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EDITIONS
Wednesday, 28 November, 2001, 18:07 GMT
Taxing times for Labour
Gordon Brown
New Labour has reached a pivotal moment
Andrew Marr

So tax and spending are back in fashion.

Gordon Brown's commissioning of a report which calls for substantially higher spending on the National Health Service, and for that to come from taxation, is a pivotal moment in the life of the government and - perhaps - in the story of modern British politics.


It has been an absolute faith in British politics that people won't vote for higher taxes

Of course, lots of people have said we need a better NHS paid for with higher taxes, not least the Liberal Democrats.

What is different is that this comes direct from the Treasury, backed up in the Commons on Wednesday by the prime minister.

This time, it's for real.

For almost a generation, since the late 1970s, successive governments have flinched away from openly raising taxes to pay for more generous public services.

It has been an absolute faith in British politics that people won't vote for higher taxes, whatever they say to opinion pollsters.

Taxation by stealth

A deep dishonesty has been built into the system, with politicians promising much better services than they know they dare to pay for.

This hasn't stopped actual tax rises, under the Conservatives and under Labour, but they have tended to be hidden, or 'stealth' taxes, often falling on spending, business and higher duties - anything, more or less, except income tax.

As a result, the British health service is far less well funded than continental health services - and it shows.

Rising public anger over the state of many hospitals, long waiting lists and the need to buy operations abroad may have tipped the balance.

Mr Brown and Mr Blair certainly seem to think so.

Looking to Europe

The Conservatives may even be close to agreeing with them: last week the new shadow chancellor Michael Howard announced that at the next election, the Tories would put better public services ahead of tax cuts as a priority.

Marc Bolan
A return to glam rock?
The Conservatives are studying health systems in Scandinavia, France and Germany to see whether a mix of tax-based health care and compulsory insurance schemes could get enough money into British health, without forcing tax rises.

But the prime minister told the Commons that he had already looked at these schemes and rejected them.

Derek Wanless's report for the chancellor concludes, even at an interim stage, that conventional tax-funded systems are best.

The exact figures are going to be a source of great argument in the years ahead but it looks as if Labour is committing itself to a substantial tax rise, equivalent to several pence in the pound, around the time of the next election.

Rash politics?

That is one heck of a gamble.

Have the British voters changed their spots? And if they have when it comes to the NHS, what about schools and the decaying, delay-clogged transport system? Would they pay higher taxes for those too?

It would be a rash politician who answered yes.

But thanks to the latest coup from Gordon Brown, a politician his rivals were trying to write off only a few weeks ago, Britain has returned to a higher-tax political argument - something many people thought we had left behind with flares, glam rock and British Leyland cars.

The government's pre-Budget report will be on 27 Novewmber


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See also:

16 Nov 01 | Business
12 Nov 01 | UK Politics
31 Jan 01 | Business
02 Nov 00 | Pre budget report
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