Wednesday 1 October 2008

Inheritance tracks

IDS also said that he wanted to see a broader definition of poverty, particularly suggesting that inequalities in assets should be seen as important, and not merely inequalities in income. It is assets – he suggested – which are particularly important in terms of developing a stake in society, speaking at the Fabian/Webb Memorial Trust/Centre for Social Justice fringe event in Birmingham.

However, robustly challenged by Derek Draper from the fringe floor, IDS would not admit to any contradiction between that view and the priority given by the Conservatives to increasing the tax free threshold for inheritance tax to not just £1 million but now to £2 million for a married couple. ‘Its not a zero-sum game’, he said.

That was challenged by both Martin Narey and myself. Politicians can not, argued Narey, worry about social immobility in one breath and then adopt policies which would entrench social immobility and inequalities in wealth. I suggested that IDS’s concern with asset inequalities must mean that he should push his own party to retain the child trust fund (and indeed that Martin Narey’s social justice commission should seek to persuade the LibDems to ditch their policy of scrapping it too).

IDS couldn’t speak for the party as to whether the child trust fund would be safe under a Conservative government – but he reiterated his own belief that his party should pay more attention to asset inequalities.

I argued that the major political parties should call a halt to an auction on inheritance tax thresholds – and put the receipts from (rather modest) taxation on inherited wealth above the (already rather generous) tax thresholds. And put the receipts into a universal approach to ensuring there are assets for all in society.

Why wouldn’t any politicians who wants concerns about social mobility to be taken seriously be able to sign up to that?

1 comment:

Stuart White said...

The link between inheritance tax and asset poverty also came up at the ippr fringe event. Greg Clark argued, in effect, that raising the threshold on inheritance tax is a way of fighting asset poverty. Does this get the prize for the daftest policy argument of the conference season? Given that the people in asset poverty have a lower probability of getting an inheritance than on average, and stand to inherit quite small amounts if they do get an inheritance - amounts well below the threshold as it was in September 2007 - the idea that raising inheritance tax thresholds will help the asset poor get assets is ridiculous. They would stand to gain from a policy of taxing inheritances properly and using the funds to support the Child Trust Fund and Saving Gateway.