Prime Minister Andy Burnham's early proposals, including a potential 10% inheritance tax on all estates and an undefined "national care service," have drawn sharp criticism, with opponents labeling his government as fiscally illiterate.
Within his first 48 hours in office, Burnham has indicated a significant expansion of government spending. The proposed "national care service," intended to address issues facing an aging population, was presented with scant detail but hinted at being a parallel service to the National Health Service (NHS). The Health Foundation think tank has previously estimated such a service could cost an additional £18.7 billion annually.
Burnham's past proposals as health secretary under Gordon Brown included a flat 10% inheritance tax, or "universal death duty," to fund healthcare. Critics argue that such a tax would be deeply unpopular and economically damaging. Polling by the TaxPayers' Alliance suggests a majority of the public favors abolishing inheritance tax, with many viewing it as the "most unfair" of all levies.
Under current UK law, individuals can generally pass on assets up to a threshold of £325,000, or £500,000 if leaving their main home to direct descendants, with this threshold frozen since 2009. Many families rely on this ability to pass on savings and property to children and grandchildren. Critics contend that a broad inheritance tax would force many ordinary families to sell inherited assets, such as their homes, simply to pay the tax. There are also discussions about removing the capital gains "uplift" on inherited assets, which would mean taxing the difference between the original purchase price and the value at the time of death, potentially exacerbating the financial burden on grieving families.
Concerns have also been raised about the UK's current tax burden, described as the heaviest since World War II. The notes highlight an increase in welfare spending, particularly Personal Independence Payments (PIP), with over four million claimants. Mental health conditions account for a significant portion of PIP claims, costing £3 billion annually, and total sickness and disability benefits are projected to rise substantially. Despite these figures, a government report noted a lack of concern from the disability minister.
Analysis suggests that an increasing number of individuals, including pensioners, are being drawn into income tax or higher tax brackets. Meanwhile, the potential weekly income for welfare claimants in London, when factoring in all entitlements, can approach the median salary in the city, raising questions about the financial incentives for employment. The article argues that the government cannot sustain current levels of spending on benefits or continue to raise taxes without risking further economic decline, characterizing this situation as a "doom loop."
John O’Connell, chief executive of the TaxPayers’ Alliance, is cited as the author of the critical analysis. The notes suggest that Burnham's proposed schemes are not part of the Labour party manifesto on which they were elected.