Donald Macintyre: Myths and realities about Labour's plans for the NHS

'It is inconceivable that Mr Brown and Mr Blair would have omitted to agree taxes would have to go up'
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A little deconstruction is needed. The casual reader of yesterday's headlines might conclude that tax and the future of the NHS were the latest commodities to have been sacrificed on the altar of Gordon Brown's rivalry with Tony Blair. There is both less and more to this than meets the eye. Certainly there has been confusion, in which several myths have arisen since Mr Brown's defining pre-Budget statement last Tuesday.

The first myth is that commitment to a tax-funded NHS means rejecting the idea of greater private-sector provision (as opposed to private funding). Alan Milburn, the Secretary of State for Health, knew before Mr Brown said so publicly that further reform would be needed to justify extra money; and that an essential component of such reform would be yet more harnessing of the private sector, where there is spare capacity, to augment the public sector, where there is very little. Which is why he will announce a new public-private partnership today, possibly involving the use of Bupa assets within the NHS. Or, more important, he will start to explain later this week how he intends to create patient choice within the NHS.

For, as Mr Milburn well knows, there is no reason why patients shouldn't, say, be able to travel farther afield to a hospital where waiting lists are shorter if they choose. A start is likely to be a patient's right to go elsewhere to another public hospital or to free, privately provided care – for certain operations after a six-month wait.

Why should patients be permanent and static victims of the huge disparities in provision around the country? Disparities, that is, as Mr Brown tellingly pointed out in his interview with Sir David Frost, that mean wildly differing waiting lists and, in some hospitals, operations costing 50 per cent more than in others. What's more, because money has to follow the patient, more choice would create an incentive for hospitals to be more efficient in order to attract the patients. And if this has echoes of the internal market envisaged by the Tories and so long attacked by Labour in opposition, so be it. The public-service model floated by the Blairite thinker Charles Leadbeater, that of Channel Four – a public-sector commissioner rather than a monopoly provider – could start to look increasingly appropriate even for the NHS.

A second myth is that there is already a huge argument raging within the Government over whether social insurance – ie employer-based social insurance – offers a desirable alternative to funding through taxes. There was certainly irritation within the Department of Health, and quite possibly in Downing Street, at the way in which the Chancellor – and for that matter the report he commissioned from Derek Wanless – appeared to close off the social-insurance option before the debate Mr Brown had called for had started.

But not because the social-insurance option as yet has many powerful champions. First such schemes tend to have a narrower "risk pool" than a public-health system, concentrating, as they tend to, on the able-bodied in work. Secondly, they are a big extra non-wage cost to employers, which is partly why the French, as Mr Brown pointed out last week, are beginning to retreat from them. There are well-aired differences over the important but second-order issue of tax hypothecation, though Mr Brown was commendably careful to leave that issue open in his Frost interview. Over the issue of social insurance it's much less clear that there are such deep differences.

The point, rather, was primarily a presentational one. Mr Milburn and others would have liked to make precisely this case with the public in the space Mr Brown has allowed for debate. Of course they can – indeed must – still do so. However, the debate looks more pre-cooked than it did, and the public may be a little more suspicious as a result. Moreover, the fact that Mr Wanless chose, without providing a huge dossier of evidence and even though it wasn't really in his remit to do so, to argue for a tax-funded system makes him look a little more like a government stooge than is desirable if you want to use him as an independent voice to underline the deep and chronic investment starvation to which the national health service has been historically subjected.

The third myth is that underlying all this is a fundamental ideological difference between tax-raising, "real" Labour Gordon and tax-cutting, New Labour Tony. It is not just that it is inconceivable that two men who have spoken, as Mr Brown put it vividly in his weekend interview, "almost every day for the last 18 years" and "sometimes three or four times a day about the things that matter" would have omitted to agree on what is now regarded as a defining moment in the evolution of Labour. I'm told that way back before the summer recess Mr Blair was saying to trusted colleagues that, in the next stage of that evolution, taxes would have to go up, not least to cope with the huge incapacity in the NHS. On this, Mr Brown and Mr Blair were indeed as one.

(While we're at it, we should dispose of two micro-myths. One is that charges for non-clinical services – so called "hotel charges" – are absolutely ruled out, even by the Brown-Wanless exercise. There are those who argue that such charges – say for individual rooms or more choice of meals would merely be like taking a train. You travel first or second class but you get to the same destination at the same time. Others – including, as it happens, Mr Milburn and Mr Blair – are unconvinced as yet that they have any place in the NHS beyond, say, possible additional payments for your own television or telephone. And the other micro-myth is that there can be no increase whatsoever in income tax in this Parliament. The Chancellor's pledge applies to rates, not to indexation of allowances or to the national-insurance ceilings.)

But the fact that the disputes were not as great as they have been allowed to seem is not, from the Government's point of view, as cheering a lesson as it might be. For last week was still pretty messy. Mr Brown was obliged to placate the low taxation-obsessed Sun with his fresh call for NHS reform. Mr Blair was obliged to moderate the specificity of his pledge to meet European levels of health spending by 2005. And the Tories were able to inflate differences between the two most powerful men in British politics.

It's hard to believe that all this – and some of the myths that arose last week – could not have been avoided if the relationship was a little less dysfunctional and the joint preparation of the pre-Budget message a little better. The Independent on Sunday – correctly – made the main point of its weekend interview with Mr Blair the fact that he backed Mr Brown on tax rises. That it should be (genuinely) front-page news that the Prime Minister supports the Chancellor on the key issue of fiscal policy in this Parliament would, in other circumstances, be pretty extraordinary. As it happens, it was always the case that he did. For the fact that this took four days to become clear, there is no one outside the all important Blair-Brown axis to blame.