Two policies currently being promoted by the Conservative government in office and the Conservative Party in the country sharply highlight the Conservative’s values and priorities.
From April, the government is implementing changes in Inheritance Tax. The policy will only benefit families with homes worth more than £650,000. Under the new system, families will have a new £175,000 inheritance tax allowance for their home on top of the existing £325,000 threshold. It amounts to a tax giveaway of £38,400 for each of the estates affected. It amounts to a £1bn tax giveaway.
Of the 100 constituencies that will benefit the most, 96 are in London or the south-east. They are mostly represented by Conservative MPs, as are the 4 constituencies outside of London – Tatton (George Osborne’s constituency in Cheshire), Bath, Altrincham and Sale West (also in Cheshire) and Stratford-upon-Avon. Whereas these constituencies may each have 2000 or more homes valued at £650,000 or more, for the vast majority of constituencies, like mine, there are likely to 20 or less.
Carl Emmerson, of the independent Institute for Fiscal Studies, says that the policy clearly benefits the wealthy. When the threshold reaches its final level in 2020, “the biggest beneficiaries of this tax cut will be those whose parents are married and have an estate worth between £1m and £2m,” he said. “This small number of typically well-off individuals will see a £140,000 reduction in their inheritance tax bill.”
Meanwhile, the government is planning to make big cuts in the support to the poorest bereaved families.
The existing scheme, which is based on the NI record of the person who died, has three different benefits to support spouses and civil partners: Bereavement Payment (BP) – lump sum, Widowed Parent’s Allowance (WPA) and Bereavement Allowance (BA). The new replacement Bereavement Support Payment (BSP) will be for new claimants from 6 April 2017.
Under BSP, three-quarters of bereaved families will receive less in cash terms than under the current system. Further, nine-out-of-ten families will also see a cut to the length of time that they can receive support following a bereavement.
So, bereavement for the very wealthiest families (the top 5%) is to be acknowledged with big tax cuts, and bereavement for the poorest families means big cuts in support.
These policies tell you everything you need to know about the Conservative instinct.
