thenextwave

Inheritance tax, insecurity, and inequality

Posted in economics, emerging issues, equality, finance, trends, Uncategorized by thenextwavefutures on 13 October, 2007

The politics of the inheritance tax have exploded in the UK over the past couple of weeks, ever since the Conservative Shadow Chancellor promised to raise the threshold to £1 million pounds a couple of weeks ago. Which is odd since hardly anyone pays it and as taxes go it is easily avoided. In the Guardian a good article by Andy Beckett links it to an increasing sense of financial insecurity and a failure by politicians to build a discourse around the value of social mobility and the problems caused by social and economic inquality.

Beckett interviewed Oxford University researcher Stuart White, who had researched inheritance tax for the IPPR through a process which exposed participants to increasing amounts of information about the tax. Half remained opposed to inheritance tax in principle. White says they linked it to their feelings of financial insecurity:

“In our focus groups people talked about insecurity. People talked about their pensions being insecure, and about their inheritance being a way of plugging the gap. They also talked more generally about insecurity. They basically said: ‘We’re in this extremely insecure, competitive world, and our housing wealth is an enormous source of security. Passing it on is a way for my family to batten down the hatches while the storm rages outside.'”.

White also found that the notion of equality of opportunity wasn’t widely understood, especially by younger respondents, even though Britain is one of the least socially mobile societies in Europe.

“People weren’t actually very receptive to the idea of equality of opportunity. The younger participants didn’t really get the idea that equality had anything to do with life chances or the distribution of wealth. The older people could remember the idea of equality from their youth, but that whole language is increasingly alien to people. What seems to have come through in Britain, post-Thatcher, is not so much a meritocracy as a feeling that what you get is what you’re entitled to.”

It’s difficult to work out whether this all represents a triumph of Thatcherism or a complete failure of social democracy – and social democrats. At one level, people’s feelings of financial insecurity largely stem from the massive deregulation of the financial sector by the Conservatives in the 1980s – the subject of Andrew Glyn’s book last year Capitalism Unleashed.

At another, the politics of new Labourism have not lent themselves to developing a critique of why redistribution and social mobility matter. (And just to get a measure of the scale of this failure, Anthony Crosland – one of the great advocates of the importance of opportunity – was regarded as being well to the right of the party in the ’50s and ’60s).

One of the clues lies in some recent research by the National Institute for Economic and Social Research (by recollection right now since I can’t find the reference: will add when I do) which suggested that people weren’t much concerned about inquality – but also didn’t have any idea of how much it had increased over the last thirty years.

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