IT comes to something when a game show host speaks more sense than a lot of politicians. When that game show host is Sir Bruce Forsyth though, veteran of light entertainment and all-round national treasure, it is well worth taking note. At 87, he has seen more governments than most. And at his age, with six children, nine grandchildren, three great-grandchildren, a house worth an estimated £4m and a business empire thought to be worth in the region of £5.7m, he is also more qualified than most to talk about the issue that is really bothering him – inheritance tax.
In a recent interview, he says that the chunk the Government takes out of a person’s estate when they die can be “a bit over the top”. It’s not exactly the stuff of rabble-rousing rhetoric, but he makes a point which will chime with many families. As he puts it – “I think your inheritance should go to your children more than back to the country that you’ve lived in.”
Who could argue with that? Well, politicians from all corners for a start. Manifestos for the General Election are still under construction, so we are yet to find out what each party has in mind.
However, David Cameron has suggested that the Conservatives might eventually make good their 2010 promise to raise the inheritance tax threshold to £1m, and take steps to ensure that it applies only to the “rich”.
As it stands though, if a person’s estate – house, savings, personal possessions – is worth more than £325,000, inheritance tax is payable at the rate of 40 per cent. “Death duties” are such a political hot potato, it’s no wonder they have remained pretty much unreformed for years. Yet as the value of property alone continues to shoot up, it is clear that the matter demands serious consideration. It drags more and more of us into its net every year. And although politicians can duck out of it, those of us faced with a hefty bill can’t.
That said, some still assume it is an issue that applies only to wealthy southerners. Look at those figures and think again. When you consider the price of prime properties in the desirable areas of our region, and consider the levels of personal wealth built up by individuals who have grafted all their lives since leaving school, it soon becomes apparent that this is an issue which affects more people than a select few south of the Watford Gap.
It’s not just the actual sums of money either. It’s the principle of the thing. The Government taking a slice of capital directly away from a family? It’s where the personal and the political come to their sharpest point. We’re talking here about people who have already paid taxes on what they have earned. Why should they effectively be taxed twice, especially after they have gone?
You can understand why someone in Sir Bruce’s position, still working despite the fact he is approaching 90, feels badly done to. Why should he soldier on, only to see the fruits of his labour handed over to the state to help pay for benefits to support those who can’t even get out of bed? Sorry if this sounds harsh, but it’s a response which I know is shared by many.
Clearly, it’s his personal view. And some might think it’s a bit er, rich, coming from a loaded celebrity. However, there is also a very good argument put forward by academic economists which suggests that a large number of business start-ups are funded by what we might call “family money”. Taxing inheritances reduces the pool of capital which budding entrepreneurs can draw upon to get their business idea under way, contribute to the economy and create jobs. Instead, they must turn to the banks, saddling themselves with debt and leaving their budding ventures more vulnerable to fluctuating market conditions. It seems ironic that a coalition government dedicated to encouraging small businesses to “help make Britain great again” should be so ignorant of this fact, especially when public money is so scarce for start-up loans and grants.
Politicians will cloak the arguments in rhetoric and attempt to whip up political capital out of personal fortunes. Indeed, there is nothing more hypocritical than a Labour MP banging on about inheritance tax being a good and necessary thing when they have investments shored away in all kinds of tax-avoidance schemes.
When it comes down to it though, it’s simple. Perfectly ordinary people living modest lives believe that inheritance tax is unfair. It taxes hard-working families twice, it reduces the capital available for private individuals to reinvest in the economy, and it is believed to raise just £2.9bn a year, or 0.18 per cent of our GDP. Is it worth it then? This is the question which those with ambitions to run the country need to ask. Other successful countries, including Australia, abolished it years ago. A solution needs to be found.
Confused politicians could do worse than pay serious attention to Sir Brucie’s concerns. After all, he knows more about the Generation Game than most.