Ed Miliband speaks with radiotherapists, during his visit to University College hospital, on April 4, 2011 in London. Photograph: Getty Images.
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A tax rise for the NHS would be good policy and politics for Labour

By promising to save the most popular public service from a funding crisis, Miliband can craft a potent dividing line with the Tories.

If Labour is to win the general election, it will need the NHS to be one of the dominant themes of the campaign. Unlike on issues such as immigration, welfare and the deficit, it enjoys a consistent double-digit lead over the Conservatives and can point to an unambiguous record of success in government (it left office with NHS satisfaction at a record high). As one shadow cabinet minister told me recently: "The more people talk about the NHS, the better Labour does". 

But if the party is to credibly address the future of the health service it will need to confront the looming funding crisis. Contrary to the common view that it has been shielded from austerity, the NHS is currently enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the current Spending Review it will rise by an average of just 0.5 per cent. As a result, in the words of a recent Social Market Foundation paper, there has been "an effective cut of £16bn from the health budget in terms of what patients expect the NHS to deliver". Should the NHS receive flat real-terms settlements for the three years from 2015-16, this cut will increase to £34bn or 23 per cent. In the last year, the number of foundation trusts in financial trouble has nearly doubled from 21 to to 39. By the time of the general election, as many as two-thirds could be in the red. 

To date, Labour has emphasised that it will focus on maximising efficiency by ending the dogmatic privatisation of services (which, as former NHS head David Nicholson said, has left the service "bogged down in a morass of competition law") and by integrating health and social care (which Monitor estimates could save up to £6bn).

As Andy Burnham told me when I interviewed him earlier this year: "The reason I’ve outlined the policy that I have is that I can’t make any assumptions about new money, I can’t, I’m just being honest. I’ve got to assume that things are going to be very tight and it’s that reality, that financial outlook, that makes me look at going very deeply into integration. Before anybody asks the public for more money, any politician of any party, you’ve got to be able to look the public in the eye and say 'are we getting the best we possibly can, the most we possibly can, from what the public are already giving us for the health and care system?' I don’t believe we can do that at the moment."

But the question of new funding cannot be indefinitely postponed. It is for this reason, as today's Independent reports, that the shadow cabinet is examining how the party could promise a significant increase in NHS spending at the election. The most popular option is a hypothecated rise in National Insurance (NI). When Gordon Brown increased the tax by 1 per cent in his 2002 Budget to fund higher NHS spending, Tony Blair and others feared the move would be disastrous. But it proved to be a political coup, creating a potent dividing line with the Tories and securing the health service's future for the next decade. Ed Miliband, who helped to design the policy as a special adviser to Brown, later described it as the proudest moment of his career. Recalling this success, Frank Field and others are publicly urging Labour to raise NI again (perhaps rebranding it entirely as an "NHS tax"). 

Field tells the Independent: "I can’t tell you what a good meeting I had with Ed Balls. He knew all the right questions. He was brilliant. I have been discussing this with John Cruddas for some time and he is happy with it...We are not pretending that the NHS can be saved through efficiencies nor that increased funding will not be accompanied by serious reform. By God, it has to be. But there won’t be much left to reform if we don’t do it."

But Labour's past experience of pre-election tax promises (most notably in 1992) and the living standards crisis that it has done so much to draw attention to, means that many are anxious about asking any group other than the very richest to contribute more. A pledge to raise NI would gift the Tories to chance to run a classic 1992-style "tax bombshell" campaign and accuse the party of planning to squeeze "hardworking families". 

Yet this is a political obstacle to be overcome, not to be avoided. As a ComRes poll found last year, health is the most popular spending area among voters. Just 5 per cent believe the NHS budget should be reduced and 71 per cent believe it should be increased. And as Brown's experience in 2002 demonstrated, voters are realistic enough to know that they cannot have something for nothing. By seizing the initiative on tax, Labour will in turn be able to accuse the Tories of planning an "NHS bombshell" under which the service collapses for want of funds. Having made so much of his commitment to our "national religion", Cameron will have no reasonable response. With the polls narrowing as the economy recovers, the time has come to resurrect those dividing lines. 

George Eaton is political editor of the New Statesman.

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Should London leave the UK?

Almost 60 per cent of Londoners voted to stay in the EU. Is it time for the city to say good by to Brexit Britain and go it alone?

Amid the shocked dismay of Brexit on Friday morning, there was some small, vindictive consolation to be had from the discomfort of Boris Johnson as he left his handsome home in EU-loving Islington to cat-calls from inflamed north London europhiles. They weren’t alone in their displeasure at the result. Soon, a petition calling for “Londependence” had gathered tens of thousands of names and Sadiq Khan, Johnson’s successor as London mayor, was being urged to declare the capital a separate city-state that would defiantly remain in the EU.

Well, he did have a mandate of a kind: almost 60 per cent of Londoners thought the UK would be Stronger In. It was the largest Remain margin in England – even larger than the hefty one of 14 per cent by which Khan defeated Tory eurosceptic Zac Goldsmith to become mayor in May – and not much smaller than Scotland’s. Khan’s response was to stress the importance of retaining access to the single market and to describe as “crucial” London having an input into the renegotiation of the UK’s relationship with the EU, alongside Scotland and Northern Ireland.

It’s possible to take a dim view of all this. Why should London have a special say in the terms on which the UK withdraws from the EU when it ended up on the wrong side of the people’s will? Calling for London to formally uncouple from the rest of the UK, even as a joke to cheer gloomy Inners up, might be seen as vindicating small-town Outer resentment of the metropolis and its smug elites. In any case, it isn’t going to happen. No, really. There will be no sovereign Greater London nation with its own passport, flag and wraparound border with Home Counties England any time soon.

Imagine the practicalities. Currency wouldn’t be a problem, as the newborn city-state would convert to the euro in a trice, but there would be immediate secessionist agitation in the five London boroughs of 32 that wanted Out: Cheam would assert its historic links with Surrey; stallholders in Romford market would raise the flag of Essex County Council. Then there is the Queen to think about. Plainly, Buckingham Palace could no longer be the HQ of a foreign head of state, but given the monarch’s age would it be fair to turf her out?

Step away from the fun-filled fantasy though, and see that Brexit has underlined just how dependent the UK is on London’s economic power and the case for that power to be protected and even enhanced. Greater London contains 13 per cent of the UK’s population, yet generates 23 per cent of its economic output. Much of the tax raised in London is spent on the rest of the country – 20 per cent by some calculations – largely because it contains more business and higher earners. The capital has long subsidised the rest the UK, just as the EU has funded attempts to regenerate its poorer regions.

Like it or not, foreign capital and foreign labour have been integral to the burgeoning of the “world city” from which even the most europhobic corners of the island nation benefit in terms of public spending. If Leaver mentality outside the capital was partly about resentment of “rich London”, with its bankers and big businesses – handy targets for Nigel Farage – and fuelled by a fear of an alien internationalism London might symbolise, then it may prove to have been sadly self-defeating.

Ensuring that London maintains the economic resilience it has shown since the mid-Nineties must now be a priority for national government, (once it decides to reappear). Pessimists predict a loss of jobs, disinvestment and a decrease in cultural energy. Some have mooted a special post-Brexit deal for the capital that might suit the interests of EU member states too – London’s economy is, after all, larger than that of Denmark, not to mention larger than that of Scotland, Wales and Northern Ireland combined – though what that might be and how that could happen remain obscure.

There is, though, no real barrier to greater devolution of powers to London other than the political will of central government. Allowing more decisions about how taxes raised in the capital are spent in the capital, both at mayoral and borough level, would strengthen the city in terms of managing its own growth, addressing its (often forgotten) poverty and enhancing the skills of its workforce.

Handing down control over the spending of property taxes, as set out in an influential 2013 report by the London Finance Commission set up by Mayor Johnson, would be a logical place to start. Mayor Khan’s manifesto pledged to campaign for strategic powers over further education and health service co-ordination, so that these can be better tailored to London’s needs. Since Brexit, he has underlined the value of London securing greater command of its own destiny.

This isn’t just a London thing, and neither should it be. Plans are already in place for other English cities and city regions to enjoy more autonomy under the auspices of directly elected “metro mayors”, notably for Greater Manchester and Liverpool and its environs. One of the lessons of Brexit for the UK is that many people have felt that decisions about their futures have been taken at too great a distance from them and with too little regard for what they want and how they feel.

That lesson holds for London too – 40 per cent is a large minority. Boris Johnson was an advocate of devolution to London when he was its mayor and secured some, thanks to the more progressive side of Tory localism. If he becomes prime minister, it would be good for London and for the country as a whole if he remembered that.  

Dave Hill writes the Guardian’s On London column. Find him on Twitter as @DaveHill.