George Osborne will not endorse Redwood proposals on inheritance tax

Earlier today I reported an Evening Standard exclusive that George Osborne was likely to accept recommendations by John Redwood to abolish inheritance tax for the main family home.  Paul Waugh of the Standard wrote:

"Crucially, shadow chancellor George Osborne is set to endorse the plan when he appears alongside the report's author John Redwood in the City tomorrow."

Just interviewed for BBC1's Ten'o'clock News, George Osborne did not formally endorse the cut in inheritance tax.  Instead he repeated the commitment to put stability before any talk of tax cuts and welcomed John Redwood's own endorsement of this precondition.

Tomorrow's Telegraph will report that Mr Osborne is "sympathetic" to the Redwood proposals and this is The Times' take:

"George Osborne, the Shadow Chancellor, who will attend today’s publication of the report in the City, will not embrace any proposal in it formally. However, he has already made clear that he regards the present structure of inheritance tax as unfair. In ideal circumstances it is a tax cut that he would favour, but he will insist today that the Tories will not promise any unfunded reductions at the next election."

Comments

[Tanuki]

Shame... we really need to start pushing hard the "Conservatives will cost you less" value-message if we want the slightest chance of winning the next election.

[Alan S]

Never mind.

[Alistair]

Oh. Toryboys just gone up in my estimation

[Opinicus]

He can't see a foot without shooting.
Timid and useless.
With his money, you'd think his family accountant would take him aside and shout at him.

[Stephen Tolkinghorne]

I thought it was too good to be true. As with anything relating to Cameron's Tories - something crops up which actually appears different from the tax and spend liberal consensus, but then it all turns out to be complete pipe-dreams.

The Tories aren't conservative - they're just Blu Labour. RIP Tory Party.

[Stephen Tolkinghorne]

"Oh. Toryboys just gone up in my estimation"

I can't believe that you ever doubted him in the first place.

[Justin Hinchcliffe]

A terrible waste of a good opportunity...

[Miss Tooty]

Poor Cameron and his cronies have done another grammar schools fiasco in under 24 hrs. Gordon must be having fits of laughter at the tories just now. Oh I know your all just dying to know what I had for lunch, I'm a bit tired so maybe another time. Sleep well all.

[No tax cuts for 5 years]

LoL. Well Graeme,

It looks like you've got to u-turn and tell those poor Hackney homebuyers that IHT isn't so bad after all....

[Tapestry]

Interesting that Osborne and Redwood seem to be working closely and productively on the economy.

If Redwood is a bit old hat for some tastes and doesn't like singing national anthems in ancient languages, Osborne has the look of someone who could sing anything you like from the Eton Boating Song to Gordon Is A Moron to The House Of The Rising Tax Liability.

And if Osborne looks a little on the youthful side, Redwood adds a certain gravitas to the young pretender's whipping and snapping.

A great combination for an assault of Labour's economic house of cards. As for the BBC attacking Redwood's proposals before he'd even had a chance to say what they were, which planet do they think they're on?

[Richard Willis]

Osborne SHOULD endorse this plan. He should stop faffing about and come out with some ideas and policies or at least agree with some that Redwood is proposing.

Why not fund it by increasing taxes on alcohol and cigarettes?

[Ali Gledhill]

How interesting. After a lot of publicity, and stirring up another BBC issue, the proposals have come to nothing. This is perfect use/abuse of the media. One day it will hit the Tories like it hit Tony.

[Stephen Tolkinghorne]

"A great combination for an assault of Labour's economic house of cards."

They're clearly a dream ticket for attacking the tax and spend Labour Party. Osbourne just doesn't bother listening to a word Redwood says.

Not exactly a winning partnership, are they ?

Ditch Osbourne now. Give the Shadow Chancellor post to Redwood.

Oh, but then Redwood wouldn't qualify, as he didn't go to Eton.

[Red faces again]

"Interesting that Osborne and Redwood seem to be working closely and productively on the economy."

ROTFL. You mean, one carefully researches a problem then recommends a sensible solution, then the other publicy explains why he isn't going to support it?

Who would have thought that Redwood would play the straight man to Osborne's clown?

[Mark Fulford]

Editor, shouldn't your headline be "would not" or "did not"?

[Tapestry]

it's the art of seduction. flash a bit of knicher elastic and then go off round the dance floor again. just listen to you all panting for more...these two know a thing or two.

[voreas06]

I think Osborne has effectively all but said this is a tax cut he is going to do. Cameron and Osborne have said for ages tax the bad not the good, they clearly therefore need to wait for the quality of life report which is likely to recommend some green tax increases before they can officially cut Inheritence Tax so as indeed to offset them with green taxes. What those taxes are I think everyone will have to wait and see.

I for one agree with steve, Graeme Archer, and others Inheritance tax on the family home is nasty and vindictive and - with average house prices now at £215,000 - widespread. and if Osborne removes this it will be popular and fair. Brown can spout all he likes about tax cuts for the rich but it is his governments housing and economic policies that have put so many low to average incomes family homes above the threshold in the firstplace.

[Dominic]

Alistair if you were ever a Tory it must have been in your dreams.Unfortunatly areas that get the most benefit from our taxes i.e. no tuition fees better health care etc have to vote too. The City of London is the Engine room of this country the foundations laid by the Conservative Party which benefits Prudence and his growing army of Civil Servants
If it is true re Osborne it looks like another own goal and these stupid Etonians are going from one blunder to another they seem to be incapable of smelling the coffee the commies on the blog with their postings showed real panic they must now be ecstatic

[Tapestry]

Newsnight. Paxo to Crick. 10 minutes ago.

Paxo. Will Osborne abolish IHT?

Crick. Yes. He'll get rid of IHT altogether, replace it with CGT, with exemption for assets owned for ten years or more or the main home.

Pax0. What else did he say?

Crick. Toll roads on roads to our ports. Bicycles on pathements - might not be good electorally. And rubber wheels on trains to increase frequency of trains in rush hour.

Paxo. Will the leadership agree?

Crick. Yes. But Gummer of the Quality of Life review reports in a month, when he will propose new green taxes. Redwood has advised being careful not to tax aviation.

HORSE's MOUTH.

Re the rubber wheels on trains, will the rubber be vulcanized?

[Mike A]

Great - more confusion from Crick.

This looks like another Osborne 'overbriefing' mistake.

Not as bad as when he told people he was going for a meeting with Bush, or the time he suggested he was mates with Mervyn King, but clumsy and unneccessary.

[Dominic Paul]

Please no more Mickey Mouse announcements. Just for one moment hope came on the horizon that perhaps Dave at last had seen the light” it’s the economy stupid”

[Henry Mayhew -]

It is amazing to see the fascination tax has for posters on this site. Phenomenal response since 5.30PM this evening, when a tax cut is suggested. I agree that this one would simmply lead to old people owning massive homes.

[Chris Palmer]

Being sympathetic? Sorry, but this is all just pathetic.

[Tapestry]

The key question is 'will the leadership agree?'

The answer is that no one knows what the shadow cabinet will finally decide.

The Beeb started off attacking Redwood for his regulation cuts ideas earlier in the week, and caught a ton of ridicule and criticism for their overreaction to Redwood back out in the open. His suggestions then were also only provisional - to be discussed further.

This time the Beeb pulled right back from outright hostility - after attacking so blatantly last time. They are trying to sound reasoned and intelligent about Tory tax proposals - all of which seemed to give Crick and Paxman serious indigestion. They were all confused. are these legitimate Tory targets or not?

Paxman looked like a bloodhound called off his prey, when he knew he'd had the smell of Tory blood in his nostrils, but got no kill. The Newsnight Tory killing machine is merely biding its time.

[Will]

These policy commissions are turning out to be more trouble than they are worth. The media management of this has again been poor - get a grip Coulson.

[john]

Agree with Chris Palmer. BBC News at 10pm and Newsnight both previewed the Redwood proposals without the usual sneers.
I find this encouraging. The biased BBC are on the back foot and they should be encouraged to stay there.

[Tim Collins]

Can I have my head back please?

[Cllr Keith Standring]

As a free-market, libertarian Conservative I totally support that Inheritance Tax should be scrapped.

Inheritance Tax is absolutely unjust. People are taxed when they earn money, taxed when they spend money and taxed when they invest
money - what right has the state to seize yet more when someone dies? Taking £3.6 billion from the pockets of bereaved families is appalling.

The Government should be encouraging people to work hard, save and take responsibility for their families, and abolishing Inheritance Tax would be a step in the right direction.

[john]

Agree with Chris Palmer should read:
Agree with Tapestry.

[Traditional Tory]

Well this has turned out to be yet another own goal. Well done all concerned.

As I said before. I'm in favour of tax cuts across the board, including IHT.

I'm not in favour of an estate consisting of a house worth £1m and diddlysquat else getting off scot free while another consisting of a £300000 house and £700000 worth of stocks and shares is taxed to the hilt.

It's called unfairness.

For the record, if my better half and I fell under a bus tomorrow Gordon would receive a very handsome injection of funds.

Am I worried? Of course not.

You can't take it with you.

[The Huntsman]

I have, for the moment , foresworn trenchant criticism, of which I am quite capable, in the interests of getting a Conservative Government elected in place of this Quisling Shower.

So on this topic I confine myself to observing that most of us are not vegetarians but would like some red meat to chew on, if you would not mind. But most of all, please get on and decide what is going to be on the menu.

[Treacle]

Oh Dear, Once again a timid, cautious, uninspiring and gutless response to good attacking Tory policies.

Seeing potentially winning Conservative ideas being put through the mincer like this is like watching the works of Shakespeare being re-written by an accountant, for performance by a 'speak-your-weight' machine.

No leadership, no inspiration and no sign that anyone in charge has the remotest conception of when to go on the attack or how to do so in an effective manner.

Pity

[jeff]

Oh, if one has a trust fund, and a mortgage-free house from one's parents, where is the urgency about tax cuts, old boy?

[Tapestry]

Jeff. Trust funds are now taxed and are no longer tax-free - courtesy of Gordon Brown as Chancellor.

Sounds to me that all programmes coming out of the reviews are provisional. The media want them to be definite so they have something to bite on. But there is a serious discussion going on at the top of the Party which will, if the political environment permits, abolish IHT.

This programme will not be applied in practice if there is a public uproar against it - unlikely - or if opposition to it is strong from any quarter...or if the Conservative Party doesn't win power.

The writers above need to consider the probability of Labour or Lib Dem introducing a similar policy - and their own effect in reducing Conservative chances of winning power by being openly critical of the Party's policy review methods.

Winning power means be positive, and don't sulk if you might not get your way. Play the probabilities. There are no certainties in politics.

If a policy you approve of is becoming more probable, then back the Party which is making the policy more probable, and assist the process.

Compare to Brown who announces policies which are the opposite of his actions - on a frequent basis, and the BBC do not even challenge him, but assist in the cover -up. See details on iain dale today.

[Traditional Tory]

I have, for the moment , foresworn trenchant criticism, of which I am quite capable, in the interests of getting a Conservative Government elected in place of this Quisling Shower.

A Conservative government isn't on offer and the prospects of a Cameroon government are fading beyond the point of no return.

It's now all so predictable. Each commission comes up with - er - Conservative recommendations, from which the Blulabour general staff promptly distance themselves.

After all they can't be seen to abandon the Heir-to-Blair mood music (I won't dignify it with the name of 'policy') which has successfully put them 10 points behind Brown.

There will be no tax cuts. The Cameron/Osborne axis is at least consistant on that one.

But when even the likes of Graeme Archer come out in support of Redwood it seems that 'David Cameron's Conservatives' have rather more to worry about than usual.

[steve]

Why don't you say what you feel Traditioal Tory?Vote Labour.

[The Monitor]

07:04

Think you might find that rather than doing that, "Traditional Tories" might opt to not vote at all.

[TomTom]

If you want to have selective schooling use your Trust Fund to pay for it

If you want to avoid IHT set up a Trust Fund

George Osborne knows about Trust Funds

[Traditional Tory]

I'm getting terribly worried about you steve. Is it terminal, or is it just something they did when they took your brains out?

I did not say I was against reductions in IHT, but I do not see the logic of this proposal.

Apart from homes of the 'ancestral' variety (and I have always been in favour of special measures to facilitate the maintenance of estates of cultural and historical importance)the former family house is these days usually sold after death and the proceeds distributed.

It therefore becomes just another asset falling to be liquidated, so I absolutely fail to see why it should be treated any differently from the others.

[steve]

'The IHT proposals just give the middle classes their money back....I don't think it will benefit the nation as a whol'e-Traditional Tory yesterday.
So you believe in taxing people twice and preventing people providing people from leaving a home to provide for their family? A true Labour supporter if ever I saw one.

[Jack Stone]

It really is about time the Editor of this site stopped trying to destablise the party.
It is party policy that there will be no up front tax cuts. This as been said time and time again and a bit of gossip in the Evening Standard is not exactly evidence to suggest that the party`s policy as changed.
We all know what your trying to do Mr Editor. We all know what agenda you have.Its about time you had the guts enougth to come out and state publically what that agenda is and not keep trying to use the site to damage the party and sow dissent in this underhand way.

[Traditional Tory]

So you believe in taxing people twice and preventing people providing people from leaving a home to provide for their family? A true Labour supporter if ever I saw one.

No I don't. Ideally I'd like to abolish IHT altogether, but since even these proposals are likely to cost the state £4Bn I'd prefer to see the cuts more evenly distributed.

If you want to take a pop at a socialist 'Jack Stone' has just re-emerged, probably following his annual holiday in North Korea.

[Equlibrium]

(little) steve,

Traditional Tory's point is particularly easy to understand.

When the will is read out, and assets distriubuted to the family, why should one type of asset have tax preference over another?

Why should the family who inherit just 50k worth of stocks face a large tax bill, but then family who inherit a 500k house face none?

From reading his comments, TT obviously supports the conservative idea of not double taxing, but he does not support applying it to just pet assets.

That seems consistent in terms of equality and conservatism, no?

[Alan S]

You are quite right, Jack. Let's close this site down. We can then go back to the good old days when the grassroots were fodder for the leadership. The leadership would say we were all happy no matter what they did.

Alternatively you and others should adjust to the fact that we live in a digital age where we all have a voice.

The reason the party is in trouble is because the party has the wrong strategy. Not because we have found a voice to complain about it.

[TomTom]

It therefore becomes just another asset falling to be liquidated, so I absolutely fail to see why it should be treated any differently from the others.

Son or daughter or grandchildren caring for relative who dies. They are then homeless because as blood relations they are banned from entering a civil partnership and using the IHT exemption.

This is why civil partnerships should be extended to cover family members

[Oberon Houston]

Well, I'mglad GO is remaining consistent. The only reason the BBC are pushing this story is that they exitedly smell a kicking for the Tories whenever Redwood is around, but so far things haven't gone pete tong. Lets move on.

[steve]

Because for the vast majority of people the family home is the only major asset they have to be passed down.I expect John Redwood is more interested in helping ordinary people than those with 700k worth of shares.

[Richard Shaw]

It seems to me that scrapping IHT will be one very good way to get the 10,000 Conservatives in Bromley & Chislehurst (who did not vote at all in the by-election in 2006) to get off their backsides next time !

[Equilibrium]

Nice spin Oberon, but equally, why should the family inheriting just a few k in cash pay tax but not the family inheriting a 1 million pound house?

All assets should be reduced to the cashflows they ultimately are, then taxed equally. This is the only way to prevent the rich benefitting more than the poor.

[ToMTom]

Nice spin Oberon, but equally, why should the family inheriting just a few k in cash pay tax but not the family inheriting a 1 million pound house?

Because you cap the relief at the Average House Price in each region - and index the cap to house price inflation and not the CPI

[Equilibrium]

TomTom,

But that completely ignores the fact that the average house price itself will be driven up as this one kind of asset is awarded tax-free status.

If it was pegged to the average overall national inheritance amount then fine, equality of asset taxation would prevail, but to benchmark it against itself is meaningless.

I completely agree with your extension to civil partnership idea, but beyond that, we're not talking about people losing their home, but adults with their own homes inheriting one kind of massive asset tax free.

[Frank McGarry]

Congratulations to John Redwood on his excellent report.

Of course Inheritance Tax should be abolished. It is a grossly unfair form of double taxation.

People who want to save up to leave something of value to their families ought to be encouraged - not punished.

The cost of abolition is modest and abolition would be very popular with the electorate.

But we will need to be clear and unambiguous in our policy announcement when it comes. For example: "When we win the election we will scrap Inheritance Tax immediately."

[Traditional Tory]

This is why civil partnerships should be extended to cover family members

Well I agree with that. It would also take the controversial 'moral' sting out of those arrangements, but let's not go there now.

In such cases - which are much less common than they once would have been - IHT could be possibly be deferred until such time as the home is sold, but the fact is that in the vast majority of cases net benefits, not hardships, are the result.

A lot of this discussion revolves around sheer, mawkish, sentimentality. I have more respect for OAPs who use equity release to spend the value they have accumulated on their own comfort and leave the next generation to stand on its own two feet.

That's one way of beating the taxman.

[Ken Stevens]

Traditional Tory | August 17, 09:47

"leave the next generation to stand on its own two feet."

Aside from the practical difficulties of today's younger generation being able to do so with property rents/prices considerably outstripping average salaries, is it not a natural aspiration that each generation should be a stepping stone for the next? Otherwise family life is reduced to a game of snakes and ladders, with the last few squares all having snakes back to square one for your kids to start all over again.

[Opinicus]

@Traditional Tory
I am ashamed of you. The only possible Tory position is to call for the abolition of inheritance tax and plunge the stake into LLoyd George's coffin. It will be fantastically electorally popular with our people and cause them to bus to the polls. I can think of no other policy (apart from wet dreams like leaving the EU) so likely to energise our side.

As to tactics. Yes; restricting relief to the principle residence will do silly things to the upper reaches of the housing market but so what. It's pretty chaotic in central London already. If we offer to aboilsh the tax outright then Labour will whine about how much we are saving the very rich but eliminating the principle residence will abolish the tax for 80% of those who currently have to pay it. The yield from the tax will then be so low that it will be uneconomic to collect and as a second bite of the cherry it can be abolished entirely even only two or three years later.

[Lord Cashcroft]

Felicity and I love these good cop - bad cop routines.

[Yet Another Anon]

A good start would be to exempt property from Inheritance Tax, someone benefiting from an estate is in a situation in which someone has just died, in many cases they are still grieving and in many cases they could end up with the house they are living in sold off to pay for the tax. It's strange that the Conservatives didn't exempt property from Inheritance Taxation when Supplementary Benefit was altered in the early 1980s so that it wasn't effected by the value of a house - surely this was hugely inconsistent on their part.

[Raj]

Whilst I think a lot of voters would welcome a serious change in inheritance tax, abolishing it completely would lead to some complaints - why should people with say £5 million+ estates pay nothing, people will say?

I would say that the tax-free threshold should increase to about £750,000 at something like 15% over that. Then maybe 30% over £2,000,000. That would take by far the majority of people out of the tax and still not punish those who were over the first threshold that much. Of course one would need an annual review of house-prices to ensure this remained fair.

What I do like is the proposal to move the higher rate of income tax up, as well as cut corporation tax. I think that should be priority for discussion and implementation, not inheritance tax. I think it is far more important that people can enjoy more of their own money and businesses can be more competitive.

[Simon Denis]

Inheritance tax is a tax on achievement and a tax on families. Finally it is a tax on the whole notion of dynasty which is what made Britain so much more stable than France throughout the nineteenth century. Long, dynastic accumulations of wealth stabilise a society as surely as the roots of an ancient forest will stabilise and preserve the soil. It is venomous envy to whine about free assets and base purtianism to suggest "standing on one's own two feet." In a free society, we should be at liberty to dispose of our goods without the snooping intrusions of the taxman. We should be free to give and free to receive and this will incentivise millions whose first wish is to see that their families will be all right after they themselves have gone.

[Enoch]

I'm not surprised that George Osbourne doesn't want to scrap inheritance tax: Once you swallow one UKIP policy (that one's been on our website for a year!) you might develop a taste for others... And we couldn't risk that, could we :-)

[ToMTom]

TomTom,

But that completely ignores the fact that the average house price itself will be driven up as this one kind of asset is awarded tax-free status.

But it has tax-free status already. If you sell it it is free of CGT - it is only if someone dies that it is taxed.

If the house were re-mortgaged and the money put into Gilts or Premium Bonds it would be tax-free as would the prize won in the 12 months following death

In fact it is a weird country that let a woman win £35 million on a lottery TAX-FREE but would make people pay 40% tax on a house worth over £285.000

[TomTom]

Britain is a Socialist Society which prefers to make people rich through lotteries than through work and accumulation.

It taxes the seed corn but subsidises gambling through tax-free prizes.

Socialism is about breaking families and punishing individual enterprise - how fitting that the best returns in this society are to gambling

[TomTom]

The only possible Tory position is to call for the abolition of inheritance tax and plunge the stake into LLoyd George's coffin.

Harcourt not Lloyd George

http://www.tax.org.uk/showarticle.pl?id=1566

The rate of duty was to vary from 1 per cent. on an estate between £100 and £500 value, to a maximum of 8 per cent. on an estate of over £1,000,000 value.

£1 million in 1894 = c. £125 million in 2004

eg W H Smith died in 1893 leaving £1.7 million - when Lord Randolph Churchill died in 1895 he left £75,000 - Gladstone in 1898 left £59,000

[Dontmakemelaugh]

According to the Telegraph it has been suggested that the Tories are going to increase Green taxes (i.e. air travel) to fund the loss of the tax income derived from Inheritance Tax if abolished. Rather than having to pay out now for the dodgy science of climate change beloved of the UN, the EU and the BBC, I would prefer be taxed after my death - thank you. The Tories explanation that the raised Green tax will mitigate or ameliorate climate change is a joke (and a bad one). Pull the other leg.