Whenever the Conservatives are in trouble they turn to the idea of scrapping inheritance tax to court new voters. But this policy is not going to help them win over the youth, writes Thomas Nurcombe
The issue of inheritance tax, once again brought into focus by a number of Conservative MPs, has resurfaced like a fiscal Lazarus. Advocates of eliminating the tax are thinking that, with the Conservatives behind in the polls, abolishing the inheritance tax may provide a pathway to electoral victory.
But, much like in 1997, promising to scrap the tax will not save the party from electoral oblivion. Conversely, proposing its abolition shows how out of touch many Conservative MPs are with the crucial demographic that they need to win over – young people.
Whenever the Conservatives are in an uncertain electoral position, the idea of scrapping inheritance tax gains prominence. Just months before Tony Blair’s Labour landslide, Ken Clarke promised to abolish it. Then, in 2007, after ten years in opposition and still unsure of the Party’s future prospects, the Conservatives once again floated something similar. George Osborne promised at the time to raise the threshold from which one pays inheritance tax to one million pounds. The theory goes that Gordon Brown was persuaded against calling a snap election because of public opinion turning towards the Tories after the announcement. But the success of the 2010 election was not down to this promise. At the time, Labour lost because their electability was undercut by the credit crunch.
Fast forward to the present, the Conservatives find themselves 16 points behind in the polls. Panic is setting in and inheritance tax reform is back at the forefront. Several prominent Conservative MPs are calling for the abolition of inheritance tax, labelling it as “morally wrong.” Nadhim Zahawi MP, the flagbearer of this campaign, claimed that by abolishing inheritance tax the government “can show that they back families in their desire to pass on their hard-earned savings to the next generation.”
A lot of this campaign’s ideas about inheritance tax revolve around the perception that it penalises hard-working families and deprives them of their savings. However, only around 4 per cent of deaths in the UK result in an inheritance tax charge. Ordinary taxpayers, workers and young people would be left largely unaffected, especially as the median age to inherit is 61. Consequently, it would not be an electoral asset.
Almost half of the UK population is under 40. Yet even in the 2019 election, with its resounding Conservative victory, the under-40s overwhelmingly sided with Labour, with age being the strongest determinant of voting intention.
To make things worse for the Tories, it’s no longer the case that people become more conservative as they age. The majority of young people continue to perceive them as out of touch, while they see Labour as relatable and supportive. Indeed, a recent report from Onward showed that those below 35 are increasingly unlikely to vote Conservative. Merely offering tax benefits to the top 4 per cent will not alter this perception.
This is despite the fact that young people hold some values that resonate with the Conservative Party. They have recently been characterised as “shy capitalists,” who prioritise economic equality, but believe they should retain their hard-earned money. They view low taxes favourably, with lowering income tax ranking as the fourth most popular policy amongst this demographic. Among the general population, it only ranks seventh place.
Given their desire for fiscal policy that benefits working people, abolishing inheritance tax wouldn’t be a particularly poignant issue amongst the young. They would rightly see it as exacerbating wealth inequality between generations and social classes. Not only does it fail to achieve distributive justice, but it would also fuel resentment that it is again young people who are being overlooked for tax cuts.
Just like in 1996, the Conservatives face the serious risk of electoral defeat. Scrapping inheritance tax is not the path to avert it. If the Tories do go ahead and eliminate it, it will only serve to prove that they indeed are disconnected from young people and favour supporting those leaving the workforce rather than those entering it.
The Conservative Party will have to garner the support of young people somehow if they are to succeed. Abolishing inheritance tax is not the way to do so.