The National Health Service needs its own visible source of revenue in order to show taxpayers the cost of the enterprise, says Samuel Brittan

Should the spending priority of Tony Blair's government be "education, education and education", as proclaimed in the last parliament? Or should it be "health, health and health" as it in fact has been since Mr Blair came to office in 1997?

The correct answer is: none of the above. The first duty of government is to protect the physical security of its citizens. As the greatest of English political philosophers, Thomas Hobbes, put it: "The obligation of the subjects of the Sovereign is understood to last as long, and no longer, than the power lasteth, by which he is able to protect them." Welfare services and everything else are secondary items that can be enjoyed only when security is satisfied.

If the events of last September 11 have not yet brought home to people this fundamental truth, they may be in for a rude awakening. This emphasis on security should not be confused with nationalism or with a concern for preserving the sovereignty of one particular national entity. It would apply to a European or to a world government.

Once the government has done what it can to protect our security, we can attend to the second-level debate on the division of the remaining claims on public spending.

The clamour for more spending is not of course really for health, which depends on many other things than the National Health Service. But as I am the last person to lecture anyone on diet or exercise, I shall concentrate on medical services and their finance.

Some of the responsibility for the febrile level of the present debate lies with Robin Cook, the former foreign secretary, who is now leader of the House of Commons. When he was opposition health spokesman in 1987-92 he secured debating triumph after triumph by making the prime minister appear personally responsible every time a patient fell off a trolley or an illness was wrongly diagnosed. These debating triumphs had a high price. For now it is a Labour prime minister who is held responsible for every human failing or blunder.

The government is now committed to increasing the level of medical expenditure to the European average. There is plenty of ambiguity here. Does the target apply to total medical spending or the state financed part? Private medical expenditure is bigger in nearly every country than it is in the UK.

A goal of increasing NHS spending to a level corresponding with total medical spending in, say, France or Germany would not be credible. To increase it to the level of state medicine in those countries is a possible aspiration. But, taken in conjunction with the government's other spending commitments, there is no way in which the aspiration can be met without an eventual tax increase.

For a time total departmental expenditure can rise by 3 or 4 per cent per annum, even though the trend growth of national income is 2½ per cent. The government has benefited from several windfalls - above all from a falling share of national debt interest. But windfalls cannot continue for ever. There is little case for a tax increase this year, whether judged by the state of the public finances or the general state of the economy which - taking together the depressed manufacturing sector and the more buoyant ones - is still stagnant. But what Gordon Brown, the chancellor of the exchequer, has to do, as he well knows, is to prepare the ground for future increases.

He could well take a leaf out of the book of Norman Lamont, the former Tory chancellor, who announced in 1993 tax increases to be staggered over the next few years. Mr Brown should not be too proud to adopt this strategy, which is neither Labour nor Conservative but economic common sense.

But staggered or not, he has to decide which taxes to increase. To my mind, there is an overwhelming case for a hypothecated tax channelled specifically into the NHS. Such an earmarked tax would provide an automatic feedback. Voters would have to put their money where their mouth is.

Here, however, is an area where a compromise would be worse than either extreme. It is worse than useless to earmark a small section of tax revenue to finance NHS increases, as the chancellor has already done with the proceeds of increased tobacco duties. Such gestures only obscure the size of the total NHS bill and foster the illusion of finance on the cheap.

It would be best to channel the bulk of the revenue from some clearly visible existing tax into the NHS. Present plans show government health spending rising to more than £55bn (E89bn) per annum in the next financial year. There are two taxes of roughly this order of magnitude. They are social security contributions -which have long become a levy on payrolls far removed from any insurance principle - and value added tax.

Social security contributions could easily be transformed into a payroll levy to cover health. The snag here is that about half the contributions are now paid by employers. Wage earners, looking at the deductions from their own pay packets, would thus get a far too rosy idea of the true cost of the NHS.

VAT on the other hand is clearly visible; and the trend towards itemising VAT separately by many retailers and service providers will make it all the clearer. Moreover VAT is a pretty buoyant tax. Receipts here have risen remarkably in line with public health expenditure; but up to now they have always been a little higher, leaving some headroom for further NHS growth. But if that is not enough, nothing could make clearer the cost of increasing NHS care than an automatic increase in the VAT rate or the extension of the tax to products now exempted.

Many of the objections to hypothecation are of a quibbling nature. For instance, receipts of individual taxes fluctuate with the state of the economy. But surely it would not matter if there were small amounts of topping up from general revenue in recessions so long as it was clear that most NHS spending was financed from a specific fund, which might accumulate a surplus in times of boom. It is worth a little untidiness for the sake of greater transparency.

Earmarked taxes cannot remove all the inherent defects of the political market. They cannot enable different voters to have different sized health services to suit their individual preference as they can with supermarket purchases. But they can at least make sure that the service comes with a price tag and its expenditure is representative of what the middle-of-the-road taxpayer is prepared to finance.