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.

Photo: Justin Tallis/Getty Images
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If Jeremy Corbyn does win, the Greens should shut up shop

If self-described socialists continue to organise outside of the Labour party, they risk depriving the left's main outlet of both talent and voters, warns Michael Chessum.

It could all be rash complacency, but for much of left thoughts have already begun to focus on the reality of a Corbyn-led Labour Party. In the Labour left, the air is swirling with new projects – to back Corbyn up as leader, to organise the membership against parts of the PLP if necessary, to bring Labour into social movements and social movements into Labour. But outside Labour, too, the wider left is waking up to discover the entirely different reality that could be posed by a sharp left turn in leadership. In the Green Party, and especially among those on the left of the party, there is increasing pressure to find a formal working arrangement with Corbyn’s Labour, much of which is reflected in Caroline Lucas’s open letter in the Independent last week. An electoral pact is, apparently, already on the table.

Lucas’s call for an electoral pact is a pretty honest gesture, and will not be entirely uncontroversial in her own party; it is certainly worth much more than, as some more cynical onlookers in Labour have put it, “please don’t run against me in Brighton Pavillion”. It could also be significant in terms of electoral arithmetic: after boundary changes, and in any tight election, Labour will need the 3.8 per cent of the vote that the Greens got at the last election.  But while Lucas and other leftwingers in the Green Party are at least acknowledging the issue, there is a danger that they will avoid a more fundamental question: if Corbyn wins, does it really make sense for self-described socialists in the Green Party to continue a separate existence outside of Labour at all?

Corbyn represents the undeniable arrival of a wider political trend. Across Europe, democratic socialism is undergoing a split: yesterday’s “realists”, who argue for an accommodation with neo-liberal economics and the austerity politics that follows it like clockwork, are on one side; on the other is an assortment of socialists and social democrats who argue for something else. Mass anti-austerity politics has not been a one-party affair in the UK: it was built from the ground up by students, workers and community campaigns; it was road-tested in Scotland; and it has been formulated into policy from a variety of angles, as well as by the Corbyn campaign itself. But now, in the face of the realities presented by five more years in opposition, the vital political expression of the anti-austerity movement seems to have come to fruition in the Labour Party.

This fact will leave one of the largest sections of the organised left – the Green left – disorientated and unsure of what to do. Some socialists and leftwingers in the Green Party are there on the basis of a genuine conviction that the green movement, rather than the labour movement, is their political home. But for the vast bulk of those drawn to the Green left – many of them freshly recruited from recent social movements, others exiles from Labour under Blair – the purpose of the Green left is premised largely on the idea that a credible party-political alternative was needed, and that an anti-austerity surge would be impossible inside the Labour Party. This premise is now ebbing away.

The race is now on for the true believers to convince their periphery of the virtues of remaining in the Green Party after Corbyn wins. Many may yet be convinced, and the Labour left should not be complacent about recruiting a sudden tide of departing Greens.  But for those who joined because they wanted to intervene into mainstream politics from the left, there should be no doubt as to where the big fights will now happen, and where those committed to having them should go.

The incorporation of elements of the radical left’s core constituency into the Greens was always a peculiarity of recent British history. Had it become a sustainable arrangement and grown into a faint British Syriza, it would have made the Green Party of England and Wales unique in Europe, where ecologist and green parties usually sit distinctly and uneasily next to their far-left counterparts.

Much of the uneasiness that characterises the relationship between green parties and radical left groupings in other countries is about ideas, but much of it is also about tribalism – the simple fact that they have separate organisations which need to be different, and which breed differences in approach as often as they reflect them. If either the Green left or the Labour left are not careful, this tribalism will replicate itself, weakening everyone and dividing the left for no particularly coherent political reason.

That is why it is so significant that figures as senior as Caroline Lucas are already making overtures to Corbyn’s Labour. However, there is a danger that behind the positive gestures lie a serious of less friendly assumptions: that any electoral pact is temporary, is designed to build and promote the existence of the two separate parties, and would end upon the introduction of a proportional voting system – a move which, although positive in itself, would further entrench the fault lines between the Green and Labour lefts.

There are numerous ways that this could be overcome which would avoid the Greens simply dissolving themselves or quietly surrendering their politics. If it carried majority support in the party, the Green Party could reach the same arrangement with Labour that the Co-operative Party has: it would have its own structures, and would run Green-Labour candidates in places where it won the selection inside the local Labour Party. If there is no majority for such an arrangement, socialist Greens who want a higher degree of unity with Labour could form a faction, first within the Greens, and, if they continued to lose the argument, they could break away to form a platform in Labour.

As the seemingly impossible becomes a reality, there will be all kinds of realignments in the political space that the Labour left and Green left both claim to occupy – not to mention a potential split on Labour’s right wing. The best hope for a healthy realignment of the British left lies in an honest exchange of ideas; a newly democratised and pluralistic Labour Party which embraces – rather than excludes – political energy formerly to its left; and a willingness on the part of external political forces to orientate themselves towards Labour as the political expression of a mass movement. Those forces should involve the left wing of the Green Party.