Health service 'should be funded by dedicated tax'

The Liberal Democrats overwhelmingly backed plans yesterday to hand back power over hospitals and schools to local communities.

They approved a new policy blueprint on public services, promising to guarantee funding by earmarking national insurance contributions for the health service.

Delegates agreed controversial proposals to scrap national minimum standards for health care, including cancer treatment, and to allow them to be set at local and regional level.

They agreed to give hospitals and schools the right to bypass national pay bargaining and to top up pay for staff.

This would allow hospitals in London and the South-east to pay more than nationally agreed minimum rates to compensate nurses for the high cost of living there. Hospitals in run-down inner cities that have trouble attracting staff could also increase pay.

Charles Kennedy, the party leader, said: "Now that the extra money is going into the public services, we want to make sure that it actually reaches the front line.

"Where health is concerned, there are two ways of doing that: decentralisation of the funding, so that decisions are taken more locally, not in Whitehall, and earmarking a specific portion of the tax gain and say that goes specifically to the NHS."

Matthew Taylor, the party's Treasury spokesman, who pushed the proposals through the parliamentary party despite opposition, said they represented "reinvented Liberalism".

"We propose for the first time a dedicated NHS Contribution: simple to operate and understand, based on the current national insurance system," Mr Taylor said. "People will then be guaranteed that the money they pay for the NHS goes to the NHS."