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EDITIONS
 Tuesday, 16 April, 2002, 17:19 GMT 18:19 UK
At long last, a real Budget debate

Unless all the leaks about a rise in national insurance are wrong - and that seems unlikely - this Budget will be very unusual: both the government and the opposition are looking forward to it equally.

Both think the other is making a terrible mistake.

One of them must be wrong.

From Number 11, the position is clear - after decades of under-funding of public services, the public has finally changed its mind.

People today are prepared to pay higher taxes to give us the kind of health system we thought we used to have; and one as good as other European countries enjoy.

Broad hints

A steady barrage of softening-up has been going on for months:

  • The first stage of the Treasury's Wanless report into NHS funding, which concluded that a tax-funded service was the best bet.

  • Speeches by Gordon Brown and Tony Blair promising to fund health properly

  • Broad hints too about the need for extra money for transport and crime.

All of these have been used to prepare us for tax rises.

'Grumpy voters'

The final stage of this came in newspaper leaks over the past couple of days intended to reassure the lower-paid that they would not be hit hard, thanks to changes in tax credits.

Chancellor Gordon Brown
Will Mr Brown show his Old Labour colours?
As the old poem has it, "the stocks were sold, the press was squared, The middle class was quite prepared."

But is it?

It is one thing to make the case for "better public investment" in the abstract; quite another to confront grumpy voters with the detail of extra bills.

So which taxes, and how much?

National insurance virtually chooses itself.

Labour committed itself from the mid-1990s not to raise income tax rates, nor to introduce much wider, or higher, rates of value added tax.

They've stuck by that.

Mature debate

As a result, during last year's election campaign, the Tories homed in on the last obvious tax which Labour had not promised to leave unchanged - national insurance.

Mr Howard and his colleagues think this Budget will effectively bury New Labour

Under repeated questioning, and visibly irritated, Mr Brown said the charge that he would raise NI to create an effective 50p in the pound tax rate was a "Tory smear".

But he refused to say that he would not raise the NI rates or ceilings at all.

The public, he said, wanted "a mature debate" instead.

We must assume therefore that any NI increases will fall short of an effective 50p rate.

Because two key tax credits are counted not as welfare spending but tax cuts, it may be initially difficult to spot just how much Mr Brown intends to raise taxation; but a range of 5bn - 7bn looks likely.

Lost faith

The prime minister is rumoured to be uneasy, though this could simply be the old "soft cop, tough cop" routine the two men sometimes play.

We are at last on the edge of a genuine, important and serious debate

Mr Brown faces as his shadow another highly intelligent politician who says the future of the NHS is his overriding mission in politics.

Michael Howard believes that the public have lost faith in the old tax-based and centralised model of the health service and are ready to look at alternative, insurance-based systems, like the Australian one.

'Unreformable'

The Tories have not yet settled on their preferred alternative but will heavily criticise Labour for failing to look overseas and for assuming that the British way is best.

And they can take comfort from recent polling suggesting voters here are indeed also ready for alternatives.

Mr Howard and his colleagues think this Budget will effectively bury New Labour and that Mr Brown's more traditionalist instincts have triumphed over the prime minister's anxiety about Middle England.

They believe voters are now starting to accept that the current NHS is unreformable.

Froth and sleaze

The Liberal Democrats are nearer Labour than the Tories on this, though they too have dropped their old promise of raising income taxes.

They regard NI as a bad alternative.

But the brute fact remains: Labour is committing itself to a radical break on tax after five years of stealth and caution, while the Tories are saying the once-unsayable about the NHS.

After splashing around in froth and sleaze we are at last on the edge of a genuine, important and serious debate on great domestic issues that matter to every voter in the country.

  WATCH/LISTEN
  ON THIS STORY
  The BBC's Andrew Marr
"After decades of underfunding, voters will support higher taxes to create a health service like those in other countries"
 VOTE RESULTS
Would you pay more tax to fund the NHS?

Yes
 38.79% 

No
 61.21% 

14319 Votes Cast

Results are indicative and may not reflect public opinion


Key stories

Analysis

QUIZ

BUDGET DIARIES

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See also:

16 Apr 02 | Business
15 Apr 02 | Politics
14 Apr 02 | Politics
08 Apr 02 | Business
26 Mar 02 | Business
07 Mar 02 | Business
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