Fundamental gene in human nature to hand something on
Two Prime Ministers coined phrases which witnessed their nexus over the last few days. John Major talked about ?wealth cascading down through the generations? and two decades earlier Harold Wilson uttered the truism: ?a week is a long time in politics?. The astonishing collapse of Gordon Brown?s courage and his general election strategy is blamed by his closest confidantes on the impact of Conservative policy on tax and their effect on the polls. But how could the Prime Minister be so disengaged from reality that he didn?t see this coming?
It is perhaps a fundamental gene in human nature that we desire to pass something of ourselves down through the generations. Society evolves through the experience of previous generations and through great reformers such as Wilberforce and Joseph Chamberlain. Modern day scientists are not expected to rediscover the work of Faraday and other physicists. So why should every small business be expected to start afresh with each generation?
Birmingham and the Black Country were born out of industry. Yet it is not just cheap labour in China that has crippled our small engineering works. How many have failed when a founder dies and his heirs have had to sell the business to raise money for death duties? How many stately homes have been lost to our national heritage and now lie in ruin because of the short sightedness of envious legislators?
No. There is something fundamentally good in human nature to want to pass on our endeavours. It is not wicked. Yet death duties or ?inheritance tax? mitigate against this natural wish. At first, death duties were designed only to apply to multi millionaires. But now most of us fall into that trap. Parents worry whether their home in Solihull will be passed on down to their children. Children in Lichfield fret over whether they will inherit anything from their ailing parent.
And the most galling thing of all is that these acquisitions have been paid for after paying income tax! So, you pay taxes, yet you manage to save what is left, you invest – and then the Chancellor grips you with a double whammy when you die.
This was never acceptable, and I would argue never morally right, but it was tolerable when it was the other person: the multi-millionaire. But with inheritance tax thresholds set at ?300,000, 37% of all home owners in the United Kingdom are now affected. And it is much higher than that here in the midlands. Since 1997, the number of households paying death duties has doubled. It is no longer a tax on the very rich but a tax on the middle class and on their aspirations.
In Solihull, the cost of an average home is now ?248,591 while in my district of Lichfield, which includes old mining areas, it is ?227,452. With inevitable additional savings, these households will be subject to death duties.
So when the Conservatives announced amongst other things that they would raise the death duty threshold from ?300,000 to ?1 million, they lifted 9 million households out of the inheritance tax trap. The Treasury?s own figures show the cost of this move is relatively small yet it reveals something in Gordon Brown?s nature that, budget after budget, he chose to increase the income from death duties.
West Midlanders believe in the work ethic. We ask for little yet give much to industry and to the many charitable groups and societies to whom we donate our time. When left-thinking analysts squeal that the polls have changed because of panderings to greed, they are very wrong. There is an inalienable right and a moral good in passing on our endeavours to our successors.