Hypothecation could raise public expectations to a dangerous level

All novel ideas for financing the NHS fret their hour upon the stage with almost monotonous regularity every couple of years or so. Whether it is fees for visiting the GP, hotel charges for hospital stays or radical proposals for some form of social insurance, each is periodically taken out and faithfully buffed up with all the comforting familiarity and vague promise of favourite Christmas decorations. This week it has been the turn of hypothecated taxation.

Before the 1992 general election, Labour was enthusiastic about hypothecating income tax for health spending. Then during its 'no holds barred' spending review soon after it was elected in 1997 it was rumoured to be examining the feasibility of a separate health tax. At both times, of course, NHS spending was in a parlous state. But the government finally dipped its toe into hypothecated waters exactly a year ago in chancellor Gordon Brown's pre-Budget report, in which he announced his intention to earmark£300m of revenue from increasing tobacco tax for cancer services.

Now the Fabian Society, crucible of many a Labour policy, is advocating that the amount of income tax an individual pays towards the NHS be identified on their payslips, with further tobacco and alcohol duties earmarked for health spending.

Health secretary Alan Milburn and Mr Brown were thought to have discussed hypothecation when Mr Milburn was Treasury chief secretary. The chancellor's line is that certain 'limited exceptions' may be acceptable, but that it would not work on a large scale and could easily undermine spending plans for other areas.

The Fabian Society argues that hypothecation would be a powerful tool for rebuilding public support for higher government spending. In a nation thought to be steadfastly resistant to raising income tax, it found 80 per cent would support an extra 1p on income tax if it were spent on the NHS. So in theory it appears to have stumbled on that political jewel beyond price - a popular tax.

But the reality? The public are often quick to back apparent bargains which pollsters assure them could be theirs for a mere 1p in extra tax, without fully appreciating the difference this would make to their tax bill. Yet even then, in the privacy of the voting booth few have been willing to back higher taxes.

The danger for the NHS now is that identifying in so direct a manner what people pay towards it would raise expectations still higher at a time when the service is already battling to keep pace with public demands, fuelled by the promises in the NHS plan.

Attitude surveys reveal much less patience with the service's limitations than five or 10 years ago; modernisation will take time to bear fruit and it is already debatable whether it will do so before public support runs out. A monthly payslip reminder might up the ante to dangerous levels.