Conservatives step up battle with Labour over class

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Indy Politics

The Tories reignited the "class war" political skirmishes last night by claiming that more than 4 million overwhelmingly middle-class people are now liable for inheritance tax after their death.

Labour ministers have denounced David Cameron's plans to raise inheritance tax allowance from £325,000 to £1m, accusing the Conservatives of drawing up policies to benefit their super-rich friends. They intend to return to the theme during their general election campaign as they believe it opens a clear dividing line between the parties.

The Tories also invoked the issue of class as they retaliated by insisting that the estates of 4.3 million people would be hit by inheritance tax bills under current rules. Philip Hammond, shadow Chief Secretary to the Treasury, claimed: "The real victims of Labour's class war are middle-class families. If you aspire to save for your future and pass something on to your children, then Labour is no longer the party for you."

Mr Hammond argued that raising the allowance to £1m would restore inheritance tax to "what it was designed to be – a tax on the very rich". The Tories worked out that 4.3 million people live in homes where the average personal wealth (excluding pension entitlements) was above £325,000. That takes into account the right of married couples to transfer allowances. According to the party, the average liability is almost £60,000 per person, equivalent to a national total of £254bn.

The Conservative attack could be calculated to exploit cabinet tensions over the wisdom of highlighting the privileged backgrounds of senior Tories. Some ministers believe it helps to remind voters of what they see as Labour's core values, but others fear it looks like a return to a 1970s-style politics of envy.

Some Tories, however, are nervous that the inheritance tax pledge could hamper efforts to capture largely working-class constituencies at the election. The party has lowered its priority by only promising to treble the allowance during their first term in office, which could mean a delay to 2014 or 2015.

The Government had planned to raise the threshold to £350,000 in April. But Alistair Darling, the Chancellor, announced in the pre-Budget report three weeks ago that he had decided to freeze it until 2011 because of the pressure on the public finances.