A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Sunday, August 20, 2006

I don't agree with Byers on this but ...

It was depressing to see the way in which Stephen Byers' floating of the idea of scrapping inheritance tax (http://news.bbc.co.uk/1/hi/uk_politics/5267836.stm) has been jumped on by more over-excitable Labour bloggers as evidence that he is "planning to defect to the Tories" (http://viva-freemania.blogspot.com/2006/08/will-byers-defect-to-tories.html) or is "economically illiterate" (http://letsbesensible.blogspot.com/2006/08/influence-of-bloggers-437.html) or is an "idiot" (http://newerlabour.blogspot.com/2006/08/byers-joins-idiot-brigade.html).

I don't agree with the full abolition he suggested for the simple reason that inherited wealth increases inequality and is un-meritocratic.

However, I understand why he said it: a tax that was created to cream off 40% of the wealth of the ultra-rich is, because of inflation, now hitting tens of thousands of relatively ordinary middle class suburbanites, just because their deceased parents have successfully paid off mortgages in places where house prices have gone through the roof. The people being hit by this are concentrated in London and the South East which is exactly where Labour has to win a string of marginal seats in order to win General Elections. For those of you from other parts of the country, the "huge inherited wealth" represented by an estate of £285,000 (the current threshold) would buy you a 2 bedroom ex-local authority flat where I live.

The Treasury already seems to have conceded this with a plan to up the threshold to £325,000 in 2010.

We ought to be celebrating the fact that there is at least one ex-Minister who when he puts pen to paper is trying to think up ideas to expand Labour's electoral appeal rather than trying to contract it back to the electoral laager of the 1980s, telling us what they are against rather than what they are for, or indulging in destructive and bitter personal attacks on the PM.

Byers has earnt the right to speak out on these issues. He has been commendably loyal since he left the Cabinet, despite the frustration he must feel about being stuck on the backbenches. He gets out and campaigns FOR Labour not AGAINST it. He knows about tax issues because he was the minister responsible for them when he was Chief Secretary to the Treasury. As a Cabinet Minister at DTLR he was hugely popular with councillors as a Secretary of State who actually cared about local democracy rather than seeing councils as an obstacle to edicts from on high, and he was distinctively Labour in his approach - as in bringing Railtrack back into public ownership. I saw him in action earlier in his career as School Standards Minister when he intervened to start sorting out the mess that was education in Hackney - he had a formidable grasp of detail down to the staffing and exam results of individual local schools.

My instinct is abolition is wrong but a threshold increased to £400,000 would help stop this tax hitting people who are not mega-rich and who it was not intended to hit. And would show middle class voters we have not stopped caring about their issues. Because if we can't do that we stop winning elections and leave the poorest in society to the tender mercies of Dave Cameron and his old Etonian buddies, for whom £400k was probably the pocket money put in their accounts to see them through university.

Well done to Byers for having the courage to spark a debate on this. And shame on the ignorant response to it from some colleagues.

23 Comments:

Blogger A soft socialist said...

The likelyhood of us going back to the 80s when you look at the current crop of mps.

This latest idea is a tory policy and one that will enrage sctivists and the plp.

In a true meritocracy people would achieve what we could regardless of wealth.

8:31 pm, August 20, 2006

 
Blogger Patrick H said...

I'm of the opinion that inheritance tax should be lowered (maybe to about £100,000), but should exclude one's main residential property.

That way, those with enough dosh to buy a house for £300,000 wouldn't lose out, but those with two houses worth £300,000 or those with half million in other assets, liquid or otherwise, would be rightly stung.

This would also have the consequence of moving those who could afford it into higher value properties, causing greater fluidity in the housing market. In turn, those at the bottom end and first time buyers would benefit too.

Having said all that, Byers is an idiot (Network Rail notwithstanding).

8:50 pm, August 20, 2006

 
Anonymous Tom said...

You've misread my post. I'm merely observing that Stephen Byers is a bit of a hate-figure among right-wing bloggers, many of whom are strong supporters of the abolition of inheritance tax - and I link to a comment by one of them who describes him as a "failed polytechnic lecturer" and attacks his lack of economic knowledge. I think it's quite funny that someone they describe in those terms should now be a prominent advocate of a policy they support.

I wouldn't personally describe anyone as "economically illiterate", as I'm not qualified to do so, and in any case it's rude. But I don't think that this is a good idea, and I think his arguments are lousy.

9:14 pm, August 20, 2006

 
Blogger Luke young said...

On my Blog I'm asking who will take the White House in 2008? What do you think? who's your favourite?

http://lukejyoung.blogspot.com/2006/08/america-decides-08-who-will-win.html

please join in

9:42 pm, August 20, 2006

 
Blogger Jon Rogers said...

Byers is heading for the obscurity which his talent suggests that he deserves and I really do not understand why anyone would want to say something nice about this daft capitulation to the loony right on his part. Patrick H's idea seems sensible, whereas what Byers had to say seemed like a Daily Mail (or is it Express?) editorial.

I am sure that it must be possible to have a coherent pro-New Labour point of view (albeit I would disagree). However Byers doesn't seem to be able to do this.

Why congratulate him for starting a debate which was already started by the Tories???

11:58 pm, August 20, 2006

 
Blogger El Tom said...

Luke, I campaign for labour and not against it, and I'm part of groups and movements that think to expand labour's appeal. In the same way as you don't agree with Byers, you may not agree with me, but at least give me that.

My support for labour and the government is not unconditional; that's all. It would be stupid if it was. My first commitment is to the centre left, which labour does not define, but should try to fit into.

So if those attacks are aimed at me and my ilk, perhaps they warrant some more consideration.

I agree with you in that we do not have to be against changing inheritance tax all in all. I too would not support taking chunks out of middle England. I would even support raising the threshold, because you are right about rising inflation in the housng market.

That, though, is a seperate debate.

Where have people been arguing against a pragmatic approach?

I don't think it is a good idea to be coming up with new ideas for the government if they are a)wrong b) big vote losers c)advance the agenda of the right.

I think Byers' proposal contravenes a) and b), and represent idocy. Why do the tories' work? they can do that themselves.

The guy used to be really high up in my good books for what he did wit railtrack. Shame.

12:49 am, August 21, 2006

 
Blogger El Tom said...

how embarrassing. I have mistyped 'idiocy'...

doh!

12:50 am, August 21, 2006

 
Blogger A soft socialist said...

I'm sorry but I just fail to believe that a LABOUR mp could think that such a policy fits in with our aims of social justice.

12:57 am, August 21, 2006

 
Anonymous Andrea said...

Nice double standards. Byers can speak out as much as he likes generating headlines about Labour being split or about Blairites attacking Brown (more or less what he has produced with his piece). The rest (especially those you don't like) can't.

9:23 am, August 21, 2006

 
Anonymous Michael said...

I say old chap, you are not being very helpful by suggesting that a two-bedroom ex-council flat near Abney Park cemetery is worth £285k:
"For those of you from other parts of the country, the "huge inherited wealth" represented by an estate of £285,000 (the current threshold) would buy you a 2 bedroom ex-local authority flat where I live."

I think you will find that a reasonable price for a four-bedroom ex-local authority property in your area would only be £240k-250k.

The problem with people like you making comments like this is that it pushes up price expectations and thereby drives the poorer people out of the market.

As someone who has devoted his political career to helping the poor tenant and the homeless to gain a foothold on the property ladder, I am very upset by such behaviour, especially when it comes from my Chief Whip.

For more information on my housing activities, see this excellent article about me published last month: http://www.newsshopper.co.uk/homes/lettings/display.var.837455.0.star_landlords_wanted.php

Michael

9:35 am, August 21, 2006

 
Blogger Luke Akehurst said...

Adele, the reason it might fit in with notions of social justice is that if working class people have managed to do well enough to do right-to-buy on their council house, I don't see why they shouldn't be allowed to leave it to their equally working class kids if it happens to have reached a value of over £285k.

The problem with the response here is that, just as with our 1992 tax higher rate income tax proposals, most Labour people are blind to the aspirations of the poor and working class people we are supposed to represent. We tend to forget that even people who currently don't pay higher rate tax or inheritence tax aspire and expect to be that well off - loads of people who were not higher rate tax payers voted against us in 1992 because they thought that one day they might be and would be hit by our proposed increase.

Andrea - the only reason why this has generated headlines about a split is because of the intemperate reaction to it. A more considered reaction would have been "Treasury always keeps taxes under review as the demographics of the nation change. Mr Byers has floated an interesting idea, it will be for him to see if there is support for it in the National Policy Forum process etc."

9:38 am, August 21, 2006

 
Anonymous Andrea said...

Luke, when you talked about the reactions of his piece, I thought you were referring not to the Treasury reaction itself, but to the reaction of some MPs like Sion Simon and Chris Bryant.
I think it would have generared those headlines anyway, just because the papers wanted them (so they create them)

10:05 am, August 21, 2006

 
Blogger A soft socialist said...

So which services would you cut, when the inheritance tax is abolished?

11:36 am, August 21, 2006

 
Blogger Luke Akehurst said...

Adele

I didn't say I was in favour of abolishing it. That's what Byers said.

If I was increasing the threshold (which is what I said I think would be a good idea) I wouldn't cut services, I'd increase green taxes on polluting behaviour.

Taxes aren't just to raise funds, they steer people towards certain types of behaviour (hence we tax fags and booze to cut their use) - I don't think investing in a home and hoping to pass it on to your kids is the kind of behaviour we should be discouraging.

11:50 am, August 21, 2006

 
Anonymous Michael Desmond said...

Sorry Luke, the URL I posted earlier has been changed. To learn more about my housing activities for the poor and destitute and why I don't agree with you even though you are my Chief Whip, see:

http://www.newsshopper.co.uk/homes/lettings/display.var.837455.0.star_landlords_wanted.php

Also, I've just just spoken with someone who recently bought a 3 bedroom ex-local authority flat in Cazenove Road, within spitting distance of your pad, for £185K. So I do think you are inflating the property marker old chum.

6:13 pm, August 21, 2006

 
Anonymous Michael Desmond said...

Not having much luck with your software, old chap, as I keep chopping my URL off before the end. I've posted the link as my web page, i.e. click on my name.

6:16 pm, August 21, 2006

 
Anonymous Michael Desmond said...

No - that didn't work either. Am I just getting too old and doddery?

The address is: "http://www.newsshopper.co.uk/homes/lettings/display.var.837455.0.star_landlords_wanted.php"

Don't know why this does not publish.

6:19 pm, August 21, 2006

 
Anonymous Michael Desmond said...

OK - I give up with your blog software. Just search out my article by looking for the heading "Star landlords wanted" in Google.

6:20 pm, August 21, 2006

 
Blogger A soft socialist said...

Green taxes, now youe starting to sound like a lib dem?

Maybe tax buying big powerful cars very heavily but environmental taxes would be quite hard to collect.

6:24 pm, August 21, 2006

 
Blogger Geraint said...

He claims that abolishing inheritance tax woulc show that New "Labour" is still pragmatic...How?

If anything that is a very unpragmatic and idiotic idea, although New "Labour" are full of stupid and unpragmatic ideas, I doubt that even they would go to the extreme lengths that a loony like Byers wants to.

I also would be interested to know what would have happend if it was someone from "Old Labour" saying something simular about inheritance tax, only with a more left wing suggest, would you still "understand"? I don't think you would.

So, how can you "understand" and respect a loony like Byer and not from other loonies like those in the Socialist Campaign Group?

8:15 pm, August 21, 2006

 
Blogger El Tom said...

spot on geraint.

Of course, I would be in favour of abolishing the inheritance tax if we could have a redistributive land tax system! all a bit complex though...

11:28 pm, August 21, 2006

 
Anonymous Gregg said...

Taxes aren't just to raise funds, they steer people towards certain types of behaviour (hence we tax fags and booze to cut their use) - I don't think investing in a home and hoping to pass it on to your kids is the kind of behaviour we should be discouraging.

I do. Tying money up in property is bad for the economy. IT isn't just a source of revenue - it encourages people to sell inherited property. That frees up cash for re-distribution through consumption, and frees up property.

If the threshold were raised as you suggest, the availability of housing in London would become even more limited. The current problems of ever more property being concentrated in the ownership of ever fewer people, and of prospective first time buyers being unable to buy, would be worsened. And the value of property would spiral once again, those £285K properties going up to £485K, so the group of people you're targetting with this policy will very soon be back where it started.

1:34 pm, January 24, 2007

 
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