The Daily Telegraph - Saturday
Inheritance tax against Tory values, says Hunt
Chancellor says death duties are ‘profoundly anti-Conservative’ and pledges tax breaks for middle-classes
JEREMY HUNT has said that inheritance tax is unfair as he vowed to support the middle classes with tax breaks.
In an interview with The Telegraph, the Chancellor described death duties as “profoundly anti-Conservative”, adding that the Tories would end taxes that discourage people from earning more money.
Mr Hunt vowed to build on two cuts to National Insurance and said: “We made a start, and we will go further.”
In his first interview since Rishi Sunak called the snap poll for July 4, Mr Hunt said the Tory manifesto would focus primarily on tax cuts that boost growth, reducing “taxes on work” and those that “disincentivise saving”.
The Chancellor’s promise of support for the middle classes came as private schools warned that parents were pulling children out ahead of Labour’s pledge to add VAT to the fees.
Yesterday, Sir Keir Starmer promised the tax raid would be prioritised on “day one” of a Labour government.
In an apparent effort to draw a dividing line with Labour on tax, Mr Hunt signalled the Tories would seek to end the effective 60 per cent rate that applies on incomes between £100,000 and £125,140 because of a tapering of the tax-free personal allowance
He said ensuring workers keep more of every extra pound they earn was a priority, as he repeated an ambition to abolish National Insurance, move more people from welfare to work, and do more to support home ownership.
He said: “Our priority will be taxes that boost growth. So that can be business taxes, that boost investment. But it’s also taxes on work, which is why our National Insurance cuts will fill about one in five vacancies across the economy.
“And it’s [addressing] taxes that disincentivise saving, because if we want to have more investment in the economy, we need to be saving more.”
Mr Hunt also pledged not to introduce a wealth tax: “We do not believe in wealth taxes, I can absolutely pledge that there will be no wealth taxes under a Conservative government.”
He described inheritance tax as “pernicious”, and added: “I think it is profoundly anti-Conservative because it stops and disincentivises people from saving for their future.”
The Chancellor considered slashing inheritance tax late last year, with reports suggesting he was prepared to cut the headline rate from 40 per cent to 20 per cent. While his comments suggest future cuts remain on the table, the Chancellor refused to be drawn on whether it would be a manifesto pledge, adding that his “first priority” was reducing the “taxes that have the biggest impact on growth”.
Asked if cutting inheritance tax was a priority, he said: “I hope it’s something that over time a Conservative government would be able to look at.”
He signalled that making work pay and moving people from welfare to work was a bigger priority, including reducing so-called marginal tax rates that apply on every extra £1 earned above £50,000 as benefits including Universal Credit are withdrawn.
Mr Hunt said: “I made a start in the Budget when I increased the starting point for repaying child benefit from £50,000 to £60,000. And that’s going to help about half a million families. But if you look at the distortions in the tax system between £50,000 and £125,000, they are bad economically because they disincentivise people from doing what we need, which is to work, work harder. And we are the party of hard work.”
Asked if a Tory government would seek to correct these distortions if given another five years, Mr Hunt replied: “Yes”.
The Chancellor signalled that helping people to get their “foot on the housing ladder” was also a priority for the Tories. He said: “I believe in a property-owning democracy as something that is a very strong part of the Conservative vision. We would love to offer more support to people buying a house for the first time.
“We’ve got record numbers of people doing that, but nonetheless, we recognise that finding the money for the deposit is challenging.”
Mr Hunt said an “unsteady” property market had made support difficult in the past 18 months because of the threat of negative equity, where falling house prices leave families living in a property worth less than their mortgage.
He added: “[It wasn’t] possible to introduce schemes that help first time buyers in the context where there’s a possibility of property prices going down. But that is changing now.”
Inheritance tax is a 40 per cent tax on the value of an estate – including property, money and possessions – of someone who has died. Tax is usually paid if the estate is valued at less than £325,000. Receipts rose to a record high of £7.5 billion last year, and are forecast by the Office for Budget Responsibility to climb to £10 billion by the end of the decade.
Wealthy landowners are rushing to give away their estates to their children ahead of the general election. Families are concerned that inheritance tax reliefs could be tightened under a Labour government, advisers said.
Joseph Adunse, partner at Moore Kingston Smith and an adviser to landed estate owners, told The Telegraph that those worried about being hit with tax bills have fast-tracked property transfers.
‘A big myth is that there isn’t much difference between my policies and those of Rachel Reeves’
JEREMY HUNT is ready for the race. Sporting the same black running shoes he wore to train for the London Marathon, the Chancellor strides through a new part of his constituency in Surrey, canvassing for votes.
Hunt, who has a majority of just 8,817, will contest the redrawn constituency of Godalming and Ash on July 4. The Lib Dems are aiming to snatch the seat from his grasp, and Hunt is clear the race will be tight.
Others have already thrown in the towel. There are now more Tory MPs standing down at this general election than the record number who quit in 1997, when Labour’s Sir Tony Blair won a landslide victory.
But Hunt insists the thought of joining them never crossed his mind.
“The new constituency boundaries include a village called Shere where I grew up,” he says in his first interview since Rishi Sunak fired the starting gun on the snap poll.
“So the chance to represent the area you grew up in is a huge thing. This is what I want to do.”
But this election race will be more of a sprint than a marathon, with just six weeks to overturn Labour’s huge lead in the polls.
Hunt is well aware of the task at hand, as well as the balancing act between country and constituency.
There’s an RAF plane in Northolt waiting to whisk him away for a shortened trip to Italy. Finance ministers from the world’s richest countries are gathering near Lake Como to find common ground on fresh Kremlin sanctions.
They want to pull forward earnings on frozen Russian assets to boost funding for Ukraine’s war effort. It’s a deal the Chancellor desperately wants to get over the line in what could be his last G7 meeting in the job.
But with the prospect of becoming the first serving Chancellor in modern times to lose his seat, he’s managed to find time to knock on a few doors first.
So, does he feel like the underdog? “Absolutely,” he says.
“Both locally and nationally.
Because when you’ve had 14 years, with three global shocks – we haven’t had that in our lifetimes before – obviously people are feeling bruised.
“But people vote for Conservative governments because they want to know that someone is going to take the tough decisions that will put the economy on its feet because Conservatives know that without a strong economy, nothing else is possible.”
Hunt is keen to stress that only the Tories can deliver tax cuts, describing Labour’s new deal for working people as a disaster that will turn Britain’s “job-creating factory” into a Frenchstyle labour market with fewer jobs and higher unemployment.
“They would kill off the most flexible labour market in Europe,” he declares.
Hunt wants to campaign on the Conservative promise of a stable home-owning democracy led by a Prime Minister and Chancellor who will “go further” on tax cuts, support the middle-class dream of getting on the housing ladder in aspirational society, highlighting that many young people are now priced out of the communities they grew up in.
Having toyed with the idea of halving the headline rate of inheritance tax previously, he brands the death duty “anti-Conservative” and “pernicious”, outlining an ambition to look at reducing it “over time”.
But inflation has taken a heavy toll across the country, and many will not forget he was the one presiding over the biggest tax burden in peacetime.
Hunt believes the economy has turned a corner. Growth is going “gangbusters” in the words of the Office for National Statistics, while inflation is within striking distance of the Bank of England’s
2 per cent target.
He also makes it clear that an early election was in the mix even before May’s local elections.
“Rishi had made it clear to me for several months that he wanted to keep this as an option on the table,” he says.
“But I also knew because of my long grizzled experience in politics that these decisions are never made until they’re actually announced.
“I have a very close relationship with Rishi. And I think it’s that strong partnership that’s meant we’ve been able to take really, really, you know, eye-wateringly difficult decisions.”
His job now is to distinguish the Tories from Labour, and hope people think about that when they’re standing in the polling booth.
One area that he hints we may see in the manifesto is relief for people earning above £100,000. People who earn even a penny above this level have childcare perks worth thousands of pounds snatched away, while the tapering of the personal allowance also leaves them facing marginal tax rates of 60 per cent.
Hunt suggests tackling this will be a priority in the next government.
“[Labour] don’t understand that the marginal rate of tax that you pay stops people working and so we’ve got lots of distortions in the tax system,” he says.
“I made a start in the budget when I increased the starting point for repaying child benefit from £50,000 to £60,000.
“And that’s going to help about half-a-million families. But if you look at the distortions in the tax system between £50,000 and £125,000 they are bad economically, because they disincentivise people from doing what we need, which is to work
[and] work harder. And we are the party of hard work.”
Asked if tackling marginal tax rates would be a priority in the next parliament, he says: “Yes”.
The manifestos will be unveiled shortly. But here in Godalming, there are more pressing issues on voters’ minds. One man stops an obliging
Hunt in a cul de sac in Compton to complain about the local mobile phone mast.
“I can’t get phone reception,” he grumbles, as the concerned Chancellor punches a note into his smartphone.
The reception at the doorstep is mixed. “Hello Jeremy!” beams a man in a blue zip-neck jumper as Hunt asks him about his local gripes.
“I’m happy about the triple lock”, he responds, expressing joy at the fact his pension continues to rise by the highest of prices, earnings or 2.5 per cent each year. However, he’s less impressed with the potholes.
A few doors down, a man and woman are helping a friend to prune their garden. “We support you,” they declare, adding that they live within the existing boundary as Hunt waves goodbye.
Not everyone is happy though. Waverley and Guildford were both strong Remain supporters in the
Brexit referendum. “Jeremy, I’m sorry I can’t vote for you”, bellows one new constituent behind crossed arms.
He mentions Brexit and the fact he’s no fan of Boris. “Okay. Democracy!” responds an upbeat Hunt.
Another wavering voter complains about illegal immigration. “They’re killing our kids,” she laments.
It’s one reason that Reform remains a threat, although Hunt insists that a vote for them will only lead to a Labour victory.
“If you want Keir Starmer to be prime minister, vote Reform,” he says.
“That’s the only thing that will happen. And there won’t be any Reform MPs. At the end of this process, what you will get is more Labour MPs, more Liberal Democrat MPs, and Keir Starmer as prime minister.” He adds that the Conservatives are the only party big enough to tackle the issue.
“We’re very confident with a future Conservative government, those [Rwanda] fights will be off the ground. And we’re now seeing the evidence. Migrants in Ireland are saying they don’t want to come to the UK because of the risk of being sent to Rwanda. And, I feel as someone who’s married to an immigrant, very strongly about this because for me, one of the best things about our country is that we are generous, open-minded. We have given sanctuary to people from Afghanistan, Ukraine and Hong Kong when they’ve needed it and I don’t want that to change. But I know that uncontrolled illegal migration under a Labour government would snap the social contract that makes our country one of the most open and tolerant on the planet.”
Asked what he would do if he had an extra £10 billion to play with, Hunt says ending the “double tax on work” of National Insurance remains a priority. £10 billion would be enough to reduce the rate by another 2p.
“That will take time,” he adds.
But time is not on his side, and he may not get another chance to stand at the dispatch box. He wants to remind everyone that a Labour successor will take the country in a very different direction.
“The big myth in British politics is that there isn’t much difference between my economic policies and those of Rachel Reeves,” he says.
“There are three areas where there are profound differences, which would make the country a totally different place if Labour win the next election: jobs, tax, and welfare reform. And so you will absolutely see in our manifesto, things that highlight the fact that we become a job creating factory.
“We need to move people off welfare into work ... because we think it’s right for them as well as right for the taxpayer. And on tax, you will see that the big divide in British politics is everyone knows we’ve had to put up taxes to deal with the cost of Covid, and the energy shock.
“No one thought that was the wrong thing to do. But Labour think that is a permanent change ... We’re prepared to do the hard work to bring down taxes further. We made a start and we will go further.”
Reducing the burden on voters’ finances, unlike the election, may prove to be a long-distance race.