Brown outlines NHS vision

Mr Brown also re-affirmed the government's commitment to the NHS in the short-term by announcing an extra £1bn for health next year. NHS spending will now rise by £6bn in 2002, an increase of 7% in real terms.

But significantly, the chancellor used Tuesday's pre-Budget speech to tell MPs the government wanted to draw up long-term funding plans for the NHS.

He called for cross-party consensus on the future of the health service, which he said, would continue to be funded from general taxation.

However, the Conservatives criticised the government for failing to deliver a better NHS after more than four years in office and of making promises it will not keep.

Mr Brown said the government wanted to spend more of the country's income on the health service.

His comments were seen as a strong hint that tax rates may have to rise in the future to fund healthcare in the future.

An interim report into the future of the health service, published Tuesday, suggested the service could collapse unless spending is increased significantly.

Percentage of GDP spent on health:
UK 6.9%
Netherlands 8.7%
France 9.4%
Germany 10.3%

NHS report

The report, by former Natwest bank chief executive Derek Wanless, concluded that while financial pressures on the NHS will grow over the next decade, it should continue to be funded by taxation.

Mr Brown told MPs: "I believe that as we plan to make our budget and spending decisions next year, and to fulfil all our commitments to economic prosperity and social justice it will be right to devote a significantly higher share of national income to the NHS.

"The decisions we will be making will be for a decade or more. The way we make these decisions, whether we can forge a new consensus across parties and across Britain, will determine not only the long-term future of the NHS, but the character of our country.

"I believe that out of this debate an enduring national consensus can be built around the two central conclusions at the heart of this report - that a publicly funded NHS is best for Britain and that a modernised NHS will need significantly greater capacity and significantly more long term investment."

He added: "Mr Wanless' 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."

But shadow chancellor Michael Howard criticised Mr Brown. "Every year they make these promises. Every year they break them."

Dr Evan Harris, health spokesman for the Liberal Democrats, said: "The chancellor's recognition that more resources are needed for the NHS is a welcome admission that previous under-funding has eaten away at staff morale, retention, and NHS capacity.

"Honest politicians own up to the cost of a decent health service, and the tax implications, before an election and not six months afterwards."

'Reform needed'

Speaking earlier on Tuesday, David Hinchliffe, chairman of the Commons Health Committee and Labour MP, said the NHS required far reaching reform, not just increased investment.

He told the BBC: "Clearly the NHS faces increasing demands.

"My concern is that we are avoiding debate about some of the key structural weaknesses that do, in the end, cost a huge amount of money."

On Sunday, Labour Party chairman Charles Clarke admitted that Labour has so far failed to transform the NHS.

In a BBC Radio 4 interview, he said: "The fact is there have been massive improvements in some parts of the NHS but in other areas we have even gone backwards."