NHS: Now Tories concede taxes may have to rise

The NHS debate

Rise in national insurance of £4bn may be unveiled to boost NHS

Blair drops pretence over health tax plans

Money alone will not cure the health service ills

Now Tories concede taxes may have to rise

Higher taxes needed to deliver on policies

What the professionals want

Donald Macintyre: Why Labour chose to risk its neck on the NHS

David Aaronovitch: If you want my money, I want to see some changes

Leading Article: Cast off the Bevanite mantle; it is time to hand power to the patients

The Tory party's economic policies were thrown into confusion last night after Liam Fox, the shadow Health Secretary, conceded that taxes may need to rise to fund improvements to the NHS.

Dr Fox made his remarks as senior Cabinet members weighed in behind Tony Blair's warning on Wednesday that the public will have to pay more tax for sustained investment in the health service.

In a concerted effort to back up the Prime Minister's message, Alan Milburn, the Health Secretary, and Estelle Morris, the Education Secretary, said world class health care could not be done "on the cheap".

With an announcement on tax rises likely in April's Budget, economists speculated that they were most likely to come from National Insurance hikes and higher VAT on cigarettes.

Government sources indicated last night that the tax increase would be "clearly labelled" for the health service in an attempt to help sell it to the voters, although a strict "NHS tax" had been ruled out.

But it was Dr Fox's comments which caused most surprise, particularly among his Shadow Cabinet colleagues, when he appeared to back Labour's strategy.

"Taxes may need to rise. We said recently that we would not rule out more money going into the health service if necessary. What we need to make sure is that money is being spent sensibly," Dr Fox told BBC News.

When asked to clarify his remarks later, the Shadow Health Secretary, said he could not rule out tax increases as part of the Conservative Party policy review. "We could fund it through central taxation, we could fund it though a range of other mechanisms. That's why we've been looking at other European countries to see what happens there," he told BBC Radio 4's PM programme.

However, a senior Tory source said that Dr Fox should have consulted colleagues before talking about tax rises. "How are we supposed to attack the Government on tax if we are saying we could put it up ourselves," the source said.

The Conservatives have spent the past two decades attacking Labour on tax and ran a "You Paid the Tax, So Where's the Police?" campaign in the last general election.

Although Michael Howard, the Shadow chancellor, said last year the party would put improvement to public services before tax cuts, Iain Duncan Smith has also stressed that reducing the overall tax burden remains a party aspiration.

In a clear indication that the Treasury had been outflanked by Downing Street over the issue, Gordon Brown, was tight-lipped about Mr Blair's remarks yesterday. Speaking in Fife, the Chancellor said: "The Budget is on April 17 and the Budget decisions are announced in the Budget."

But in a speech to NHS managers, Mr Milburn made clear that tax rises were "the fairest and most efficient way" of funding NHS improvements over the long term. "This is a debate that we need to take to the country," he said.