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.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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