UK politics question

[xela]

I gave up entirely on television news sometime in late 2001, but lately I've started watching it again — in the unlikely form (for an American) of Newsnight.

Thing is, the BBC produces Newsnight for domestic consumption. Which means sometimes I have absolutely no idea what they're talking about. So I figured I'd ask my friends across the pond to clue me in.....

In the year-in-review segment of Friday's show, tracing the year's poll fluctuations, they attribute Labour topping the Tories around June to Blair's departure. I get that: last time I was in England, I saw "Bliar" signs everywhere I went, and it was clear his days were numbered¹. What I don't get is their explanation of the Tories' resurgence in October, which consisted of playing a clip of the shadow chancellor giving a speech in which he said "The next conservative government will raise the inheritance tax threshold to one million pounds." At which point the graph showed by far the sharpest change of the year, with the Tories' line jumping from about 32 to 40, crossing back above Labour's line.² I'd appreciate it if someone could explain how a speech about inheritance tax could have such a huge impact.

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¹ I saw a lot of signs making the Blair-liar pun, but this was by far the most common. I think it may also be the most effective political sign I've ever seen.
²My American readers, if any are still with me at this point, should note that there are three significant parties in the UK, though the third hasn't held power for nearly a century.

Comments

[tla]

Two words: house prices.

Inheritance tax in the UK is 40%, and it applies to any amount of inheritance over £285,000 (for 2006/7). knell and I have a small semi-detached house that is a typical starter home, or a typical second home if your starter home was a flat, big enough for a three- or maybe a four-person family. Pretty modest. I think it would currently be valued at about £270,000. Add an extension, for a bigger kitchen and another bedroom, and it would easily get £350,000.

This means that if your folks die, and they were middle class and never moved into a retirement flat, you can't keep the house. After sale costs, stamp duty, and the general rising market, you can only afford to exchange the house for about half the house you started with. You can see how this might upset a whole lot of people.

[yakshaver.livejournal.com]

Okay, that explains why people would care. A lot. Thanks.

[sammason.livejournal.com]

I think the inheritance-tax issue is to do with our housing market having been in a gigantic boom for the last decade or more. Many middle-income people own properties that aren't particularly large but that are now 'worth' enough to put their total estate over the threshold at which inheritance tax becomes payable. So a tax that is supposed to target only rich people, now targets a lot of ordinary people too.

[yakshaver.livejournal.com]

Yeah, makes sense. I suppose it's one of those issues that had been creeping up slowly for a long time; the government presumably had someone working on a plan for dealing with it, but not as a priority. And the opposition announcing a simple plan must have left them flat-footed.