Tories pledge to cut inheritance tax as Cameron launches 'great fightback'

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• Promise of tax breaks for marriage

• Rescue package for pensioners

• End to litigation culture in schools

• Will scrap stamp duty for first-time home buyers

A dramatic pledge to raise the inheritance tax threshold to £1 million and free most families from it spearheaded the Tory fight-back today.

George Osborne: Only millionaires will pay inheritance tax

Shadow chancellor George Osborne promised to make it a tax that only millionaires would pay.

Opening the Conservative conference in Blackpool, Mr Osborne said his hope was to free families from the fear of seeing their life savings and homes carved up by the taxman when they die.

"That threat will be lifted. They will be able to save through their lives, put money into a home and leave it to their children when they die," he said.

An annual rate of £25,000 would be charged to around 150,000 wealthy businessmen who escape full income tax by registering for non-domiciled status. Those paying would include Mr Brown's ally, the venture capitalist Sir Ronald Cohen, and Labour donor Lakshmi Mittal.

In return for their annual levy, the wealthy foreigners get an assurance that their cherished non-domicile status will be protected by the Tories.

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'The great Conservative fightback starts now' pledged Cameron today

In the shadows: Osborne leads Tory revival with his tax pledge today

In return for their annual levy, the wealthy foreigners get an assurance that their cherished non-domicile status will be protected by the Tories.

Labour has had it under review for five years. Mr Osborne said the levy was low enough not to deter billionaires from bringing their wealth and talents to London.

Mr Osborne aimed to reclaim the Tory mantle as the party of "aspiration". "We will put ourselves forward for office as the ally of those who aspire; the friend of those who are left behind; the champion of those who strive for a better life for themselves and their children," he was expected to say.

"We have a new dividing line in British politics ... between a Labour Prime Minister that has taxed a generation out of home ownership and a Conservative Government that will abolish stamp duty for those striving hard in life to buy their first house.

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THUMPS UP: David Cameron with New York Mayor Michael Bloomberg at the Conservative conference at Blackpool

"The dividing line between a Labour Party that punishes those who aspire for a better life and a Conservative Government that says clearly: we are on your side. We are the party of aspiration."

In a separate announcement, David Tory leader Cameron pledged to remove stamp duty for first time buyers, while urging the conference to mount the "great Conservative fightback" against Mr Brown's early election plans.

During a make-or-break week, a blizzard of new policies was being unleashed. It follows a summer in which the Conservative message was blunted by the row over grammar schools, anger at the "trashingî of Margaret Thatcher's legacy, and confusion over the rival proposals from six policy ideas groups.

Mr Osborne's speech hailed a return to more traditionalist Conservative territory. More than nine million homeowners - four in ten - now pay inheritance tax. Under Mr Osborne's eye-catching cut, almost every one will be exempt.

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Boris Johnson gave a rapturously-received speech

However, children's issues will also dominate the second day of the conference.

David Willetts, who was asked by leader David Cameron to head his party's Childhood Inquiry, will say: "Children need play, adventure and excitement. But today, fear of litigation means school trips and adventure holidays are now abandoned.

"Instead, children get their excitement by retreating to their bedrooms to play video games or the artificial stimulus of drink and drugs. Nearly half of all gangs now meet in public playgrounds.

"We need to tackle the compensation culture which has done so much damage to the quality of children's lives. So we are proposing to give much greater legal protection to people organising sport and outdoor activities for children.

In a separate announcement, David Tory leader Cameron pledged to remove stamp duty for first time buyers, while urging the conference to mount the "great Conservative fightback" against Mr Brown's early election plans.

During a make-or-break week, a blizzard of new policies was being unleashed. It follows a summer in which the Conservative message was blunted by the row over grammar schools, anger at the "trashing" of Margaret Thatcher's legacy, and confusion over the rival proposals from six policy ideas groups.

PUTTING HER FOOT IN IT: Theresa May - shadow leader of the Commons - addressed the party in bizarre leopard print wellington boots on today, the second day of the conference

The Tories also plan to tackle "compensation culture" which, they say, will free schools from the fear of being sued.

David Willetts, a senior MP, will say today that teachers will only be liable for prosecution if they have shown "reckless disregard" of the risks - rather than simply being negligent - if a child is injured on an outing.

He is expected to say: "Children need play, adventure and excitement. But today, fear of litigation means school trips and adventure holidays are now abandoned."

While Mr Cameron insists he is ready for a snap election, privately senior Tories fear a fourth successive defeat if Mr Brown does call an autumn poll.

They hope a successful week offering voters much-needed "clarity" about the Tories' pitch for power will provide a lift in the polls and deter the Prime Minister, who does not need to call an election until 2010.

The theme of the attack on Mr Brown was also becoming clear, with senior Tories claiming the Prime Minister has made a huge strategic error by suggesting he will be the antidote to years of spin from Tony Blair.

Mr Cameron sent William Hague to rally the grass roots with a savage assessment of the Prime Minister as a politician in fact addicted to spinning away his intimate role in ten years of Labour failure.

The Shadow Foreign Secretary mocked Mr Brown's professed admiration for Margaret Thatcher following her appearance in Downing Street alongside him.

Mr Hague told the Prime Minister: "You are no Margaret Thatcher."

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Cameron and wife Samantha (right) take a walk along the North Pier at Blackpool with conference guest Michael Bloomberg and Diana Taylor

Mr Cameron opened up a key election battleground with his pledge of a major overhaul of the tax system in favour of marriage.

Mr Brown is ideologically opposed to tax breaks for married couples, insisting politicians should not "moralise and lecture".

But Mr Cameron said Britain was now one of the few European countries not to reward marriage in its tax system and insisted the state must send a signal about its value as an institution.

He is expected to endorse proposals which would allow a non-working spouse to transfer the "personal allowance" – a tax exemption on the first £5,025 of income – to a working partner.

Though the final details will be held back for an election campaign, that would double the total household income exempt from tax to £10,050 and be worth £1,000 a year at the basic 20p rate of tax.

Mr Cameron said: "Through the tax system we will say that marriage is a good institution, an important institution.

"It helps people bring people together and keep them together.

"We should be looking at the high rates of family breakdown in our country. One in four kids is brought up with an absent father, we have the highest rates of family breakdown in Europe.

"Of course people don't get married in order to get some money from the state.

"But the Government should be sending a positive signal about the importance of marriage as an institution.

"Other European countries do it. We should do it."

A source close to the Tory leader added: "David Cameron is absolutely committed to reinforcing marriage and it will be a central plank or our strategy, election or not."

Conservatives converging on Blackpool were buoyed by the news that Mr Osborne would scrap stamp duty on properties below £250,000, a vital piece of help for first-time buyers.

And as the Daily Mail revealed on Saturday, Mr Cameron is also to offer a £2,000 tax break to 1.8million couples raising children, regardless of whether they are married or not.

He proposes a sharp increase to the amount paid to couples who qualify for the Government's main in-work benefit – the Working Tax Credit – to end a "perverse" bias against those who stay together, rather than separate.

The change would be funded in part by removing incapacity benefit from those refusing an offer of a job.

Despite another round of damaging weekend polls, Mr Cameron goaded the Prime Minister to end his "dithering" over whether to call a November poll, claiming the party had the money and the resources in place to fight Labour. "We can win," he said.

"This week we will be setting out a very compelling alternative – not just saying what we want to achieve but saying how we want to achieve it.

"They have had ten years, they have failed and it's time for real change."

 

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