David Cameron was forced to defend the Conservatives’ latest proposal to cut tax on inherited wealth, as analysis showed that the only people to benefit will be the comparatively well-off, living mostly in the prosperous South of England.
The Tories have pledged to make the first £1m of anyone’s estate exempt from inheritance tax, which is payable on wealth passed on after a person dies.
But more than 90 per cent of estates are already exempt, because there is an allowance of £325,000 per individual, or £650,000 for a married couple, already in force. That is more than the average value of a house anywhere in the United Kingdom except the largely Conservative-voting areas of London and the South-east. The average house price in London is £510,000.
Analysis by the Institute for Fiscal Studies calculated that over the next few years the change would give about 50,000 families an average tax break of £20,000.
A married couple owning a home worth between £1m and £2m could benefit by as a much as £140,000.
The Tories say their policy would help parents fulfil their life-long wish to provide for their children.
Election Analysis: The Key Voters
Election Analysis: The Key Voters
1/6 Settled Silvers
These are the comfortably-off over-60s, still in work or drawing a decent pension – or both – who are enjoying their entitlements such as the Winter Fuel Allowance, free bus passes and free TV licence. They are worried about immigration and Europe. Both the Conservatives – who are pledging to keep benefits for wealthier pensioners – and Ukip want their votes
2/6 Squeezed Semis
Slightly older than the Harassed Hipsters, they are the second key group for Labour’s family-focused election strategy. They are married couples on low to middle incomes who own unpretentious semi-detached homes in suburban areas. In 2001, these were the Pebbledash People sought by the Conservatives. Now the pebbledash is gone and a modest conservatory has been built at the back
3/6 Aldi Woman
In 1997 and 2001 she was Worcester Woman – a middle-class Middle Englander shopping at Marks & Spencer and Waitrose. Today, the age of austerity means she still goes to Waitrose for her basic food shop but cannily switches to Aldi for her luxury bargains such as Parma ham and prosecco. Identified by Caroline Flint, she is a key target of both Labour and the Conservatives
4/6 Glass Ceiling Woman
In her thirties or forties, she has an established career under her belt, perhaps in the “marzipan layer” – one position below the still male-dominated senior executive level. She is now, according to Nick Clegg, forced into making the “heart-breaking choice” between staying at home to bring up her children and going to work and forking out for high-cost, round-the-clock childcare
5/6 Harassed Hipsters
One of the two key groups identified by Labour as crucial to hand Ed Miliband the keys to Downing Street. Well-paid professional couples, often with children, they live in diverse urban and metropolitan areas rather than the suburbs. More comfortably off than most swing voters, they are time poor – struggling to balance raising a young family with busy work schedules
These are mainly first-time voters, though some are in their twenties – students and digital-age generation renters helping to fuel the “Green Surge”. Idealists, but with no tribal loyalty to any party, they are anti-austerity, middle class, living in urban areas. Despite studying at university or recently graduated, they are struggling to find decent jobs and want cheaper housing and a higher minimum wage
“That wish to pass something on is about the most basic, human and natural instinct there is. That home that you have worked and saved for belongs to you and your family. You should be able to pass it on to your children,” the Prime Minister told a campaign event in Cheltenham.
But a Treasury memo leaked last month warned that increasing the inheritance tax threshold would encourage people to invest more of their money in property – pushing up house prices – and would add to inequality because most beneficiaries would already be comparatively well-off.
The Conservatives included a similar promise in their manifesto for the 2010 election, but were prevented from carrying it out by the Liberal Democrats. Their decision to revive the idea drew a scathing response yesterday from Nick Clegg.
“It shows politically they are a party in panic because I think it’s dawning on them – something I think which dawned on the country some time ago – that they’re not going to win,” he said.
The Conservatives were also challenged on where they proposed to find the £8bn they have promised to invest in the NHS, when they are also committed to tax cuts and to cutting the deficit.
Asked repeatedly by the BBC interviewer Andrew Marr, the Chancellor, George Osborne, refused to answer, except to say that the Conservatives had a “balanced plan” for handling public finances.
The Independent has got together with May2015.com to produce a poll of polls that produces the most up-to-date data in as close to real time as is possible.
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