When the present UK government is turned out of office - not for a good while yet but it happens to all of them eventually - it will not be because this week's UK Budget raised taxes to pay for a better health service. The voters' judgment will be based on something far less tangible but much more potent: their sense of the government's character.

It is this, rather than a few bad headlines about Old Labour tax And spend, that should be keeping Tony Blair and Gordon Brown awake at night. I cannot recall a government so schooled in the art of doing the right thing badly. It has spoken for too long from the side of its mouth.

On one level, everything is clear again in British politics. On Wednesday Mr Brown became the first chancellor since his 1970s Labour predecessors to raise taxes on income from conviction rather than necessity. After a brief period of post-ideological confusion, the familiar contours of the political landscape have been re-established.

Labour believes in the state's capacity to deliver a fairer society and, crucially, is now prepared to ask people to pay higher taxes to achieve it. After flirting briefly with the idea of bigger government, the Conservatives will resume the centre-right's traditional quest for a smaller state.

There is substance in this caricature. Mr Brown's decision to raise taxes by 1 per cent of national income to rebuild Aneurin Bevan's National Health Service does indeed mark the embrace by Mr Blair's government of a political approach more akin to European social democracy than US economic liberalism. Mr Brown is a social engineer. Sure, he believes in market economics but, like France's Lionel Jospin, he has no truck with the idea of a market society.

As for Iain Duncan Smith's Conservatives, the Budget gives them an opportunity. After a second crushing defeat in last year's general election the opposition has been shy about its tax-cutting agenda. Now it can frame the argument differently. Conservatives are not about dismantling the welfare state; they are about curbing its uncontrolled expansion.

The risks for Mr Blair's government have been well rehearsed, not least by a number of distinctly nervous cabinet ministers. The pain of higher income taxes (forget the nonsense that an increase in national insurance contributions is somehow different) will be felt next year. The wall of money now cascading into the NHS will take a great deal longer to deliver a first-world health service.

The Budget also reveals a strain between the competing priorities of prime minister and chancellor. The impetus for higher health spending has come largely from Mr Blair. But Mr Brown has insisted that it should not be at the expense of his redistributionist agenda. The new credits for children and families announced this week will cost more than £2.5bn a year on top of the additions to the health budget. No wonder taxes had to rise.

There is a bigger threat to the government, though, than the charge that it has returned to the bad old ways of tax and spend. Most people in Britain understand that the health service is ruinously underfunded. That includes those fabled voters of middle Britain. Education and health are not services reserved for the poor. We are talking about middle-class welfare. Given the neglect of the past few decades, the case for spending more on hospitals and schools is one that can be made with confidence. As long, that is, as it is made with candour.

Here the government has a problem. People will probably agree that higher taxes (up to a point) are a price worth paying. But why, they will ask, has this come from a clear blue sky? Many will recall that during last year's general election campaign, Mr Brown was pressed many times about how the government would pay for decent public services. He stonewalled. We were supposed to believe then that a 21st-century health service would come without a price tag. Only when the government is safely back in office can the truth be told.

Ah, but that's just politics, comes the retort. No one admits during an election campaign that they might have to put up taxes. Maybe. But the effects of these things are cumulative. The reservoir of trust that the government could once rely on was badly depleted during its first term. Mr Blair's soaring rhetoric - remember all that talk of transformation, New Labour, New Britain? - and Mr Brown's double-counting and stealth taxes robbed it of a precious political asset - the willingness of voters to give it the benefit of the doubt.

Other things have sapped the electorate's trust. The obsession with what has become known as spin, the relish with which some in the government (why does John Prescott always spring to mind in this context?) have grabbed the spoils of office, and the bickering and backbiting in the cabinet, not least the rivalry between Mr Blair and Mr Brown.

In isolation these could be said to be small things. Politics has never been free of vanities and rivalries. But times have changed. Even with the reappearance of some of the old ideological divides, we live in an era when popular judgments of politicians are grounded as much in the perception of who they are as in what they say and do. Politics has lost the tribal loyalties that used to bind people for a lifetime to this or that party. Today's voters want to know if they can trust their leaders, whether their values coincide or collide. Do they convey a sense that they have the nation's interests at heart? It's character that counts here.

This government leaves the impression of being self-obsessed. What's the catch, people ask when ministers have good news to impart. Check the fine print is the reflex response to anything said by Mr Brown's Treasury. The media shares some responsibility. A frenzied determination to prove that all politicians are in some respect sleazy has often fed the mood of public cynicism. But it has plenty to feed on.

Take one example. By this time next year, the government will have made the momentous choice as to whether to join the euro. Here is an issue of supreme national importance. Yet at the centre of government the decision is seen almost entirely in terms of the personal balance of power between the prime minister and the chancellor. The pro-euro Blair will triumph or the sceptical Mr Brown will wield his veto. Or the struggle will ruin both of them. Never mind what is best for the country.

The strange thing is that, by and large, Mr Blair's government has lived up to its purpose. It set out to rescue social democracy from the ruins of socialism, and has done so. Its ambitions are far from ignoble. If only it could learn to be a little more honest about them.

Contact Philip Stevens

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