This is the admission that William Hague managed to extract from Blair at Prime Minister's Question Time this week: "If we look at the figures, the tax burden will rise over this parliament." Bingo! Taxation is back on the political agenda. The Conservatives will repeat this quote endlessly in various distorted forms between now and the next election.
They were off almost before Blair had sat down. The Daily Mail, attacking this Government these days as ferociously as any previous Labour administration, declared that Blair had revealed the "unpalatable" truth. Middle England's bible declared the Government was "cutting into the prosperity of hard- working middle classes". Meanwhile, Tory MPs queued up outside the broadcasting studios immediately after Question Time to denounce a betrayal of the voters at the last election.
The Tory onslaught is preposterous. The tax burden went up over the 18 years of Tory rule, although it was disguised to some extent by the cuts in income tax. What is more, the burden was forecast to go up further if the Tories had been re-elected. John Major admitted as much during the last election campaign and gave a convoluted excuse about how the growing tax burden reflecting the higher incomes of most people. In other words, for the Conservatives the rising tax burden was a triumphant consequence of their economic boom. For Labour it is a betrayal of the middle classes.
A weak opposition making preposterous claims does not mean, however, that this is a fleeting, trivial political moment. Tax is always debated in terms of hysterical hyperbole and the propaganda nearly always hits home. It is a myth, for example, that tax ceased to be a potent issue at the last election. The campaign was shaped by the issue as much as in 1992, but in a more subtle way.
Labour was so terrified of being associated with any tax rise that plans for higher spending on education and health were kept secret until the election was safely out of the way. The Five Early Pledges were aimed at showing that Labour could "make a difference" without putting up taxes. The two-year spending freeze illustrated dramatically that there were no hidden plans requiring tax increases. The last election, like the four that preceded it, can be explained only in the context of tax. The next one, too, will be shaped by this issue more than any other.
What is more, the Tories have a point. The Government has been putting up taxes. Gordon Brown has been increasing them by stealth, while leaving income tax untouched. One of Charlie Whelan's proudest moments was The Daily Telegraph's headline after last year's Budget which screamed across the front page "Brown Spares The Middle Classes". Brown had done nothing of the sort, but he had uncovered ways of raising money that did not hurt politically. Indeed he has been doing this sort of thing brilliantly for years. Ever since he unveiled a "popular" tax, the one-off hit on the privatised utilities, he has been finding new ways of raising cash without political pain.
The Tory governments of Thatcher and Major did the same. All have worked on the assumption that if income tax was left untouched, or reduced, other measures to raise cash were possible.
But after 20 years of raising cash by stealth, the options are narrowing. There are no more obvious privatisations to fill the Treasury coffers. The search for "hidden" taxes has become increasingly less fruitful.
One of the more thoughtful Tory strategists told me, after Blair had uttered the dreaded words on the tax burden, that both Tory and Labour governments had sought invisible tax increases. The challenge for the Tories in the run up to the election was to discover visible tax cuts that were vote winners and credible. He had doubts whether the famous Tory pledge to reduce the basic rate on income tax to 20 pence in the pound would have the same potency. But you can be assured that the Tory appeal to voters at the next election will be a pledge to cut public spending and lower taxes.
How should Labour respond? For one, it should start developing a case for taxation now rather than allow the Tories to make the running in the run-up to the election. That means, instead of imposing taxes and spinning to right-wing newspapers that the opposite has occurred, ministers need to be more open about what they are trying to achieve. Brown has been a skilful persuader so far, subtly shifting his argument. Before the election the message was reassuringly blunt: Labour was no longer the party of "tax and spend". Now he uses the more positive phrase that the Government will "tax and invest", suggesting crucially that tax payers would get something back for their "investment".
Blair and Brown have also been at pains to prove that this is not a vacuous soundbite. Their insistence that reforms accompany additional money in education and health is not a manic desire for centralised control of the government machine. If they can demonstrate that voters are getting real improvements out of the increased spending, it is possible that the hysterical debate about tax can be conducted in a more rational way.
Now they need to do more. Ministers should unashamedly trumpet the connection between a rising tax burden and the improvements in the quality of life which follows. The Daily Mail has been campaigning for big pay rises for the nurses while editorialising about the need for cuts in income tax for the middle classes. The Mail should be told there is a link between the amount we pay in tax and the salaries of nurses, teachers and the rest. There is also a link between the squalid, inefficient transport system and the tax system. Tory Transport ministers were won over to privatisation when they despaired of getting adequate funds from their Treasury colleagues who were seeking savings to pay for pre-election tax cuts.
The issue of tax is similar to the euro. Rightly, Blair moved up a gear last week in order to push the argument on the single currency forward. He should shift a gear or two on tax as well. Otherwise the Tories will come forward with tax-cutting measures and Labour will be forced to follow them. The last thing Britain needs is the for the next election campaign to become a tax-cutting auction.
Steve Richards is political editor of the `New Statesman'Reuse content