Published: 06/12/2001, Volume III, No. 5784 Page 21

Icame straight from listening to Derek Wanless's debut as a political controversialist to a lunch-time seminar on health economics. It was given by free-market think-tank Politeia, and reminded me of one of those scary novels written by GK Chesterton or Joseph Conrad exactly 100 years ago.

They were peopled by sinister anarchist types, some with dynamite strapped to their chests, who met in pokey attics (as Politeia does), determined to overthrow the existing order.

In this case, their target is the NHS and it is only their ideas that are dynamite. Unfortunately Dr Liam Fox, IDS's health spokesman, is too canny to indulge their wilder fantasies, even if shadow chancellor Michael Howard lets him.

Yes, he wants to adapt the French or Swedish model for funding healthcare, private or social insurance top-ups to generate more cash. But he knows that there must be what he calls a 'transitional period' in which the historic NHS shortfall - a£267bn underspend since 1948, says Wanless - is repaired: ie more doctors, nurses and hospitals. The private sector needs time to get much better too, he thinks.

I say this to stress that, whatever the shambles of the government's performance this past few days, chancellor Gordon Brown's stubbornness, prime minister Tony Blair's blunder (committing us to matching EU levels of spending by 2005-06, again), the Tories have not come up with the answers either.

I thought it was a very bad week for Mr Blair and Mr Brown, and probably a frustrating one for health secretary Alan Milburn. As everyone now knows, the chancellor used his pre-Budget report to announce a national 'debate' on health spending, and virtually shut it down immediately in favour of finding the money from general taxation, as We have always done.

Mr Brown quoted from the report by former NatWest banker Derek Wanless the key passage stating that he had found 'no evidence that any alternative method to the UK's would deliver a given quality of healthcare at a lower cost to the economy'. The NHS is both 'fair and efficient', he concluded, while admitting that it is not very good at patient choice - or at providing health outcomes as good as Europe's.

A rather important admission, I would say.

You could write columns for a year picking through the Wanless report, but his message is a bit more complicated than Iron Gordon suggested. I haven't pre-empted the debate, said Mr Wanless (who messed up his bank and got taken over). But he seems to have cherry-picked the foreign models he examined in a curious way that the Tories will easily unravel.

At question time next day, Mr Blair repeated the error he made for David Frost when asked the same question in January 2000: he backed the chancellor on general taxation and pledged Labour to reach the EU average by 2005. Not so much Wanless as Hapless.

Mr Blair meant the tax year 2005-06. But as tax experts were quick to point out, Number 10's resident health buffs have long under-estimated that average as 8 per cent of GNP when it is actually nearer 10 per cent and rising.

On Sunday, Mr Blair duly backtracked.

In the process, Mr Milburn's attempt to widen the debate to include 'hypothecation' or ring-fencing of health taxes to make them more popular was quickly slapped down by the Treasury. But Mr Milburn's idea (he is personally agnostic) is backed by party chair Charles Clarke, who shares his old boss Neil Kinnock's fondness for ring-fencing. Watch Mr Clarke.

Just to add to the general shambles, Mr Brown belatedly noticed what a mess he was making of the electoral politics of the 'debate' (his idea of a debate is a chat with the mirror, quipped one colleague) and risked visiting hostile newspaper The Sun, where they had dubbed him 'Taxer Brown'.

The NHS will not get more money until it reforms, he told the paper. Which you and I know is daft talk. It is already getting shedloads. Treasury folks, who privately admit that taxes must go up, tell me all the 'debate' stuff is long-planned, to persuade voters of this painful necessity. The public is ready for an historic shift back to high, but competent public spending, they say. Competent?