Inheritance tax and wider issues for the Tories

There is one matter that Brown and Darling will be at one on.  The need to create a dividing line with the Tories on inheritance tax, as The Observer reports:

Government sources say Alistair Darling, the chancellor, is considering whether to abandon the government's recent policy of progressively lifting people out of the inheritance tax net. Instead, he is considering freezing the threshold at which the tax becomes payable, as part of plans to cut the deficit. This means that, if property prices rise, more – not fewer – householders will be liable to pay the 40% tax.

The plan is being urged on the chancellor by senior figures in the Labour party, who believe the move would allow Labour to sharpen its attacks on the Conservatives for being the party of the rich.

Andrew Rawnsley, who confirms that Alastair Campbell is popping into No10 for a weekly cuppa, rightly says the tax “has gone from being a lifesaver into an albatross around the necks of him [Osborne] and David Cameron”.   He concludes:

So why don't they just ditch it? Partly because they don't want to be accused of doing a U-turn. Partly because it won't go down well with many of their activists and MPs. Partly because Gordon Brown would crow. The most profound reason may be psychological. It is hard to strangle one of your first babies, especially when you have such loving memories of how it saved your skins a couple of years ago.

As a result, they are glued to a policy which has little economic merit and makes them politically vulnerable, a promise to privilege those who are already privileged.

In the grand scheme of things, inheritance tax doesn't really matter.  It raises little revenue and well organised folk can devise cunning plans to avoid it.

The wider issue is more important.  On Afghanistan, climate change, tax, public services and the economy it is Labour that is now setting the agenda, not the Tory party.  More and more Team Cameron is being pushed on the defensive.

Without a policy setting agenda, it will be very difficult for the Tories to regain the initiative in the run up to the election.