Time is running out to scrap inheritance tax

With a general election probably less than a year away, the Conservative Party is trailing in the polls and in desperate need of a boost. Next week’s Autumn Statement could be one of few remaining opportunities to fire up the thrusters.

Rishi Sunak has achieved his goal of halving inflation. Amid better than expected economic conditions, the Government now has the fiscal headroom to take bold action. As Chancellor Jeremy Hunt has said in an interview for The Telegraph, “taxes are too high”. Few voters would disagree. There is one tax cut which could improve the Tories’ prospects at a stroke: abolishing inheritance tax.

There’s good reason to believe this will work. In 2007, the mood in the Conservative Party was morose. Two by-elections had seen the Tories finish third behind the Liberal Democrats, and Labour was posting polling leads in the double-digits. Another spell in Opposition was on the cards. A bullish Gordon Brown was eyeing an early election, and there were even mutterings that a third successive loss could trigger a split within the party.

This changed overnight when David Cameron and George Osborne went to party conference with a bold offer: if elected, the Conservatives would raise the inheritance tax threshold to £1 million. The party soared in the polls, Brown retreated, and the Tories went on to triumph in 2010.

Mr Sunak and Mr Hunt will not be able to repeat this verbatim in 2023, despite the fact that George Osborne never actually delivered on this pledge. The most notable difference is that the Conservatives will enter this election having been in power for 14 years, rather than out of it. Promising jam tomorrow will not be enough for an electorate which has been waiting for over a decade. 

This time, the Tories must immediately follow through with the cut. Doing so would act as a downpayment on the policies that could drive the next five years of Conservative government. It would give wavering voters a reason to get to the polling booth, when many are considering staying at home. And, importantly, the Brexit promise of a low tax, high dynamism economy would begin to be realised.

The fractious party needs something to rally around. Inheritance tax is antithetical to Conservative values. It is anti-family, anti-aspiration and anti-prosperity. Moreover, the death duty is unpopular with the electorate, which rightly views it as an unfair levy on money already taxed in life. It is also an issue which will only grow more salient as frozen thresholds and rising property prices drag ever more ordinary middle class families into paying it.

There will be voices that urge Mr Sunak to wait, worried the move could hand Labour an opportunity to suggest he is “out of touch”. These are concerns he should ignore, while reminding voters that Norway and Sweden manage perfectly well without it. The cut may not be enough to sway the results of the election. But it would signal the party’s return to its first principles, and set a trap for a future Labour government. It is one thing to object to abolishing this immoral tax. But would Sir Keir really reintroduce it?