POLITICS MICHAEL WHITE

Published:25/04/2002, Volume II2, No. 5802, Page 17

Travelling home on the Tube on Budget night, I was lured into talk by an elderly woman who got out four stops later at South Kensington. Boy, was she cross with the NHS and what it had done to her sister and her friend. I protested in vain that my niece had a baby safely delivered by Caesar-ean section only 24 hours earlier.

As we now know, my South Ken Woman is not typical. ICM's poll for The Sunday Telegraph - a proper poll, not a cheapo online job - reported that 76 per cent, including 54 per cent of Tory voters and 69 per cent of social class AB types (they live in South Ken), support the chancellor's 1p national insurance hike to finance the NHS repair job.

All the same, she left me uneasily aware of what is at stake, as did the sting in the poll's tale.

Some 56 per cent felt Gordon Brown had broken New Labour's promises not to raise tax and 58 per cent feared the government would fail to deliver a world-class NHS. One in three predicted that the cash would make no difference.

So Iain Duncan Smith will be telling himself that when Labour fails, his now-unpopular plans for healthcare will look a lot smarter.

The Daily Mail was incandescent, The Sun sceptical, the new-look Daily Mirror wittily proclaimed: 'OUCH.That Hurt, Gordon. It Had Better Work.'

For Gordon, substitute Alan. I should report that the health secretary is in good heart. So he should be,£40bn ahead. Before Christmas, I reported here that he and other senior ministers were cross with the high-handed Brown. They still are, he is not.

Discount Brown-Blair feuding, fuelled by Mo Mowlam.

Brown, Blair and Milburn have worked closely on this one, the fruit of Blair's public conversation in 2000 on Frosty's sofa. Somewhere between November's Wanless I report and Wanless II, the£4,000bn penny dropped at the Treasury - so I am told. The NHS was going to cost. Lots. 'The PM totally understands health now, ' insiders explain.

With hindsight, I think I picked up a sniff of this when I reported here that the result would be 'soft hypothecation', not an officially ring-fenced NHS tax, but a tax increase (probably national insurance) which people regarded as being 'to pay for the NHS' - and accepted as such, subject to results.

What I noticed in the Budget speech, but didn't take seriously until a clever youth pointed it out in the Sunday Beast, was the chancellor's pledge to 'make the NHS the best insurance policy in the world'. Insurance? Yes.

When I made inquiries about that word, it was not discounted. Insurance tells people what they are entitled to. This one will embrace NHS values, but a very different system.

In other words, ministers have accepted what Derek Wanless told them (their own staff probably wrote his report): that the financing of healthcare is as well done, as fairly and efficiently, via general taxation as it is via French-style social insurance where, incidentally, the high unemployment which it helps to generate, seems to have helped the racist Monsieur le Pen this week.

What Wanless fears are 'physical constraints' - that shortage of 80,000(! ) extra staff.What it leaves open to diversity is the supply of healthcare via private hospitals, teams of flying German medics and much else, as providers - NHS to the forefront - seek to meet the challenge of the extra billions. If they all do well (the 'fully engaged' scenario rather than 'solid progress' or 'slow uptake' in Wanless-speak) it will actually cost less, 10.6 per cent of GNP by 2022-23 instead of 12.5 per cent.

A touch naive, I thought.But the politics are brutal. 'The challenge will be to the service. If you can't do it with this level of resources the issue will not be the level of resources. If people [staff] want to resist a Labour government's reforms, the likely effect will not be a Labour government, ' explains my man in the know.

That means unless all those Milburnian demands in Delivering the NHS Plan are embraced, the alternative could be Mr Duncan Smith after the 2005 election. Patients, managers, staff...all their expectations are sky-high. An oil crisis over Iraq could ruin it all. l