Blair drops pretence over health tax plans

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Indy Politics

After months of hints, coded references and "signals", Tony Blair admitted on Wednesday that tax rises were almost inevitable to fund long-term investment in the NHS. The softening-up process for the Budget, feared but needed in equal measure by Labour's strategists, was finally complete.

Gordon Brown, the Chancellor, was the first to enter the arena normally shunned by the Treasury when he refused to rule out tax increases last November. Andrew Smith, the Chief Secretary to the Treasury, took the argument a notch further at the turn of the year when he warned of the need to put the NHS on a "sound financial footing".

Nevertheless, when the Prime Minister used the BBC's NHS Day programme to announce his Government's intentions, he marked a sea- change for New Labour. By referring explicitly to tax increases, albeit earmarked for a specific purpose, he had ended the party's attempts to pretend that real improvements in public services could be afforded simply through economic growth.

Senior government sources admitted to The Independent yesterday that Downing Street was certainly worried about the BBC's day-long focus on the health service, an experiment that saw one leading public institution scrutinising another leading public institution.

Phone polls were expected to show the public had different priorities to ministers and staff were expected to plead for controversial policies such as free long-term care for the elderly and higher pay. As a result, there was nothing accidental about Mr Blair's words in his interview with Nicky Campbell, carried live on BBC1. The event had been meticulously planned by advisers, with the surprise of a Prime Ministerial statement on tax rises calculated to dominate the news arising from the coverage.

When the normally astute Mr Campbell failed to notice the momentous admission, spin doctors telephoned journalists to make sure that they had not missed the story too. With every newspaper rapidly ripping up its front pages to accommodate the news, they quickly found that such help was unnecessary.

Yesterday, Alan Milburn, the Secretary of State for Health, and Estelle Morris, Secretary of State for Education, led the charge to sell Mr Blair's message from the night before, with Mr Milburn making the point that the very notion of a tax rise was "uncomfortable" for any New Labour minister.

The Treasury, which apparently had been studiously left out of the loop of the Blair announcement, attempted to regain control of the issue, with Mr Brown stating dourly that only he could confirm the Budget's contents and they would not be revealed until April.

Nevertheless, the problems that the tax rise announcement would cause for the Tories became apparent even faster than Labour had imagined, with Liam Fox, the shadow Health Secretary, admitting yesterday that "taxes might need to rise" to aid the NHS.

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