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It was somehow appropriate that Rishi Sunak’s Budget included a cut in duty on sparkling wines. The Chancellor is doubtless hoping that people all over the country will be cracking open the

British bubbly (no more French champagne, thank you, until President Macron calls off his absurd blockade) to celebrate an expansionary package delivered with equally expansive rhetoric.

What has been billed as the biggest ever giveaway Budget does indeed include spending increases across the board, funded by a post-pandemic economic boom that is predicted to last until

2023. So far, so boosterish. Public spending on such a scale has not been seen in this country since the heady days of New Labour, before the financial crisis of 2007-2008 heralded more than

a decade of austerity, to be followed last year by the worst slump in modern times. No wonder Sunak has adopted Gordon Brown’s habit of referring to all spending (not just on capital) as

“investment”. This Budget was more reminiscent of Brown’s heyday than of the golden years of Nigel Lawson, still fondly recalled for his tax-cutting zeal. The theory behind this Budget was

in line with Treasury orthodoxy: “Government should have limits,” the Chancellor insisted. Yet in practice the figures from the Office for Budget Responsibility (OBR) tell a different story:

the overall tax burden will rise to its highest level since the postwar Attlee government and spending to its highest since the Wilson and Callaghan governments before the Thatcher era.

Unfortunately for the Government, the celebrations of the beneficiaries of this largesse — mainly public sector employees who, unlike many in the private sector, are in line for a pay rise

next year — are unlikely to show their gratitude by voting Conservative. This is not merely for the customary reasons, but because most of not all of any wage increases are likely to be

eaten up by inflation, which may well exceed five per cent next year. Predictions vary as to how “transitory” the inflationary phase we have entered will be, but expectations of higher

costs, wages and prices are already baked in to the economy. In real terms, very few families will feel better off next year or indeed the year after. Disposable household incomes will rise

by about four per cent in 2021 and 2022, but will not return to pre-Covid levels until the second half of 2023, the OBR predicts. Even assuming that inflation is brought under control (a big

assumption), the OBR expects real incomes to rise by 1.3 per cent over the rest of its forecast ending in 2025-26. The average annual increase over five years will be just 0.8 per cent.

This means that, rather than the “Roaring Twenties” hoped for by Boris Johnson when he was returned to office in his 2019 landslide victory, the first half of the decade will show at best a

modest improvement on the “lost decade” of austerity. And the 1.25 per cent hike in National Insurance (NI), which will later become a new tax, or “health and social care levy”, is bound to

depress disposable incomes for all working people. But this new levy is merely the most obvious of the tax rises that lurk in the calculations on which the Budget is based. One of the many

injustices perpetrated by inflation is known as “fiscal drag”. As prices and incomes rise, so more people are drawn into paying taxes from which they were previously exempt, or into higher

tax brackets than hitherto. As inflation rises, while tax thresholds mostly remain unchanged, so the overall fiscal burden becomes more onerous without the Chancellor having to lift a

finger. During the nine years when Gordon Brown ruled the Treasury, his Tory critics coined the term “stealth taxes” to highlight the hidden impositions for which the Labour Chancellor was

notorious. Yet in these inflationary times, fiscal drag is the biggest and most unjust stealth tax of all. Apart from income tax, the most obvious example is inheritance tax (IHT) — the

“death duty” that was originally introduced by Lloyd George to force dukes to help pay for battleships and pensions. Although IHT is still only paid on a minority of estates, the numbers are

rising rapidly because the tax-free allowance has been frozen at £325,000 since 2009. The OBR expects that the annual number of estates that will have to pay IHT will almost double in the

next five years, from 25,400 in 2020-21 to 47,700 by 2026. Yet Treasury receipts will rise by a much smaller percentage, presumably because many of the estates caught by fiscal drag are

quite modest. Indeed, almost anyone who inherits substantial savings or investments and a house or flat in London (where the average property price is now £650,000) or other prosperous parts

of the country will probably find that IHT is payable on their inheritance.  This tax is generally perceived as unfair both by those who leave an estate and by those who inherit it. The

various mitigations introduced by George Osborne have only served to make IHT even more complex, forcing those who pay it to employ expensive advisers and accountants. The most perverse

consequence of inheritance tax, however, is that it militates against intergenerational justice. The tax is deliberately designed to discourage parents from passing on their wealth to their

children, even though by many measures the young are falling further behind their elders. If the Government wants more young families to get onto the housing ladder, it should stop

penalising “the bank of Mum and Dad” by making IHT payable on all gifts up to seven years before death. But the Treasury is unwilling to forgo the £6 billion paid into its coffers in 2020-21

from estates, all of which will already have been taxed at least once during the lifetimes of those who bequeathed them. There is one reform that Rishi Sunak could easily enact that would

go some way to make IHT less onerous for families — at no cost at all. At present, Her Majesty’s Revenue and Customs are under no obligation to expedite their processing of IHT, before

passing the papers to the Probate Office. Due to disruptions caused by the pandemic and an abnormal rise in deaths, the delays in getting probate have become much worse and more arbitrary in

the past two years. It is not uncommon for HMRC to sit on a perfectly straightforward estate for 18 months or more. This means that those who inherit face long periods of uncertainty,

during which they may be obliged to pay for the upkeep of a home that is not yet theirs. If those left in limbo are themselves in poor health, they may not live to enjoy their inheritance at

all. Such delays are unconscionable and almost always unnecessary, but there is no process by which the public can even discover why probate has been held up. Anecdotal evidence suggests

that making inquiries may even be counterproductive. In any case, no statistics on such delays are available, meaning that the taxman (it is, of course, as likely as not to be a woman) is

unaccountable for them to the public. HMRC is, however, accountable to the Chancellor. Rishi Sunak could put a stop to these delays by simply imposing a limit of, say, three months, after

which HMRC would be under a statutory duty to explain the delay to the legatees and to keep them updated thereafter until the estate is passed to the Probate Office. It’s the cheapest of

cheap shots. Obliging HMRC to improve its efficiency would require a few more staff, but the public purse might actually benefit overall, because IHT would be paid much sooner. And families

would no longer have the sadness of bereavement compounded by the postponement of closure. It would only be a gesture, but it would earn Rishi Sunak the thanks of many people and it needn’t

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