Labour should use inheritance tax raid to 'ease intergenerational inequality', says frontbencher Darren Jones

3 July 2024, 11:26

Labour sees inheritance tax as an important way to reduce ‘intergenerational inequality’, according to a party frontbencher.

Darren Jones, the shadow chief secretary to the Treasury, told a public meeting that it’s important the levy remains in place after plans to abolish it were debated in Westminster.

In a leaked recording, Mr Jones said there is a “bulk coming through the system of huge amounts of inherited wealth” that will help to redistribute value across generations.

Senior Conservative members have said the comments show the “cat’s out of the bag” in terms of Labour’s tax plans with the Tories claiming throughout the General Election campaign that Sir Keir Starmer’s party will increase taxes if they come to power.

This comes as Labour MP and Former Shadow Chancellor of the Duchy of Lancaster Pat McFadden today failed to rule out a Labour government making changes to inheritance tax.

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Mr Jones is deputy to Shadow Chancellor Rachel Reeves meaning he will be responsible for public expenditure if Labour win Thursday’s election.

At the meeting in Bristol in March, he said: “We've had a bit of a debate (on inheritance tax) in Westminster because there were some plans to abolish it... we didn't think that was the right thing to do, because there was going to be this kind of bulk coming through the system of huge amounts of inherited wealth in our country, largely off the back of housing asset values.

“For the intergenerational inequality point, we think it's important that inheritance tax remains because it does allow you to get some of that value back in, to be able to redistribute across generations.”

Inheritance tax currently charges 40 per cent on the value of estates above £325,000 with up to six percent of estates set to be subject to the levy by the end of the next Parliament.

Laura Trott, the Chief Secretary to the Treasury, said: “This is what we have been warning about and now the cat's out of the bag.

“Labour are saying one thing before the election, but make no mistake – if they win, they will tax you, your home, your car, your pension.

“Now we know where they plan to tax first.”

A Labour spokesman said: “This is total nonsense. Nothing in our plans requires any additional tax to be increased. We have set out fully costed, fully funded plans, with very specific tax loopholes we would close.

“We have said very clearly that our interest isn't in raising taxes – our priorities are economic growth and making working people better off.”

Despite this, Mr McFadden failed to rule out changes to the levy, including any changes to the threshold at which it comes in.

He said: “I’m saying what we’ve said about tax throughout the campaign. We are six weeks exactly since Rishi Sunak stood in the rain in Downing Street to call the election.

“From that moment we’ve said that nothing in our manifesto requires us to raise any taxes beyond the very specific things that we’ve set out in the manifesto, and that remains the position on this as with anything else.”