Lewis Cocking
Main Page: Lewis Cocking (Conservative - Broxbourne)Department Debates - View all Lewis Cocking's debates with the HM Treasury
(1 day, 20 hours ago)
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Tim Roca (Macclesfield) (Lab)
Madam Deputy Speaker, “We do not only ask today, ‘How much have you got?’, we also ask, ‘How did you get it? Did you earn it yourself, or has it just been left to you by others?’”. The estate duties provide a “corrective against the development” of the “idle rich”. And, “It is a far better thing to tax the accumulation of the past than to burden the industry of the present.”
Those are not my words, Madam Deputy Speaker, but those of Winston Churchill, speaking 100 years ago. They raise a question that remains relevant today: do we want a country that gives people a fair chance to get on in life or one that keeps finding new ways to protect the wealth of those who already have the most?
This motion tells us exactly where the Conservative party’s priorities lie. It calls on the Government to cut public spending in order to abolish inheritance tax, but it does not tell us which services they would cut, whose support they would withdraw or which communities would pay the price. It simply says “cut public spending.”
That is easy enough to demand when one does not have to explain what it means for people’s lives. The Conservatives are asking us to approve billions of pounds in tax cuts without telling us how they would pay for them. That is not a serious plan; it is a tax giveaway looking for someone else to pick up the bill. They say that the proposals would cost around £6 billion by 2029-30, but as we have already heard from other hon. Members, once we take behavioural effects into account, the cost could be up to £10.8 billion.
Who would benefit? Around 30,000 estates are expected to benefit. Estimates suggest that around 90% of the gains would go to the wealthiest 20% of pensioner households, with around 40% going to the wealthiest 5%. Around 70% of the benefits would go to London and the south-east, despite those areas accounting for only a quarter of pensioner households. Meanwhile, under the current system, fewer than one in 20 estates face an inheritance tax charge—a figure that has remained relatively stable for several decades now.
Let us stop pretending that this is a tax cut for everyone; it is a substantial giveaway that would disproportionately benefit the wealthiest households to the tune of £10.8 billion. Nobody disputes that family farms matter, and families should be able to pass on and plan for the future of those farms and businesses. But wrapping a policy in the language of family farms does not mean that we should stop asking who benefits, and this proposal goes much further than targeted help—it is a wider tax break for the very wealthiest in society.
There are questions about how it would work in practice. Conservatives say that they want to help people to pass on their homes, but what happens if those tax changes give older people a reason to stay in a larger property rather than downsize? Someone might want to sell a large home, move somewhere smaller and release money to support their retirement or help their family, but if inheritance tax treatment makes moving financially unattractive, their policy could discourage exactly the behaviour that they say they want to encourage.
Lewis Cocking (Broxbourne) (Con)
That is exactly why we would abolish stamp duty when people buy their home as well.
Tim Roca
The Conservatives point to stamp duty as a barrier and promise to scrap it on a home, but removing one cost does not automatically resolve every other tax consequence, and we know that changes in tax policy are very behaviour sensitive. This is what happens when a party writes a policy to win a headline for a conference.
It brings me back to Churchill. More than a century ago, he challenged the idea that inherited wealth should be waved through simply because it happened to belong to the right family. He asked the straightforward question that I quoted at the beginning: did you earn your wealth, or was it left to you?
As my hon. Friends have said, people want to leave something to their children. There is nothing wrong with that. But why should the Government spend billions helping those who are already wealthy pass on even more while telling everyone else that public spending should be cut?
Lewis Cocking (Broxbourne) (Con)
I want to support the family home, family farms and small businesses right across the United Kingdom, and I back this motion. It is a fundamental Conservative principle that, as Margaret Thatcher once said, “freedom flourishes” when people can rely on the security of owning their own home. In the same speech, she made a very important point relevant to this debate when she said that a home is more than a financial asset, as it is a “stake in the future” and something to be passed on to the next generation. That is why inheritance tax matters.
As we have heard, when someone dies, 40% of their money and property is taken by the taxman, if the total value exceeds £325,000. By raising the threshold, hon. Members on all sides of this House accused us of cutting taxes for the wealthiest in our society. I can tell them that the constituents I represent in Broxbourne are certainly not some of the wealthiest in our society. In fact, there are parts of my constituency that rank among the most deprived in the UK. Despite that, average house prices across Broxbourne are £433,000. Houses in my constituency that are just over the threshold include a two-bedroom maisonette in Cheshunt and a two-bedroom bungalow in Hoddesdon. Those properties are not mansions. Homeowners in Broxbourne have worked hard to live in those places, and it is not their fault that property values have risen by more than 10% in the last five years. On that trend, more and more ordinary families are being pulled into paying inheritance tax.
Labour is making this worse by freezing the threshold until 2031. By then, one in six families will face paying an inheritance tax bill. I believe this is wrong. As my hon. Friend the shadow Chancellor set out, we would completely abolish inheritance tax on the family home and raise the threshold to £1 million for a couple. We have a clear plan.
Markus Campbell-Savours (Penrith and Solway) (Lab)
I wonder—I have not read this anywhere—is there a cap on the value of the family home that will be exempt? For example, would the penthouse at One Hyde Park, which sold for about £175 million, be completely exempt?
Lewis Cocking
If the hon. Member had been listening to my speech, he would know that this is not people’s fault. If someone works hard and buys a family home, they have no idea what the value of that family home is going to be when they die. That is why we are exempting the family home from inheritance tax.
Graham Stuart (Beverley and Holderness) (Con)
My hon. Friend will remember that the centre-left Social Democratic party in Sweden abolished inheritance tax years ago, because it had gone down the route of this envy-filled, left-wing, socialist approach, and found that it was counterproductive, led to complexity and reduced wealth in the country. Afterwards, business thrived, and even the Communist party in Sweden, in the face of the facts 20 years ago, could see how wrong it was. It is a shame that the modern Labour party does not understand that.
Lewis Cocking
No, I will not give way. I have taken two interventions, and a number of Members want to speak.
If we want to unlock the next generation of entrepreneurs and back the people who give their blood, sweat and tears when they go out to work every day to make our country great and what it is today, this is what we need to do, and we have a clear plan to pay for it. We will cut Government spending by £71 billion, including by cutting overseas aid to £1 billion a year. We would reduce welfare spending by £36 billion and support young people into work, rather than a life on benefits. Alongside our pledges to scrap the family farm tax and scrap the family business tax, these are bold changes that will get our economy growing.
Enabling people to keep and pass on more of their own money is how we encourage people to invest, take risks and create new opportunities. Inheritance tax is not the only example. I regularly speak to constituents who feel that they are better off financially to refuse a promotion or more hours at work, because it does not make sense for them to work harder and get less. I have spoken to self-employed tradespeople who turn down work because they are too close to the VAT threshold. That just cannot be right. I speak to businesses and to people who work. It is absolutely crazy that they turn down employment and business because they will be worse off, paying more taxes under this Labour Government.
Until we shift the incentives in our economy—incentives that make a life on benefits more attractive than getting a job and that will put off businesses from creating new jobs—we will never improve the situation our country faces. Labour has a choice at the Budget on 28 October: they can copy the clear plan we have set out to make savings and cut welfare, or they can continue down the same road. Sadly, I just think they are not listening.