Blair forced to correct Blunkett's VAT gaffe

Labour yesterday ruled out imposing VAT on private school fees and private health care amid a day of confusion and recrimination over party policy-making, with senior Labour sources accusing some front-benchers of lacking discipline.

Tony Blair intervened rapidly to rule out VAT on school fees after David Blunkett, his education spokesman, confirmed early yesterday that it was an option being considered alongside the removal of charitable status from private schools.

The Labour leader's move left Mr Blunkett backtracking furiously on lunchtime radio. Charitable status for private schools could well go, he said, but VAT on school fees was no longer "in the frame".

"The shadow Chancellor and the leader of the party think it is helpful to rule out that possibility in order to avoid confusion, and I accept that decision," Mr Blunkett said.

The retraction came after the Conservatives seized on the issue to accuse Labour of "the politics of envy", and after Mr Blair had confirmed in July that the issue of VAT on school fees and private medicine was under consideration by the party's economiccommission.

It emerged, however, that Gordon Brown, the shadow Chancellor, had ruled out VAT on school fees in November in Labour's Budget review. No one, however, had told Mr Blunkett about that until lunchtime yesterday, after stories had erupted in the Sunday papers.

As Margaret Beckett, Labour's health spokesman, likewise dismissed the possibility of VAT on private health care, the party found itself rowing publicly over reports that its stance against nuclear power may be overturned. Martin O'Neill, energy spokesman, told The World This Weekend that with the energy situation substantially changed, "down the line, nuclear is a possibility, but a fairly remote one".

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