Tories’ inheritance tax cut lambasted by social mobility tsar

The Conservatives have announced today that they plan to cut inheritance tax, a policy that will cost £1 billion. They say they will fund it by reducing tax relief on pensions, make it a rare costed policy for the Tories’ election campaign.

However, the plan has been attacked by Alan Milburn, who was hired by the coalition to be chair of the Social Mobility and Child Poverty Commission. The former Labour minister, who has advised this Government on inequality, says the tax cut will disproportionately benefit the wealthy and is not the way to make Britain fairer.

Milburn said:

“There are much better ways to spend £1 billion if you want to reward aspiration.  Spending £1 billion to take just 22,000 families out of inheritance tax is not the right priority and will not improve social mobility.

“The Treasury’s own analysis says it will “benefit high income and wealthier households.” 

“Offering a £140,000 tax cut on a house worth £2million to just 0.1% of Britain’s families is a slap in the face for the hundreds of thousands of young people who are struggling to get on the housing ladder in the first place.  Home ownership rates among under-25s have halved and this proposal will do nothing to help them.

“This is a missed opportunity to do something for the many young people who want to move up and get on.  The money could have been better used to restore cuts made to Sure Start funding so that children from all backgrounds would have a better chance in life. Or it could have been put into cutting the debts that students face when they go to university or into increasing the number of decent apprenticeships.

“Instead it seems to have been designed to appeal to an inner core as part of a divisive core vote strategy.

“It is not the way to make Britain fairer or more socially mobile.”

The plans have also been criticised by Labour’s Chris Leslie, who has attacked the Tories priorities:

“It cannot be a priority to spend £1 billion on a policy which the Treasury says would not apply to 90 per cent of estates. The Tories would choose to give a £140,000 tax cut for a house worth £2m while they have increased VAT on families and pensioners.”