The regime as it stands will affect more properties than it did under any of the Labour years. The reality is that if we do not take action, inheritance tax will hit more and more estates. It will be a tax that will be much more widespread than was previously the case. If that is the position the Labour party holds, that is the position, but I think we should be aware of what it is.
8.45 pm
In the time available I will briefly touch on some of the points raised by the hon. Gentleman in this area. He raised concerns that this policy would have a big effect on the housing market. Let me reassure him that the OBR has looked at this matter and it believes it will only have a small effect on the housing market. The allowance here only applies to a single home; it does not encourage people to buy multiple homes to maximise the allowance. It is capped at £175,000 per individual, or £350,000 for a married couple, and there is no disincentive to downsize because families will not lose the allowance in these circumstances.
The hon. Gentleman raised a concern about upsizing. Upsizing would only be attractive if a house is only a small part of an estate, but as the hon. Gentleman said, this is a very rare occurrence, and I repeat the point that the OBR believes this will have a small effect on the housing market.
The hon. Gentleman also raised a concern about lineal descendants and particularly made the point that the family structure tends now to be somewhat wider than the traditional nuclear family. Let me reassure him that this allowance will apply for houses that are left to adopted children or foster children or stepchildren. I hope that point of clarification is helpful to him.
Let me also address the other matters we debated. New clause 1 refers to Police Scotland and the VAT treatment. This is familiar territory which we have debated extensively in Committee. In 2012 Scotland’s eight locally governed police and fire authorities consolidated to become two national bodies. As a result, they no longer became reliant on local taxation as a means for funding. This is one of the two criteria for eligibility to the section 33 VAT refund scheme, so following this restructuring these new national bodies no longer were eligible for VAT refunds. It is important to remember that the Scottish Government were forewarned of this consequence well in advance of the decision they took. The Treasury was keen to ensure the Scottish Government considered the consequences as part and parcel of their decision to restructure these services. Because the expected cost savings from restructuring the Scottish Government outweighed the loss of any VAT refunds, I perfectly understand why the Scottish Government went ahead with their restructuring programme. As I have explained, since the Scottish Government restructured these services they are no longer eligible for VAT refunds. This was plain and clear with eligibility set out in legislation and I do not believe there is a need for a report to further make this clear
The issue that has dominated the debate is new clause 7 and VAT on tampons and sanitary towels. New clause 2 would require the Treasury to write a report on a VAT exemption of women’s sanitary protection products including a financial assessment of the impact on the purchasing of these products, especially for those aged under 25.