My Lords, I agree with much of what has been said this afternoon. In my mind, this enhanced fee is a death tax, and I should like to take this opportunity to shine a light on what, in practical terms, this will mean for a particular
group of people—the people in the middle. It is always the people in the middle whom one has to pay attention to. Clearly, it is a very good thing if people at one end of the scale are taken out of the tax or fee altogether, and I suspect that there will not be a lot of sympathy for those with multimillion pound estates having to pay an additional 0.5% charge. However, we should look at how the scale has changed for an estate of about £500,000. At £500,001 the fee goes up from £215 to £2,500, which is quite a considerable hike. Who are these people with estates of, say, £500,000, who will be subject to this fee? What do they look like? What sorts of lives do they lead? That is a lot of money.
We know from the Lord Chancellor’s briefing to us that about 25% of an average estate is in cash or liquid assets. We can assume that on a £500,000 estate, £125,000 would be in cash or investments—money saved over a lifetime, perhaps some capital taken from a pension after a hard-working life— and a family home of some £375,000. Across the country, that would be regarded as a fairly modest estate. In fact, only a few years ago people were throwing up their hands in horror that those who had bought their council houses were now subject to inheritance tax.
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I say this directly to my noble and learned friend on the Front Bench. All my political life I have supported the Conservative policy of encouraging people to work hard and buy their property, and for many people to buy their council house. We are now saying to this part of middle England— if I may refer to them in that way—that they now have to subsidise the Ministry of Justice by having another £2,500 knocked off their estate. These people are not saying “I would like to leave this to somebody in my will”. Yet they are going to be cross-subsidising another group of people against their will, however laudable that cross-subsidy may be. That is where their money is going.
Unbeknown to many of these people, this is not the only cross-subsidy they are making. For example, people with those sorts of assets—a house worth £375,000, and £125,000 in assets—but who are older, perhaps nearing death, find that if they need nursing and residential care, they will not be eligible for much help in terms of residential and nursing fees. Yet, very often by sleight of hand, when they are paying their own fees they are cross-subsidising the fees of people who are paid for out of the public purse. This group of people—those who are growing old and have worked hard, perhaps buying their home for the first time in their family’s history—is going to be hit hardest.
As a Conservative, I find this appalling, because these are not Conservative policies. This is not what Conservative Governments across decades have encouraged people to do: to save hard, to work hard, to buy their own homes, to put money aside for their retirement only to find that by sleight of hand, an enhanced fee is going to knock another £2,500 off their estate. For that reason, I will not be in the Government Lobby tonight.