Inheritance Tax (Hansard, 23 November 1995)

§ 10. Mr. Corbett
To ask the Chancellor of the Exchequer what research he has done or commissioned on the effects of changes to inheritance tax. [699]

§ 13. Mr. Worthington
To ask the Chancellor of the Exchequer if he will make a statement on inheritance tax. [703]

§ The Financial Secretary to the Treasury (Mr. Michael Jack)
The effect of changing any tax is continually kept under review.

§ Mr. Corbett
Which does the Minister think the fairest: giving £1.6 billion to 16,500 people by abolishing inheritance tax, or investing it in training and jobs, which 12 in every 100 people in my constituency are looking for?

§ Mr. Jack
What I recognise is that the wealth-creating process also addresses the question of creating jobs. I notice that, in The Independent on Sunday last week, the shadow Chancellor said that he is not against wealth. What the hon. Gentleman has said now clearly shows that the Labour party is against wealth. He is divided from his own Front Bench. All I know is that Labour will tax one to hell and then tax one all the way to heaven.

§ Mr. Hawkins
Does my hon. Friend agree that we have just heard the authentic high-tax voice of the Labour party? We understand that our policy to ensure that wealth cascades down the generations is popular and, as soon as the Opposition realise that, they will change their tack, as they have done on every other economic policy and, in future, will support us on that as they have done on other issues.

§ Mr. Jack
My hon. Friend is entirely right. The hard-working people of Britain deserve the opportunity to pass on to their successors, their children and their families, the fruits of their labour. In Britain, 1.3 million people with houses valued at above £154,000 are under threat as a result of inheritance tax. That is why we have a long-term policy to remove it. The Opposition put those people at threat. Let that be noted.

§ Mr. Wigley
Does the Minister accept that there is no mass clamour for the reduction of inheritance tax, or any other tax for that matter, but there is mass concern about hospitals closing their doors to patients, about students who cannot obtain grants to go to university and about disabled people who cannot obtain community care? In the forthcoming Budget, we need to maintain the level of public expenditure so as to look after those services, rather than to pander to the electorate before a general election.

§ Mr. Jack
The hon. Gentleman shows his fundamental misunderstanding of the process of wealth creation, because that process, and the passing on of wealth between generations, help to create what we have today, which is record spending on the health service and record numbers of patients being treated. The hon. Gentleman should wake up to the reality of the modern world.

§ Sir Patrick Cormack
Will my hon. Friend give an assurance that the Government will never offer the British people a single ticket to a one-generation society?

§ Mr. Jack
I can assure my hon. Friend that the Government are dedicated to the creation of wealth and the passing on of that wealth between generations, and all the benefits that that brings.

§ Mr. Darling
Is it not the case that not only have the Government increased income tax by the equivalent of 7p in the pound, but the Financial Secretary has now committed the Government to abolishing inheritance tax? Does he accept that, of the combined benefit of abolishing capital gains tax and inheritance tax, amounting to more than £4.5 billion, half would go to only 5,000 people in Britain? Which is fairer—abolishing inheritance tax or cutting the starting rate of income tax to 10p in the pound?

§ Mr. Jack
I had better tell the hon. Gentleman that, apart from the fact that, again, his sums do not add up, 790 it was the Labour party in 1974 that began the process of exempting people from inheritance tax. Today, only 3.1 per cent. of estates pay it. That tax has now had its time and we have a long-term commitment to abolishing it.