Inheritance Tax

Paul Holmes Excerpts

Wednesday 14th October 2026 Commons Chamber

[Daisy Cooper]

The hon. Gentleman’s first question was broader and was asking about the capacity of businesses generally to pay for advance tax planning. Hopefully we can all agree that the tax code in this country is so complicated that unfortunately people must seek expert tax advice. Our tax system could be much simpler. The point that I was trying to make is that there are problems and loopholes with this particular tax. We have one of the highest headline rates of inheritance tax in the OECD, yet only 4% of estates end up paying it. The burden often falls on those who cannot take advantage of the loopholes and exemptions that are available to those with access to expensive tax advice.

We would reform inheritance tax to make it fairer, but let us be clear: a mini-Budget style approach to tax cuts is not the way to do it. There is a better alternative. If we want to help people who are being squeezed by the cost of living, the fairest and most effective approach is to cut income tax. We Liberal Democrats have done that before; when in power, we would do that again. In Government, we cut tax for millions of people, taking 3.4 million people out of income tax altogether. Today, we Liberal Democrats are committed to raising both the income tax personal allowance and the national insurance threshold to £15,000 over five years—[Interruption.] Conservative Members ask where we are going to find money for that—I will tell them.

[Paul Holmes (Hamble Valley) (Con)]

The hon. Lady is making an excellent case for her leadership campaign. If the Liberal Democrats got into government and put these policies forward, does she believe that the leader of the Liberal Democrats would be there to do it?

[Daisy Cooper]

Yes. Of all political parties represented in this Chamber, the official Opposition will know that the leader of the Liberal Democrats was an excellent climate Minister in the coalition Government. Our party leader is an economist and would never, ever have done what the hon. Gentleman’s party did with the mini-Budget.

Our Liberal Democrat policy would take a further 2.5 million people out of paying income tax altogether. While the Conservatives’ proposal would benefit only around 30,000 people, funded through a mini-Budget style approach to tax cuts, our plans would deliver tax cuts to more than 30 million people across the country. Crucially, we would pay for that responsibly through the growth dividend generated by a new growth and defence partnership with the European Union.

[Daisy Cooper]

I know exactly where Carlisle Avenue is. Based on the demographic of that ward, I might go and knock on that door and ask if their mortgage went up after the Liz Truss mini-Budget.

We Liberal Democrats are clear: rebuilding our relationship with Europe is the single biggest lever available to increase economic growth, to boost living standards and to cut personal tax. For as long as the Conservative party refuses to acknowledge that, it will remain an anti-growth, anti-business party. We Liberal Democrats know that economic growth is not an end in itself. As we grow the economy, it is incumbent on all parties to ensure that the benefits of that growth are shared widely across the country.

[Paul Holmes]

In the hon. Lady’s view, what would be the greatest thing to increase growth and business growth in this country? Would it be rejoining the European Union, or would it be halving national insurance contributions by businesses for people aged 18 to 24?

[Daisy Cooper]

I can tell the hon. Member that, based on the statistics, the thing that would bring the biggest amount of growth would be having a closer relationship with Europe. He will know that we Liberal Democrats opposed the rise in national insurance contributions, and we have said that we would like to see the reversal of the lower threshold as an immediate move to give businesses back the incentive to give young people jobs, given the crisis of young people not in education, employment or training. That is why our plans link the additional growth generated by a stronger partnership with Europe directly to tax cuts for working people. That is the fair way to help families facing the cost of living crisis, the responsible way to cut taxes and the honest way to pay for tax cuts, unlike the Conservatives’ unfunded promises.

--- Later in debate ---

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

I know from bitter personal experience that a period of opposition is an opportunity for a political party to reflect on what went wrong in government, so that it can take a different approach and seek to win the trust of the country again. Unfortunately, it appears that the Conservative party is instead using its time in opposition to double down on the mistakes made in government. Of course, we must support our farms and our family businesses, but the complete abolition of inheritance tax, not only on farms and family businesses but on all family homes, does not represent sound stewardship of this nation’s finances. I am afraid that it is a proposal all too worthy of one of the key architects of Liz Truss’s disastrous mini-Budget.

For me, the key question about the proposal is its impact on my constituents in Glenrothes and Mid Fife. They are already paying the price of the SNP’s failures in education and health services, with still too many people in pain on NHS waiting lists. Medium-sized and large businesses in Scotland are paying some £54 million more each in year in business rates than their counterparts in England, and if the Scottish economy under the SNP had grown at the same rate as Manchester’s with Andy Burnham over the past 10 years, it would be £33 billion bigger.

My constituents need fiscal policies that meet their priorities, protecting both the economy and public services. The Opposition’s proposal does not meet that test. The latest available figures show that inheritance tax is payable on fewer than one in 20 estates. Just 1,620 of those estates were in Scotland, and in Glenrothes and Mid Fife, so few estates pay inheritance tax that HMRC withholds the figures to protect confidentiality. In other words, the number of people in my constituency who would benefit from the proposal is so diminishingly small that it is not possible for HMRC to publish the figures. With so few people in Glenrothes and Mid Fife qualifying for the theoretical benefit of the policy, we must look at the costs.

The Opposition have said that the proposal would cost £6 billion, but as a number of hon. Friends have mentioned, Tax Policy Associates estimates that the cost could be up to £11 billion a year once behaviours as a result of the tax change are taken into consideration. Forty per cent. of the benefit of the cut would go to the richest 5%. Once again, the Conservatives are the party of the few and not the many.

Given the pressures being felt by UK households because of the challenges facing the global economy, the cost of living increases for families across the country and the challenges facing key public services such as social care, how on earth can this be a policy priority? How can the abolition of inheritance tax, not just on farms and family businesses but on all family homes, be a priority for any Government who truly have the interests of the whole country at heart?

My constituents need actions like those already taken by this Government, which include scrapping VAT on energy bills, action on business rates, which is needed in Scotland as well, and procurement changes to back British businesses and jobs. They do not need billions of pounds of investment in policies that will benefit precious few people in the communities I represent. Our pensioners and our older people need a Government who are prepared to act on real priorities, such as social care.

It is highly regrettable that the First Minister of Scotland has spent more time propagating factually incorrect statements on the proposal to adjust the triple lock than on dealing with the reality of social care in Scotland. Just as in England, in Scotland people who require care support face high social care charges, services are under-resourced and social care workers are underpaid.

[Paul Holmes]

The hon. Gentleman mentioned the Government’s pledge to reduce energy bills. When he stood at the election, did he exalt the policy of reducing energy bills by £300 that was put forward by the former Prime Minister? Now that that has been reduced to £45, has he apologised for the bit that he has not delivered on?

[Richard Baker]

We are already acting. We have already cut VAT from energy bills. What we are not going to do is invest up to £11 billion in priorities that do not represent the needs of people who are facing those high energy bills at the moment. It is this Government who are showing that they are prepared to take action on the real priorities of my constituents and this country. The spending proposals from the Opposition show, regrettably, just how far they remain from being a credible party of Government again.