Ed Davey calls for inheritance tax reform so rich pay more

Liberal Democrat leader Sir Ed Davey has said he would like to see inheritance tax reformed to “ensure the better-off pay more”.

The Lib Dems fought the general election on a promise to increase capital gains tax and reverse Tory cuts to the levy on banks to pay for improvements to the NHS.

But in an interview with the BBC’s political editor Chris Mason, Sir Ed went further, saying he would also make changes to inheritance tax.

He said people with “valuable homes” were “clobbered” by the current inheritance tax system, and that he would “like to see a reform that made it fairer”.

Pressed on who would pay the higher rate, he said: “I think those people who aren’t inheriting huge amounts – and that money comes primarily from their property – they would see lower inheritance tax and you pay for that by ensuring that the better-off pay more.”

He also called for the rules to be tightened up so “people who are really wealthy” or who have benefited “from really very vast inheritances” could not use “clever” accountants to “hide the money”.

The Lib Dems are using their autumn party conference in Brighton to urge the Labour government to invest more in the NHS in October’s budget.

The party says the health service needs £3.7bn a year extra in day-to-day spending, and a further £1.1bn a year for investment.

Sir Ed told Chris Mason he “broadly” agreed with Prime Minister Sir Keir Starmer that the NHS was currently “broken”.

But – unlike Sir Keir – the Lib Dem leader argues that more money needs to go into it alongside reforms and wants a renewed focus on social care.

In a report last week, Lord Darzi blamed the coalition government Sir Ed was part of for a “disastrous” reorganisation of the NHS in England.

In his BBC interview, Sir Ed did not defend the reorganisation but insisted the NHS “would have been worse” than it currently is without action the Lib Dems had taken in government.

He claimed his party “fought the Conservatives to make sure there was more money going in” and had prevented some parts of the reorganisation.

The Lib Dems had their best-ever general election result in July, going from 15 MPs to 72 – but the Labour Party’s huge Commons majority of 167 has raised questions about how much influence they will have.

“There is no doubt that if [Labour] don’t listen to criticism, they can push things through, but that would make a very bad government,” Sir Ed told Chris Mason.

He insisted his party would be a better opposition to the government than the Conservatives because they would be more “constructive”.

“This country, our Parliament, needs a party that has credibility on the economy, credibility on health and care.

“We’re that party and with 72 MPs, we will get our voice heard.”

He was also asked for his thoughts on the row over Sir Keir failing to declare clothes bought for his wife Victoria by Labour donor.

The Lib Dem leader said “we need to know… where any MP transgresses the rules”.

He said he paid for the “vast majority” of his own clothes but a “few years ago” he had declared a donation when someone was “kind enough to pay for a suit for me”.