As someone who considers this fading ConDem government to have been the worst under which I have ever lived, I am quite gratified by their current car-crash of an election campaign. I think a left-leaning coalition would be the best outcome of this election.
But let me just unpick the bones from the latest inheritance tax announcement. First, a disclaimer. I – or my heirs – are likely to benefit from it. I own a home that’s within the value limits, between £650,000 and £1,000,000. But it’s still a godawful idea.
- We’ve lived through an era of appalling growth in income and asset inequality. Locking that in for a 2nd generation is very bad news.
- Growth in house value is generously excluded from capital gains because you need to live in it. When you’re dead, that excuse is gone.
- Housing wealth derives from the value of the land, which rises because of the actions of everyone in the country, not you.
- Caring for the old is very costly. The old didn’t foresee this, and didn’t pay tax to fund it. Housing wealth will do nicely.
- A country where you get ahead best by luck and inheritance, rather than hard work, is a lazy unfair country that will fail
- I totally get the primordial desire to do your best for your kids, but if your plan is to do that with banknotes, you’re doing it wrong.
There are more.
There’s a bit of a housing shortage on at the moment. One reason for this is that people like me have bought all the houses; another is that there are more of us, we’re living longer and in smaller households. Old people living on in the family home isn’t a very good way of using the housing stock. A house that’s good for bringing up children in isn’t, on the whole, very good for growing old in. Many people my age are dealing with elderly parents, and the ones who have the least problem are the ones that got their parents out of the family home and into sheltered housing of one form or another. That releases a family home for another family. It makes providing social care much easier. It makes the inevitable old-person falls less dangerous. It reduces pressures on the NHS – it’s much more practical to discharge a patient after an inevitable fall back into a safe sheltered house than into an impractical family house. Now, there’s yet another reason not to move – you’ll lose Mr Cameron’s IHT breaks.
It’s bad enough that we’re a land of housing haves – my generation, mostly – and have-nots. Mostly divided by age – people over 40 mostly have homes, people under 40 are mostly Generation Rent. When we die, our homes will come back on the market. But Mr Cameron will make sure that most of them go by inheritance. There will still be housing haves and have-nots, but divided less by age than by how lucky you were with your inheritance. It’s a massive step backward.
Luckily, it seems that the commentariat has come out against Cameron on this. It’s a policy that will benefit a very few, pretty rich people – like most Conservative policies – and let’s hope that voters see this next month.