POLITICS

Published: 28/02/2002, Volume II2, No. 5794 Page 21

'Gone to Texas' was an expression Americans used to describe people who had walked away from their responsibilities and headed west. But there is no truth in the suggestion that I fled to avoid the BBC's gallant Your NHS day.

By all accounts it was a critical success, one I would gladly have watched.Yet I could not help recalling once hearing Lord Birt, then BBC director general, explaining how his own internal market reforms were modelled on the dynamic internal market created by the Tories to shake up the NHS.

Such language has since been discarded at both Great National Institutions (GNIs), though not without leaving a permanent change in the culture. Lord Birt battles on in Tony Blair's team (unpaid), and both BBC and NHS are still gripped by relentless pressure to adapt in a fast-changing world.

I can only add that two weeks spent in the US underlines just how important both GNIs are. I wasn't ill there, thank goodness.

But I did miss proper news bulletins and programmes that are not interrupted twice as much as ITV is by adverts.

Nuff said.What are we to make of Mr Blair's hint that taxes will rise in the 17 April Budget? Quite a lot, albeit not as much as the Daily Mail's rising tide of hysteria last week. 'Labour promises a world-class NHS, but guess what - It is Middle England who'll pick up the bill.'

My hunch is that it will actually be Upper England, those well above average earnings, who will take most of the hit. The Mail's complaints about 'stealth taxes' are the direct result of its own campaign against income tax in the 1980s.

Mr Blair's warning on Your NHS about higher taxes was what my friends call a 'well-prepared intervention', coming both before and after Alan Milburn's similar hints last week. They are softening us up for the Budget, though they are also softening up the chancellor.

Whitehall spending bids for the coming year went in to the Treasury last week, and Estelle Morris is already complaining that education will lose out to health even though Mr Brown is piling up a bigger cash surplus than expected - despite the belated rise in spending on public services.

Right, now to this week's new concept: 'soft hypothecation'.You read it here first.Will Mr Brown ring-fence any new taxes for health, as some people have long advocated? Possibly, but not in the '1p in the£1 on income tax'way proposed by the Lib Dems.

That is too simple a device, vulnerable to falling employment (and lower tax receipts), for instance. The theory I am picking up is that Mr Brown will increase National Insurance contributions (NICs), either from 10 per cent to 11 per cent, and/or by abolishing the 'NICs dip'.That would align the point where people stop paying NICs with the one where they start paying proper income tax at 40 per cent, around£30,000.At present There is a gap.That would raise£3bn and£1bn, respectively.Most radical of all, he might abolish the NICs ceiling altogether, so that everyone earning over£30,000 would, in effect, pay 50 per cent in tax - 40 per cent tax plus 10 per cent NICs, raising£5.9bn a year.

If Mr Brown declared that all that extra cash would go to the NHS, it would provide the benefits of a hypothecated 'ring-fenced' tax without the drawbacks, being that much more flexible: in other words 'soft hypothecation'.

Incidentally, it sort of revives the old 1940s notion that 'paying your stamp' actually goes into an NIC fund for pensions and sickness.

As Nye Bevan said a million years ago, 'there ain't no fund'.But it might chime with the public mood, which even has Dr Liam Fox confirming that taxes may have to rise to fund the NHS.

Contrary to reports, Dr Fox was not caught off balance by Mr Blair.Where he differs is in saying that Labour just wants extra cash for the old NHS structure, whereas the Tory spokesman has long advocated structural reform.

We shall see. The Milburnites are in good heart despite the growing attacks on Mr Milburn's chum and political twin, Stephen Byers. For what it is worth, my money has long been on Al - not Steve - as the great survivor.