Cameron must drop IHT pledge to be a true progressive

This week the Progressive Conservatism Project at Demos published twelve tests that Cameron must meet by 2012 to fulfil his pledge to have governed as a progressive. One in particular stands out. The Conservatives cannot credibly claim to be progressive while supporting a cut in inheritance tax.

At a fringe event in Manchester last week, Francis Maude invited the audience to “hold our feet to the fire” if the Conservatives failed to translate its progressive rhetoric into action if in power. The Tories are certainly talking a good game on fairness now. David Cameron devoted an entire speech to supporting the Conservative’s claim to be progressive in January. George Osborne reiterated the point speaking at Demos this August. Last week Cameron rammed home the message by making fighting poverty a central theme of his conference speech in Manchester.

However, in opposition, talk is cheap. Some think Cameron will spend political and financial capital in government to create a fairer society while others are not so sure. So how will we know if Cameron is serious about building a more equal society if he gets to Number 10?

This week the Progressive Conservatism Project at Demos published twelve tests that Cameron must meet by 2012 to fulfil his pledge to have governed as a progressive. Amongst the list are seeing through Gove’s pro-poor pupil premium pledge, investment in childcare, supporting Turkey’s application to the EU, freeing data, using the benefits system to promote ownership, and a carbon toll on motorway use. They are not the only things Cameron should do, but together they provide a litmus test across a range of policy areas.

One in particular stands out. The Conservatives cannot credibly claim to be progressive while supporting a cut in inheritance tax. Not only does the policy benefit the wealthiest the most, as Sunder Katwala has skilfully argued; but IHT is also one of the most socially positive taxes since it attacks self-perpetuating elites. If anything, inheritance taxation should be expanded (and used to cut tax on incomes under £15,000). If government has to get its money from somewhere, unearned dynastic advantage is a pretty good place to start. Quite apart from anything else, Osborne’s stance on IHT gives Labour a stick to beat him with. A tactical masterstroke when it was announced in the fake election of 2007, the policy is now a millstone round Cameron’s neck. Drop it.

In his victory speech in 1997 Tony Blair announced he had been elected as New Labour and would govern as New Labour. Cameron aspires to be elected as a progressive conservative. The Progressive Conservatism Project intends to make sure he is held to his promise to govern as one as well.

Our guest writer is Jonty Olliff-Cooper, Senior Researcher & Head of the Progressive Conservatism Project at Demos.

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14 Responses to “Cameron must drop IHT pledge to be a true progressive”

  1. Will Straw

    RT @leftfootfwd: Drop inheritance tax pledge to become a true progressive Jonty Olliff-Cooper tells Cameron http://bit.ly/RWkaZ

  2. Henry

    The more cynical of us regard the PC project as just another clever PR stunt by the Cameron team to soften the Tory image. They’ve been rather successful in tying up journalists & intellectuals in discussing this – & even getting some to join them.

    As we know, talk in opposition is cheap & the massive (but largely unspecified) public expenditure cuts that are being planned send a very clear message about Cameron’s real intentions.

  3. Mark

    Why just Cameron? Darling allowed spouses to combine allowances and so doubled the estate threshold and he’s said he’d raise the figure to £700,000. That’s still shy of the Tories and their £1 million level but Labour are cutting IHT by a lot too.

    This blog reads like an “attack blog” too often, you are ready to snipe at Cameron but take no view on the others: no mention of Labour’s IHT tax breaks and the words “liberal” and “democrat” almost never appear in the same sentence!

  4. Jonty Olliff-Cooper

    my new @demos blog on inheritance @leftfootfwd http://bit.ly/4sA755

  5. Laura Bunt

    "Conservatives cannot credibly claim to be progressive while supporting a cut in inheritance tax" great post @jontyOC http://bit.ly/4sA755

  6. David T Breaker

    The whole stance of this article is wrong. Progressive conservatism should be about creating equality of opportunity, not equality of assets, and this equality must be achieved by maximising opportunity and raising people up rather than bringing people down! IHT is also morally wrong, it is a tax on already taxed wealth and implies that your assets are not truly yours to dispose of as you wish but in effect the State’s. IHT penalises those that achieve and save. And those “self perpetuating elites ” are statistically the backbone of the economy through investing – not that everyone attacked by IHT is “rich”.

  7. Henry

    Actually, IHT stops people handing wealth from generation to generation & producing privileged types like Cameron & Osborne. It’s interesting that some self-made billionaires (like Warren Buffett) believe in a high rate of inheritance tax for precisely this reason.

    You do not create equality of opportunity (or an entrepreneurial society) by establishing a self-interested caste of trustafarians.

  8. Jack Storry

    It’s a disgrace to call Cameron and the Conservative party anything close to progressive. Why would he and Osborne be in favour of inheritance tax when their parents money is one of the main reasons they are in the positions they are today.

  9. Vidal Consulting

    Cameron must drop IHT pledge to be a true progressive | Left Foot …: The Conservatives cannot credibly claim .. http://bit.ly/3pfmK

  10. Vidal Taxes

    Cameron must drop IHT pledge to be a true progressive | Left Foot …: The Conservatives cannot credibly claim .. http://tinyurl.com/yzudwnj

  11. Jonty Olliff-Cooper

    Thank you all for your comments.

    Henry,
    The Progressive Conservative Project at Demos is entirely independent from the Conservative Party and indeed all parties. We have politicians from both Labour and the Conservatives on our board.

    On cuts, I disagree. Cutting is not necessarily evil. There is a valid question about what to do and not do, to what extent and in what manner. It is quite clear that public spending will have to be cut. We now spend more on debt interest than schools. It is equally clear that many services do not have maximum impact: surestart, jobcentres, local government and the civil service all require reform. (There is a separate question about when – it is important not to snuff out recovery as Brown has argued rather feebly.)

    Mark,
    It is not aimed as an attack, but constructive criticism.

    I agree on Darling. The blog is focussed on the Conservatives because the focus of our research at Demos is on how conservative traditions can be applied to create a better society. The criticism of cutting IHT rates applies to Labour too.

    David,
    You are quite right about aiming for a system in which all can stand on their own two feet, not one where poverty is alleviated primarily through simple transfers. However, this measure does not preclude measures to improve opportunity, such as school reform or retraining. Indeed, maintaining IHT may pay for them.

    As to the moral arguments, I do not agree. Many forms of asset and cash flow are taxed repeatedly. Salaries spent are taxed in income and then again in VAT, and possibly again for goods like cigarettes or petrol.

    I can see you point on encouraging saving, but in that case why not make it easier to keep wealth from one’s own savings and investments, rather than one’s parents? It would be fairer to increase the ISA limit or cut capital gains tax than IHT.

    Jack,
    No. The Conservatives have a number of concrete policies to point to which are undeniably progressive: the commitment to a pro-poor pupil premium in education for instance or to maintain a 50% income tax rate.

    One can only draw a tenuous link from Cameron’s wealth to his current position. If anything his background is an electoral hindrance. Yes he is wealthy, but so was the Earl of Shaftesbury, Gladstone, Keynes and Tony Benn. That does not mean he can not be serious about wanting to create a better society.

  12. Rory

    What on earth is a progressive conservative? It sounds truly Orwellian to me.

    And how does supporting Turkey’s entry to the EU or introducing a ‘carbon toll’ help reduce poverty in the UK?

  13. Henry

    Jonty,

    I would hope your project is independent of the Conservative Party. Otherwise, Demos will be in deep trouble with the Charity Commission!

    My problem with the Tory cuts is that we do not really know what they will be. For all the talk of being frank etc, the IFS indicated that Osborne has only provided information on about ONE SIXTH of the cuts needed to meet his financial targets. I dread to this what bloodsheed will take place if Cameron is elected (& you can bet it won’t be ‘progressive’). And you can we sure that he will not be frank about his plans this side of an election.

  14. Jonty Olliff-Cooper

    Henry,

    a] Do not be too hard on them for only covering a sixth. It is hard for an opposition to muster the manpower to do in depth analytics on the entire public sector. They just can not afford enough staff.

    b] On cuts, we just disagree. Your view of the Conservatives does not tally at all with the modern party leadership. I hope and believe that if they win they will be serious, bold and progressive.

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