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Sunday, 22 September, 2002, 16:16 GMT 17:16 UK
Lib Dems press for NHS tax
Nurses in an NHS hospital
Whitehall would not set targets under Lib Dem plans

The Liberal Democrats have become the first major UK political party to call for a specially earmarked tax to raise money to fund the NHS.

All National Insurance contributions should be used to fund healthcare, says the party in plans to be debated at its annual conference in Brighton.

We need to know the money is there for the NHS

Charles Kennedy
The call came as the Liberal Democrats unveiled the results of a review of their proposals for public services.

A new local income tax to fund schools and other local services, as well as plans to scrap Whitehall hospital targets, are among the other proposals.

Transparency pledge

The Lib Dems claim the package, called Quality, Innovation, Choice, contains the most "ambitious plans to rescue Britain's crumbling public services in a generation".

The party sees an earmarked tax for the NHS as the best way of showing people their money is being spent on the right things.

Chris Huhne, Lib Dem MEP
Huhne says boom and bust in public spending must stop
Lib Dem leader Charles Kennedy said: "We need transparency in funding. We need to know the money is there for the NHS and we need to be sure it's being spent effectively."

National insurance, which would be renamed the NHS contribution, would be less vulnerable to changes in the economic cycle than other taxes, it says.

Lib Dem MEP Chris Huhne, who headed up the review, said the aim was to "end the boom and bust in public spending".

Decentralisation is another key principle underlying the new Lib Dems' policy plans.

Mr Huhne said only his party was prepared to trust local people.

That approach contrasted with government talk of decentralisation, he said, accusing ministers of setting targets and political aims and then saying: "You, oh local people, will deliver."


The plans try to bridge the apparent contradiction in giving power to local people and having basic national standards.

On healthcare, the Lib Dems argue those national standards should be agreed at the new regional level of government they want to see across the UK.

There are plans too for school league tables to be replaced with "annual progress reports".

Children in a primary school class
'Schools should be funded from local income tax'
Mr Huhne said he was not against education league tables "per se" but they needed to measure the value added, not just reflect the school's intake.

The review has rejected the idea of education vouchers, which are designed to give parents more choice over schools.

Mr Huhne said allowing parents to pay more on top of such vouchers would just offer a "subsidy to the upper middle classes and Conservative MPs".

Local tax choices

Without such top-ups, vouchers only made it explicit that funding should follow pupils to their choice school - something the Lib Dems are proposing anyway.

The party is abandoning its long-held pledge to put a penny on national income tax to fund education.

Instead, it wants some local services to be delivered through a new local income tax.

"People would influence choices over funding levels through local elections," says the policy paper.

Critics of such a change argue that some areas do not have enough wealthy people to produce enough revenue through such a tax.

But Mr Huhne countered: "The reality is that any local tax source is going to suffer from this problem."

What was needed was a better way of redistributing taxes collected nationally so it went to the areas needed - a criticism of the current council tax system, he said.

'Public vs private'

There are divisions among Lib Dems, as in the Labour Party, on whether private companies should be involved in running and financing public services.

Mr Huhne said the review team had "tried to get away from the sterile debate about public versus private".

The plans instead press the need for new "mutual" public benefit organisations which can charge for services but use profits to provide better and cheaper services.

They might be modelled on housing associations, suggested Mr Huhne.

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04 Apr 02 | Politics
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