David Cameron yesterday moved to seize the initiative in the General Election battle, with a promise to end inheritance tax on properties worth up to £1 million.
Playing his biggest card of the campaign to date, the Prime Minister revived a Tory pledge from the 2010 election after it was blocked by the Liberal Democrats in coalition.
However the Conservatives found themselves under pressure to say how they would pay for another key commitment to raise spending on the NHS in England by £8 billion a year by the end of the next parliament.
Chancellor George Osborne strongly denied that they were making unfunded spending commitments.
But pressed repeatedly on BBC1’s The Andrew Marr Show, he said only that it was part of the Conservatives’ “balanced” plan for the economy, while refusing to go into any further detail.
“We have a track record in this Parliament where we found almost £8 billion extra in real terms for the National Health Service in very, very difficult economic circumstances so we have proved our mettle, we have proved our ability to stand behind the National Health Service in this parliament. We can do it in the next,” he said.
Labour shadow treasury chief secretary Chris Leslie said the interview was further evidence of a “floundering and chaotic” Tory campaign.
The home that you worked and saved for belongs to you and your family – the tax man won’t get his hands on it
“Eighteen times he was asked where the money will come from for his panicky pre-election promises and 18 times he could not explain. Nobody will believe a word of these empty promises when the Tories can’t say how they will be paid for,” he said.
With the opinion polls showing the two main parties still level pegging, the Conservatives were hoping that Mr Cameron’s announcement on inheritance tax would deliver the breakthrough they have been looking for.
Speaking at a campaign event in Cheltenham, the Prime Minister said that they were responding to the “most basic, human and natural instinct there is” for parents to be able to pass something on to their children.
“You want to know that even after you’re gone, when you’re not on the phone and not physically there – you can still provide for them. That wish to pass something on is about the most basic, human and natural instinct there is,” he said.
“That home that you have worked and saved for belongs to you and your family. You should be able to pass it onto your children. And with the Conservatives, the tax man will not get his hands on it.”
The Tories estimate that 22,000 families could benefit by 2020 from the proposed £175,000 allowance offered to parents to enable them to pass property on to children tax-free after their death.
The £1 billion scheme - to come into effect in April 2017 and available to married couples or civil partners – would be funded by a raid on pension tax reliefs for people earning over £150,000. The family home allowance will be transferable on the death of one spouse and added to the existing £325,000 transferable allowance to bring the tax-free total up to £1 million. But on properties worth more than £2 million, the allowance would be gradually tapered away until it was worth nothing to those with homes worth more than £2.35 million.