Blair Back-Pedals Over NHS Tax Suggestions

by Jason Gorringe, Tax-News.com, London

14 January 2002

Amid fears that the public would see such a move as a return to the 'tax and spend' policies of Old Labour, UK Prime Minister Tony Blair and Chancellor Gordon Brown are reported to be moving away from the idea that a rise in income tax might be necessary in order to improve standards and services within the NHS.

In his pre-budget report in November, the Chancellor indicated that a rise in taxes to pay for the NHS was not completely out of the question. However, government sources have claimed that this possibility has been 'overplayed' by the media.

Speaking to the Independent on Friday, an unnamed source explained: 'If taxes rise- and it is still a big if- it would only happen if it was right for the economy. It would be for a specific purpose on public services. We are not going to just think of a number for the sake of it.'

However, although the Prime Minister and Mr Brown are now seemingly united over plans to increase national insurance contributions rather than income tax, a debate has broken out between two of Mr Blair's advisers over whether tax hikes to improve public services in general are necessary.

At a seminar held at the London School of Economics on Thursday, the LSE Director, Professor Anthony Giddens, argued that: 'It is crucial to renew the New Labour project and not simply lapse back into the old one'. He warned that tax increases could jeopardise the currently relatively healthy economy.

However, Michael Jacobs, General Secretary to the Fabian Society, and another adviser to the Prime Minister, disagreed. 'We need to find new ways to tax and spend,' he asserted. 'If we ignore the crucial importance of that issue we will fail in our principal goal of reviving the left of centre and public services.'

However, Mr Jacobs acknowledged that taxes could not suddenly be increased without upsetting the nation's taxpayers, who would want assurances that the money was being spent well.

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