Clause 8
Finance Bill
11:45 am
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
Sir Nicholas, what a great pleasure it is to serve under your chairmanship—this is my first opportunity to speak during our proceedings. I am delighted to learn that the sun was shining over the fine county of Cheshire at the weekend—long may that continue. The sun was also shining over the fine county of Hertfordshire on Sunday.
I would like to take the opportunity to make a few remarks on the Government’s policy on inheritance tax and the provisions contained in clause 8, with the details set out in schedule 4. We have tabled a number of amendments about those details, which I will address when we reach that point.
The Conservative party welcomes attempts to address the issue of the increased burden of inheritance tax. In 1997-98, 3 per cent. of estates paid inheritance tax, but according to the most recent figures, that is now up to 6 per cent. Research for Scottish Widows showed that 37 per cent. of households are now worth more than the inheritance tax threshold. The average detached house price last September was £326,000—above the then threshold for inheritance tax of £300,000. The average house price may have changed since then. None the less, inheritance tax is a concern for a far wider group of people than was the case not so long ago. In my constituency, relatively modest properties in towns such as Rickmansworth, Berkhamsted and Tring—attractive towns, I would concede—are well above the inheritance tax threshold. There is great concern about inheritance tax and it would be churlish for us not to welcome the move of allowing the nil-rate band to be transferred between spouses and civil partners, as clause 8 and schedule 4 would permit.
Not everybody welcomes those provisions. In The Guardian of 12 October, Polly Toynbee was most critical. I am sure, Sir Nicholas, that like me you read Ms Toynbee’s articles with great interest. She stated:
“This was more than a horrible humiliation for the Prime Minister. This was the week that social democracy ebbed away in England.”
Indeed, she makes a clear distinction between what is occurring with the devolved Administrations in Scotland and Wales, and what is happening in England. She went on to describe inheritance tax as “a Labour talisman”.
In a recent pamphlet, the Fabian Society described the announcement of the Government’s policy on the issue as
“a profoundly depressing moment for those interested in fair taxation”.
We do not share that view. We think the fact that inheritance tax now applies to a much wider group of people is unfair. There is consensus that there is a role for it, but to apply it to relatively modest homes and estates seems wrong. When inheritance tax hits ordinary families in ordinary homes, it is right that it is reformed.
However, we do agree with some of the criticisms made by the likes of Polly Toynbee and the Fabian Society. The policy was a response to the Conservative party’s policy on the matter, and the announcement by my hon. Friend the Member for Tatton (Mr. Osborne) in Blackpool on 1 October, about raising the threshold for inheritance tax to £1,000,000. The Fabian Society paper describes the Prime Minister’s “panic-stricken failure” to stand his ground, and the pre-Budget report as a “panic-driven surrender”.
A letter to The Guardian on 15 April 2008 by various notable figures on the left of British politics, referred to
“the Government’s retreat in the face of a rightwing challenge over inheritance tax”.
The letter was signed by 14 Labour MPs, including one Parliamentary Private Secretary. I know that Parliamentary Private Secretaries are not necessarily all expected to support Treasury policy these days, but it is striking that there was such distrust and opposition from Labour figures to the policy. I note, however, that none of the signatories to the letter is serving on the Committee—members have clearly been selected with some care.
I refer again to Polly Toynbee’s article of 12 October when she wrote about the Prime Minister. It is an important point because it gets to the motivation of the policy under clause 8 and schedule 4. She wrote:
“But when Cameron threw ‘phoney’ at him in Prime Minister's Questions, it stuck like napalm. He could duck the bottles thrown over his election funk, but ‘phoney’ will stick because his comprehensive spending review smacked of panicky, comprehensive cowardice.”
The criticism was that the move was tactical, and it was reiterated this weekend by the right hon. Member for North Tyneside (Mr. Byers) in an article in The Sunday Times, in which he stated:
“In the past year far too many decisions about tax have been taken to try to secure a tactical advantage. This has led to some damaging mistakes. Whether in relation to the changes to inheritance tax, capital gains tax, the treatment of nondoms or the abolition of the 10p income tax band, the whole approach has been about political positioning.”
Many hon. Members, in the House and in Committee, might have that concern about the policy and think that it is an act of political calculation in response to a policy announcement at the Conservative party conference that was undoubtedly extremely popular.