On inheritance tax there is a "credibility gap"

Cameron's plan remains unfair and unfunded

David Cameron has denounced Alistair Darling's 148-page dossier on the "credibility gap" in the Tories' spending plans as "complete junk from start to finish". So are the Tories' spending commitments fully costed? Here's one that isn't.

Cameron claimed again today that sweeping cuts in inheritance tax could be paid for by "taxing the non-doms". The party's pledge to raise the inheritance-tax threshold -- currently £325,000 -- to £1m would cost £3.1bn a year. Cameron hopes to raise this amount by charging non-doms £25,000 a year to live and work in the UK. The Tories estimate that about 150,000 residents would pay the levy, raising £3.5bn and funding cuts in inheritance tax and a rise in the stamp duty threshold to £250,000 for first-time buyers.

But the Tory proposal overestimates the total number of non-doms. The latest HMRC figures show that there are only 120,000 currently registered. Ken Clarke was admirably honest when he conceded: "We don't know how many non-doms will be here; we don't know how much our policy of raising fair taxation from foreigners who work in this country will raise." It's a pity his leader can't be.

The commitment to cut inheritance tax could yet become politically toxic for the Tories, particularly if the suspicion that a Cameron government would increase VAT grows. History teaches us that when in need of revenue, the Tories raise VAT, the most regressive tax of all.

It was Margaret Thatcher who almost doubled VAT from 8 to 15 per cent in 1979 in order to slash income tax and it was John Major who raised VAT by 2.5 per cent to its current level of 17.5 per cent.

Over at Comment Central, Daniel Finkelstein astutely notes that Darling himself still refuses to rule out raising VAT to 20 per cent. The Chancellor's plan to do so in the pre-Budget report was overruled by Gordon Brown. By contrast, Ed Balls (writing outside of his brief) has accused the Tories of secretly plotting to increase VAT and has attacked George Osborne for refusing -- like Darling -- to rule out a rise.

Balls might be keen to use these lines on the campaign trail, but VAT could yet become a dividing line between him and the man he still longs to replace.

 

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George Eaton is political editor of the New Statesman.

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.