Page last updated at 15:01 GMT, Monday, 23 March 2009

Tories 'committed to tax pledge'

Ken Clarke
Ken Clarke said the tax pledge would appear in the party's manifesto

Senior Conservatives including Ken Clarke have insisted the party remains committed to abolishing inheritance tax on estates worth less than £1m.

It follows comments from Mr Clarke, shadow business secretary, on Sunday suggesting it was only an "aspiration".

He later issued a statement insisting it would happen in the first term of a Tory government - a commitment stressed by other shadow cabinet members.

Labour claimed the Conservative tax plans had been "thrown into confusion".

Shadow Commons leader Alan Duncan - the man Mr Clarke replaced as shadow business secretary - sought to clarify the position on Monday.

House prices

He told BBC Radio 4's Today: "We intend to make sure that only millionaires pay inheritance tax and if we are elected - as I hope we will be - it will be in our manifesto and we will reduce inheritance tax during that Parliament."

He said the money to fund the tax cut had already been identified and said: "Actually the cost of this proposal, because property prices are going down, has in itself gone down. So in that sense it is easier."

The thing about Ken is that he just cannot help but say what he thinks
Lord Mandelson
Business Secretary

He added inheritance tax was an "attack on savings", which the Conservatives opposed.

Philip Hammond, the shadow chief secretary to the Treasury, also said the commitment to reducing the tax remained.

He told BBC Radio 5 Live: "It's very important that we restore some confidence in politics. And that means that when we make a commitment, we stick by that commitment.

"And we've made it very clear that this commitment will be in our manifesto and a Conservative government will implement it in its first term."

Private doubts

On Sunday lunchtime Mr Clarke told BBC One's Politics Show the priority was to stabilise public finances in a way which hopefully did not necessitate tax rises for most people.

He said raising current inheritance tax thresholds was an "aspiration" which the party retained and hoped to get around to "sooner or later".

BBC political editor Nick Robinson
This is a classic lesson in the perils for an Opposition party of announcing specific tax and spending policies.
BBC political editor Nick Robinson

But in a statement issued later he said: "So far as I am concerned, we are fully committed to raising the threshold for inheritance tax in the first parliament of a Conservative government, as [shadow chancellor] George Osborne has promised."

Business Secretary Lord Mandelson responded: "Ken Clarke's comments have thrown George Osborne's tax plans into confusion."

He added: "The thing about Ken is that he just cannot help but say what he thinks. On economic and taxation policy, as on so many issues, his views are nearer to the government's than to the Cameron-Osborne Tory Party."

Threshold doubled

For the Liberal Democrats, Vince Cable said it was a "reminder of where the Tories' priorities really lie" while his party emphasised that any cuts should be concentrated on less wealthy people.

He added: "Ken Clarke's comments are further evidence of the disarray and confusion which has characterised the Conservatives' tax policy and their response to the economic crisis."

The Tories' proposal in 2007 to cut inheritance tax was seen as a key point in reviving party fortunes. It was estimated at the time to cost £3.1bn. It was to be paid for out of the money raised by bringing in a £25,000-per-year charge for "non-domicile" taxpayers.

At the time, inheritance tax was being charged at 40% on assets worth more than £300,000 that someone left behind when they died, unless it was left to a spouse.

A week after the Conservatives unveiled the proposal, Chancellor Alistair Darling doubled the inheritance tax threshold for married couples to £600,000.

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