Brown to block moves for special 'NHS tax' to fund health service

Gordon Brown is to block moves for the National Health Service to be funded by a special "health tax" which supporters believe would make it easier for the Government to pump more money into it.

Alan Milburn, the Health Secretary, is attracted by the idea of an "NHS tax" and believes the public would be more willing to accept a rise in taxation if they were sure the money would be earmarked for health. But the Chancellor has told allies he will not countenance a special NHS tax. One said: "This would not be a flexible way of financing the health service. If tax revenues were lower than expected, would you then spend less on the NHS? If revenues were higher than forecast, would you have to spend the extra money on the NHS rather than anything else?"

Mr Brown is ready to make the case for more money to be injected into the health service when the Government draws up a new three-year spending programme next year. But he will insist the NHS continues to be funded from general taxation.

A commission set up by the Fabian Society, a Labour-affiliated think-tank, has called for half of the revenue from income tax to be channelled to the NHS. It said that an earmarked tax would "connect" people to the money being spent by the Government. The commission carried out a survey showing that 40 per cent of people would support a 1p increase in the basic rate of income tax for unspecified extra public spending. The number rose to 68 per cent if the money would be spent on education and 80 per cent if it was earmarked for health.

The case for higher health spending will receive powerful support next month in an interim report by Derek Wanless, former group chief executive at NatWest Bank, who is reviewing future health spending trends for the Treasury.

His initial findings, to be published at the same time as Mr Brown's pre-Budget report, are expected to show that the health budget will have to rise significantly in future years to keep pace with demographic trends, public expectations and medical advances.

Both Mr Brown and Tony Blair have hinted in the past two weeks that a rise in taxation may be needed for Labour to maintain its big increases in spending on key services.