The left should applaud Osborne's inheritance tax U-turn

The Chancellor's decision to freeze the inheritance tax threshold at £325,000, rather than raise it to a £1m, is an opportunity to put the principled case for the tax.

Back in 2007, when the Tories as much as Labour assumed that boom and bust had been abolished, George Osborne told his party's conference that a Conservative government would raise the inheritance tax threshold to £1m. It was unacceptable, he said, that a tax "designed to hit the very rich" was increasingly borne by "ordinary people". The pledge was a political masterstroke, prompting a surge in support for the Tories and spooking Gordon Brown into abandoning plans for an early election. 

But the policy looked less impressive by the time of the general election when Osborne's declaration of an "age of austerity" sat uneasily with a pledge to cut taxes by £200,000 for the wealthiest 3,000 estates. The Chancellor, according to Janan Ganesh's recent biography, was secretely glad when the Liberal Democrats gave him political cover to abandon the pledge.

In last year's Autumn Statement, he announced that the inheritance tax threshold, frozen since 2009 at £325,000 (£650,000 for couples), would rise by a paltry 1 per cent in 2015-16 to £329,000. Now he's set to announce that, in fact, it won't rise at all. Instead, to help meet the £1bn a year cost of the coalition's social care plan, the threshold will be frozen at £329,000 until at least 2019. Many more "ordinary people", to use Osborne's phrase (although the average house price is £249,958), will be hit by inheritance tax. Were the threshold to rise in line with inflation, it would stand at £420,000 in 2019. 

In other words, Osborne is effectively increasing the tax - and he is right to do so. If "equality of opportunity" is to be more than merely a slogan, a progressive inheritance tax system is essential to prevent privilege being automatically transferred from one generation to the next. As Warren Buffett sagely observed when he campaigned against George W. Bush's plan to abolish "the death tax", one would not choose the 2020 Olympic team "by picking the eldest sons of the gold-medal winners in the 2000 Olympics". It would, he added, replace a meritocracy with an "aristocracy of wealth". Inheritance tax is currently levied at 40 per cent; a progressive government would consider introducing a higher band for the wealthiest estates. 

Osborne's U-turn may have more to do with his desperate need for revenue than any conversion to progressive taxation but it is an opportunity for Labour to finally make the principled case for the tax. 

George Osborne plans to freeze the inheritance tax threshold at £325,000 until 2019. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Can’t afford to die: the rise of funeral poverty

The cost to councils of public health funerals has risen by 30 per cent in the past four years. 

Dying, as you'll know if you've ever planned a funeral, is an expensive business. If your relatives plan a service with a funeral director, they should expect to pay around £3,500*. Burial alone will cost you around £1,750 (making cremation, at £660, seem like a positive steal). And that's before they've even bought a box to put you in. So it is unsurprising that, according to insurance company Sun Life Research, one in seven families struggles to pay funeral costs. 

Families who can't pay are left with two options. First, there's the Social Fund, a centrally-managed pot of money which can offer a one-off payment to help with funeral costs (it also covers things like maternity grants and the winter fuel allowance). Councils themselves also offer "public health funerals" for either people who die with no next of kin, or whose next of kin can't afford to bury them.

Public health funerals are, it seems, on the rise - partly because of the rising costs of burial and the limited nature of the Social Fund, but also thanks to austerity measures which mean that luxuries (like burying your loved ones) are no longer within reach for the poorest families in Britain. 

Coffin up

A Freedom of Information request by BBC Local Radio found that, according to responses from 300 councils of the 409 who offer public health burials, the costs to councils of these public health services was up an average of 30 per cent from four years ago. Part of this rise is due to the skyrocketing costs of funerals, but part was down to the fact that the number of public health funerals had increased by 11 per cent.  

The assistant director of bereavement at Cardiff City Council told the BBC that when he started his job 20 years ago, the service was mostly used by "vagrants or alcoholics". However, the pool of those accessing council funds for burial has widened dramatically: 

"Over the years it has increased, and sometimes there are families but they are estranged or divorced, or there are families where they claim there's an inability to pay."

Another factor is that applying to the Social Fund, as opposed to your council, is complex and confusing, so many who are eligible for it don't get the money they're entitled to. Even if they do, they're only given £700; an amount that hasn't increased over the past decade despite the rising cost of funeral services. 

Grave policies 

Social policy academics from the University of Bath, led by Katherine Woodthorpe, recently investigated the role of bereavement in public policy. In their paper, they note that "little attention has been paid towards benefits associated with bereavement". The researchers conclude that the system needs to be simplified so families don't have to pay the costs up front, then apply to complicated systems of funding afterwards:

The most constructive change to the current system would be to re-organise the claim process so that individuals could be informed of their eligibility and (potentially) what they might receive from the state before committing to funeral costs. The current practice of submitting a claim after committing to funeral costs is counterproductive, leads to confusion and is the creator of unnecessary stress and financial difficulty for newly bereaved individuals.

When Woodthorpe's paper came out last year, the Telegraph reported its findings under the headline "Paupers’ funerals making comeback as families exploit loophole to save funeral costs", based on the fact that some families who couldn't afford services were going to councils for funeral funding rather than applying to the Social Fund. It included reports of council workers' "anger" at seeing people "who claimed they could not pay then turning up to the laden with expensive bouquets and other embellishments". 

It’s more than possible that these funds are occasionally misallocated and exploited, but we also need to remember that respectful disposal of the dead, while something we take for granted, is deeply ingrained in our culture – which is why there is a dedicated public health budget to ensure that this process isn't restricted to those with thousands of pounds in the bank.It's also worth noting that even the price of the most "expensive" bouquet wouldn't make much of a dent in modern funeral costs. 

It’s perhaps a sign of the times that a respectful burial, which is a deeply symbolic and emotionally significant ritual in all cultures, is now seen as a luxury, increasingly beyond the reach of the poorest families - and one which we bedgrudge those who are too poor to access it without help. 

*Costs are estimates from Money Saving Expert. 

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.