Steve Richards: The challenge for Gordon Brown is to put Labour ahead on the health service again

On the day before Gordon Brown delivered his most famous Budget in the spring of 2002, I bumped into one of Tony Blair's senior advisers. A normally ebullient figure, he exuded a sweaty fearfulness. In the following day's Budget, Brown was openly to raise taxes to pay for the NHS. "This could cost us the election", the adviser declared.

The tax rise was indeed an audacious moment. Yet no one, not even the most cautious pessimist in Downing Street, could have predicted what followed. Almost immediately, the tax rise proved to be popular.

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But today, from the Government's perspective, something more alarming has happened. Polls suggest that the Conservatives are ahead on the NHS. The Government survived the tax rise and went on to win another election. Yet, for the time being at least, it is not trusted to run the NHS. If, in the spring of 2002, I had told the nervy Blairite that the Government would get the thumbs-up for the tax rise and yet would lose support for running the NHS, he would have collapsed on the spot in shock. So what is going on?

Not surprisingly, it is a question being asked with an agonising intensity by the architects of the original tax rise. Brown and his close advisers will be posing the question with an even greater unease after the weekend's TV pictures of David Cameron being cheered by young doctors as he addressed them at a rally.

Yet the answer is complex and less reassuring for the Conservatives. For a start, Brown is alert to the potentially fatal combination of relatively high investment and discontent. Brown's close allies see three political challenges when he becomes prime minister: to restore trust in the Government, to purge the political poison generated by Iraq, and to re-establish Labour's standing as the party with the best policies for the NHS.

They regard the third as much the most problematic and demanding. One of those close to Brown tells me that for certain there must be no demonstrations against hospital closures in the run up to the election. The anger must have been addressed by then. They do not rule out some policy changes.

In the meantime, there will almost certainly be a new Health Secretary this summer. For Brown, this will be the most important appointment of the lot, more significant than the new Chancellor or the next deputy leader. The current occupant, Patricia Hewitt, who has managed to provoke the ire of nurses and doctors when they were being paid more than ever, will not be there much longer.

The Government's policies are also moving broadly in the right direction. Some of the current short-term crises arise because several hospitals are poorly managed, spending carelessly in the knowledge that they will be bailed out by the better performing hospitals, a perverse arrangement that encourages inefficiencies and penalises well run institutions.

Part of the problem is that the new financial rules are being applied too indiscriminately, failing to take account of expensive policies imposed by the Government. So some hospitals face big bills as a result of Brown's Private Finance Initiative and yet are being punished for spending excessively. This is where the politics of the NHS lapses into silliness: You must pay for this and we will penalise you for doing so. Yet the reforms are being implemented at the wisest moment of the political cycle, in the first half of a parliament, long before an election and when investment is high.

In contrast,for all their unquestionable presentational and strategic leaps forward, the Conservatives' policies are a muddle. Their broad position is to support Blairite reforms while arguing mischievously that they do not go far enough. Yet it is those reforms that are causing some of the short-term pain. The Conservatives are in the contradictory position of feeling the pain but wanting the cause of the agony to be pushed further. They cheekily rail against Brown's "NHS cuts" while originally opposing the public spending increases and currently advocating overall reductions in the level of public spending in order to pay for tax cuts.

More specifically, they call for more power to be devolved to clinicians, a policy that sounds attractive until clinicians take decisions that are in their interests rather than those of the patients. Will a Conservative health secretary raise the money and then stand aside if he or she fears the cash is being wasted at a local level? Devolution of spending powers has its appeal in theory, but when centrally raised cash is blown by local inefficiencies the attractions become less obvious.

None of this will matter if the Government loses the battle over whether the public spending increases of the past few years have been wasted. If voters reach such a settled conclusion, the chances of us experiencing decent public services in our lifetime are doomed whichever party is in charge. Of course some of the money raised by the tax rise has been thrown away. But that does not mean increasing investment to the levels of other European countries was wrong.

Ask patients in those European countries. None of them are calling for cuts. No candidate in the French presidential election is arguing for a move to British investment levels of the mid-1990s. In Germany, Chancellor Merkel agreed with her political opponents last summer to raise taxes in order to increase spending again on health. In the parliamentary debates that preceded the tax rise, no one argued for the British model pre-1997. In Britain too, most patients notice improvements in their own treatment. But they are brainwashed into believing that the NHS is falling apart elsewhere.

Some still have genuinely appalling experiences. Variation in standards proves that investment is not the sole issue. But reforms to lift the performance of inefficient hospitals must be accompanied by realistic levels of spending.

Indeed what is missing in the current debate is an honest appraisal of likely future demands on healthcare. The demands will continue to rise, and so will the costs of improvements in medical technology. Yet the Conservatives promise tax cuts, and Brown will not dare to put up tax overtly again to pay for the NHS. Inevitably there will be a huge shortfall. Every health specialist who looks to the future reaches this obvious conclusion, and yet the political debate is focused solely on whether current resources can be better spent.

At some point, a political leader will have no choice but to take a deep breath and propose co-payments for health care, a common feature in other equivalent countries. Such an arrangement would increase investment and empower patients, a supposedly fashionable combination. In the meantime, I will be surprised if the Tories are still ahead on the NHS by the time of the election.

s.richards@independent.co.uk

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