Steve Richards: How brave the mighty titans, daring to mouth the words 'tax and spend'

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The Independent Online

Gordon Brown's announcements are never quite what they seem. In the past he appeared to be spending recklessly when he was hardly spending at all. Sometimes he seemed to be sparing Middle England taxpayers when he was hitting them stealthily. Now we come to the Big One, the one we have all been waiting for, and it is not quite what it seems either. Only this time the illusion is more extraordinary than ever before.

We all know now that the Chancellor can appear to be acting in one way, while in reality doing something altogether different. Now he is performing contradictory acts simultaneously. Like the later Beatles albums or the more serious Woody Allen films, we recognise the tricksy echoes from his "early years", but he has moved on to more subtle and complex terrain. What Mr Brown has done in hinting at the need for higher taxes is both more mundane and more dramatic than the headlines have suggested.

Let us get the more mundane over with first. From the way Mr Brown's statement has been presented, it would seem that taxes have not been increased since 1979. Both the crusading supporters of Mr Brown and his right-wing opponents have fed this impression. "What bravery!" shriek some Labour MPs. "I'm emigrating", scream some reactionary fools calling in to various phone-ins on national radio. It was not long ago that poor old Norman Lamont announced substantial tax rises. Indeed Mr Lamont performed a double whammy. In one Budget he proposed tax increases, some of which he would implement only in a year's time. He therefore got slaughtered twice for the same announcement.

As for Mr Brown himself, he has been busy with his stealth taxes since 1997. There is nothing new about tax increases. They did not end in 1979. Nor will Mr Brown's new tax rises next March be as great as some of the predictions have been suggesting. They may not be great enough. I am told that the equivalent of a 2p rise in the basic rate of income tax is the type of preliminary sum being mentioned in ministerial circles.

To some extent Mr Brown has been forced to make such calculations. He has had his tax-crusading heroism thrust upon him. The economic downturn imposed an unexpectedly early choice between lower spending and higher taxes. Given the state of the public services a cut in spending was not a realistic option. In reality Mr Brown has had no choice but to put the case for higher taxes.

In our interview today Mr Blair also makes the argument for an NHS system funded out of general taxation. He does so at least as strongly as Mr Brown. If he were beset by private doubts Mr Blair need not have done this. Indeed before the interview I had expected him to keep his options open, to encourage the "debate" eagerly joined by some cabinet ministers and his old friend Peter Mandelson. Alternatively Mr Blair need not have given an interview at all at this point. Silence is sometimes an effective way of communicating unease about what Mr Brown is up to. Instead he has come out fighting, and, on this, he is fighting in Mr Brown's corner.

Even so both Mr Blair and Mr Brown are being only meekly heroic at this early stage. For all the frenzy – which for once is justified – neither of them has actually dared to say that taxes will rise. Last week the mighty Chancellor knelt for cover behind the Wanless report on the NHS: "Wanless believes the NHS to be seriously under-invested ... Wanless argues for a tax-based system ... Wanless has discovered that France is moving to a more tax-funded system, away from social insurance schemes". Mr Brown ruled nothing in or out. Wanless, even the interim Wanless, rather than the fully fledged, unbounded version we will get in March, is the brave conviction politician. Mr Blair and Mr Brown, the architects of two landslide election victories, are hiding nervously behind a shield called Wanless.

Yet while there is less here than meets the eye, there is also a lot more. What has happened over the last few days – Mr Brown's statement last Tuesday and Mr Blair's interview today – is more significant than the election campaigns of 1997 and 2001. Even during the last campaign in June, when the mighty titans faced the hopeless William Hague, they did not dare to suggest that taxes would rise. In fact Mr Brown and his team have spent 10 years planning for this moment, when a Labour government would be trusted openly to make the cases for higher taxes.

Now the moment has finally arrived their desperate, infuriating caution in the early years has to some extent been vindicated. As the headlines shriek that this is a return to old Labour, Mr Blair and Mr Brown can claim with credibility that this is far from the case. Under old Labour, interest rates – a hidden tax – soared along with taxes. Now debt has been repaid in bucketloads and the Bank of England is independent. Mr Brown always said that he was being prudent for a purpose, without being entirely clearly what the purpose was. We knew more about Prudence than we did about Purpose. Now we know more about Purpose, too. That is why Mr Brown sounded a little more relaxed in interviews last week. For the first time in 10 years he could almost say what he really felt.

Even in this new context the scale of the political challenge is daunting. Surveys suggest that voters will accept higher taxes only if they are convinced that the money is being spent productively. This is hardly a great shock. Is there anyone who wants to pay more taxes on the assumption that their cash will be wasted? Still, the obvious is the crux of the matter. Messrs Blair and Brown have to convince voters that higher taxes will result in improvements in services. More broadly they must address the conundrum they have deliberately ignored for a decade. Voters want European-style public services and US levels of tax. They cannot have both.

Almost as mind-boggling as the opening-up of the ideological divide is the prospect of this nervy government acting boldly on two separate fronts. In the run-up to the next election it will put up taxes and may hold a referendum on the euro. A government that has been too scared to take a ride on a children's merry-go-round looks as if, suddenly, it might be tempted by the big dipper.