Tory tax plans for 'fair' society

The Tories' flagship economic policy of cutting inheritance tax for the relatively well-off is consistent with their new claim to be the party of fairness, George Osborne, the shadow chancellor, said yesterday.

In a pre-emptive strike against Gordon Brown's fairness-themed autumn relaunch, Mr Osborne said a "new centre ground of British politics of fairness and aspiration".

The prime minister's bid to use state-controlled redistribution to tackle poverty had failed, Mr Osborne said. "After a decade of means-tested cash payments, we are left with greater inequality of health, education and ambition than we have seen for decades," he said in a speech to the left-of-centre Demos think-tank.

Mr Osborne drew a distinction between his party's Thatcherite past of disowning society and its championing of social and progressive goals under David Cameron. In contrast to the Tories' historic opposition to a minimum wage, the shadow chancellor said that "modern Conservatives acknowledge the fairness" of this measure.

On tax, he said that the Tories now "want to see not just lower taxes but fairer taxes too". The "good old-fashioned British tax revolt" over Mr Brown's axing of the 10p income tax rate reflected this, Mr Osborne said, as middle-income families were reluctant to benefit at the expense of the poorest.

In a question and answer session, he said fiscal fairness was consistent with his proposal to increase the inheritance tax threshold to £1m, exempting all but the wealthiest 2 per cent of estates. Highlighting the way in which rising house prices had sucked many families into the inheritance tax net, Mr Osborne said: "It was because that offended the British sense of fairness that this pledge to do something about it was so popular . . . that's why it struck such a chord.

"A fair tax system is one which, yes of course is progressive, but also rewards aspiration," the shadow chancellor said.

Rivals accused the Tories of being unwilling to sanction the policies necessary to achieve increased fairness. "George Osborne's restaurant has a menu without prices. There is something for everyone, but no one has to pay," Nick Clegg, the Liberal Democrat leader, said. "It's time for the Conservatives to realise that power must be earned, not inherited, and to start setting out some serious policies."