAEL HOWARD:
No, I don't, and I¿ve said it endlessly.

ALISTAIR DARLING:
You don¿t believe that spending should be 35%? You believe it ought to be reduced?

MICHAEL HOWARD:
Of course I don¿t.

ALISTAIR DARLING:
Of course you do.

MICHAEL HOWARD:
What we now face, largely as a result of the five years of Labour Government, is a crisis in the public services. I've endlessly said that has got to come before tax cuts. Let's not argue about what was said in 1997, let's argue about the problems that the country faces today, because it faces serious problems. It¿s going to face serious problems as a result of your tax increases. We are now one of the most highly taxed countries in Europe. We're one of the most highly regulated countries in Europe. We're becoming less and less attractive to inward investment. As the Secretary of State for Work, you ought to be concerned about the effect on jobs of the large hike in taxes that you have imposed today.

ALISTAIR DARLING:
Actually, as today's employment figures show, there are record numbers of people in work, something that Michael couldn't say when he had the equivalent post ten years ago. Our record there is quite good.

JEREMY PAXMAN:
Let¿s see what about your National Insurance employers charge does?

ALISTAIR DARLING:
Let us come to the central issue before us tonight. There is common ground that the amount of money that needs to be spent on the NHS needs to be increased. The choice is clear, you either do it through taxation or you do it, and I repeat the point, because Liam Fox has said this, you do it through insurance or charges. The question he has to answer is who pays, how much, and if you can't pay, what happen to you? That¿s the difference between the two parties.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.

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