Alistair Darling blurts out U-turn on death tax

• Alistair Darling, Vince Cable and George Osborne state their case. Picture: PA

The controversial 10 per cent take from the value of all estates when somebody dies was being discussed as a means of paying for the burgeoning costs of care for the elderly.

But Mr Darling was backed into a corner on the proposal by his Conservative opposite number as he went head to head with George Osborne and Lib Dem Vince Cable in an event billed as the Clash of the Men who would be Chancellor.

The debate coincided with a new Comres opinion poll showing the Tory lead has stretched to 7 percentage points, with Conservative support staying on 37 per cent, Labour dropping two points to 30 per cent and the Liberal Democrats up one point to 20 per cent.

While the so-called "death tax" was being planned as a means of giving English pensioners a similar scheme to the one enjoyed by the elderly in Scotland since 2002, it had also been mooted as a means of coping with the out-of-control costs of free personal care north of the Border.

Recently, it was estimated that the cost of free personal care in Scotland would soar to 8 billion in the next two decades as the number of elderly people rises. Since it began, the cost of care at home alone has almost doubled to 257 million, with the overall bill in 2009 set at 358m.

Mr Darling's admission came as he criticised the Conservatives for walking away from efforts to get a cross-party consensus on provision of care for the elderly, accusing them of trying to score political points.

Mr Osborne insisted they had abandoned the effort because the government's favoured option was unacceptable. "I just do not think it is fair to have a 10 per cent death tax on people," he said. "I am afraid the Conservative Party will not be supporting that option."

He then went on to press Mr Darling over whether the proposal would be included in the white paper on social care today. "It's a simple question," Mr Osborne said. "Is that an option that a Labour government, if elected in four to five weeks' time, will keep on the table?"

Mr Darling replied: "No, it is not."

Mr Osborne raised laughter from the studio audience by quipping: "I've been accused of not agreeing with him, and it's an option he has ruled out."

The encounter was the high point in a difficult evening for Mr Osborne as he tried to prove his detractors wrong and stand up to more experienced opponents.

The clash was a precursor to the prime ministerial debates on BBC, ITV and Sky, which are set to define the forthcoming election and set the tone on the leading subject of the campaign – the economy.

The three each tried to persuade a Channel Four audience he had the personality to deal with hauling the economy out of the downturn.

Mr Darling said he had "made the right calls" in the past three years as Britain and the world "faced the worst economic downturn" in living memory. He added that his "tenacity" and "sense of fairness" would also help to make sure all people in Britain share the benefits of the recovery.

Mr Osborne claimed he was best for the job because he had been shadow chancellor for five years and had "watched other people doing the job". He said he was always mindful that tax was "not my money or Alistair's money, it is the public's money".

Mr Cable said he had the best experience as an economist in the private sector and government. He reminded the audience that he was the first to predict the economic problems Britain faced, based on an over-inflated housing market and over-reliance on the financial sector.

Mr Cable also accused the others of being dishonest over their claims that they could protect health spending and increase it in real terms. He said: "To do that you need to make severe cuts to the army, police, public transport, housing and a host of other areas."

But Mr Osborne said that health spending needed protecting because it affected everybody and that the NHS was struggling to afford new medicines coming on the market.

"It is a matter of making priorities," he said.

The three clashed on a range of taxes proposed by their opponents.

Mr Darling attacked Mr Osborne for his announcement yesterday that the Tories would reverse his proposed increase in National Insurance contributions. He pointed out that to do this Mr Osborne had accepted 11 billion of savings he announced in the Budget, which just a few days ago Mr Osborne had said were too vague and fictional.

The three all agreed the priority had to be about cutting the national debt of 1.4 trillion. Although they could not agree how quickly, they all accepted the cuts would be "deeper than the ones made by Margaret Thatcher".

The loudest cheer of the night came for Mr Cable, when he accused the Conservatives of wanting to let "their rich friends get their heads in the trough again".

Afterwards, the SNP claimed it had unfairly been excluded from the debate, as it is from the Prime Ministerial ones.

SNP Treasury spokesman Stewart Hosie said: "There was little from any of the three participants which would inspire confidence that they are committed to growth, protecting recovery and securing a sustainable economic future for Scotland."

Meanwhile, First Minister Alex Salmond will this week meet the three men who hope to be chancellor, to press his case for more spending in Scotland.

Mr Salmond plans to use his meetings with Mr Osborne and Mr Cable today and Mr Darling tomorrow to argue for a new stimulus package.

A win for the third party's money man in three-way debate

Alistair Darling 7/10

FOR most of the session he looked every inch the calm, assured Chancellor, who has been almost the only minister in the Brown administration to have enhanced his reputation in recent times.

His strategy was to hold the advantage as one "who had made all the right calls".

He also was the only candidate to bring his personal life into the debate, by mentioning the talk he had with his son about getting a job.

However, attack is not his forte and he got bogged down a little when he was trying to go in for the kill on Mr Osborne.

He was forced to admit that he had dropped the "death tax" to fund care for the elderly, when he was trying to lampoon Mr Osborne for walking away from discussions on that very issue.

Pre-debate Odds: 5/1

Post debate Odds: 5/1

Vince Cable 8/10

FOR many the people's fantasy chancellor, Mr Cable lived up to his billing and remained clear, calm and focused throughout.

His basic strategy was to be the man "who told you so" about the economic crisis well before it happened.

He was helped by the third-party luxury of not having his own policies and positions challenged much by his two opponents, who were far more interested in knocking chunks out of each other.

However, this did at times make him look more like a political commentator than a would-be chancellor.

Pre-debate Odds 16/1

Post debate Odds: 12/1

George Osborne 6/10

OSBORNE started off in a nervous manner, suggesting he felt under a huge amount of pressure to prove himself against his seasoned opponents. His voice betrayed him with a distinct waver to it.

The strategy he adopted was to warn that "five more years of Labour waste and debt would be a catastrophe".

He was made to look foolish over his pledge earlier in the day to reverse National Insurance contribution rises, when it was pointed out that he was accepting savings which just a few days ago he had described as fictional.

However, he did pick up in the middle of the debate and landed a couple of good blows on Mr Darling, including the moment he forced the Chancellor to admit that he had dropped the death tax.

Pre-debate 2/5

Post debate: 2/5

Q&A: Tough questions as voters put trio on spot

THE three would-be chancellors were quizzed by professionals, a student and a pensioner:

This is, in a sense, a job interview for you all. What qualities do you have?

Vince Cable (VC) said he had "got a lot of experience".

Alistair Darling (AD) claimed he had "tenacity, I hope, among other things".

George Osborne (GO) said he had "energy" and "new ideas".

Instead of hiding behind a smokescreen of rhetoric, why don't you come clean about how much you will cut and when?

AD: "We set out measures over a four-year period."

GO: "I've set out some difficult decisions, but I don't pretend there won't be more difficult decisions ahead."

VC said the Lib Dems had been the only party to say billions of pounds of cuts were needed.

Public sector pensions – which of you will cut them?

AD: "I think reform of public sector pensions is necessary."

GO: "What the Conservatives are proposing is a cap in the big public sector pensions."

VC: "Has to be reformed in a fundamental way."

For people on a middle income like me, can you guarantee not to increase income tax or VAT?

VC said Lib Dems would lift the threshold to 10,000 by removing tax relief for high earners.

GO said there would be unavoidable tax increases, but "seven out of 10 people would be better off".

AD: "Most of the tax increases I've announced will be born by people earning over 150,000."

None of you predicted what happened to the banking system ... how can you expect any of us to trust your judgment now?

AD: "All of us have to accept responsibility."

GO "wasn't going to pretend" he saw the crisis coming.

VC: "Some of us did see it coming."