The reaction from the opposition has been predictable, but I'm afraid the Tories are right about this one. Inheritance Tax should go, or at least be radically reformed, not necessarily for all the reasons John Redwood says it should but because, thanks to the phenomenon of fiscal drag, it has basically become a regressive tax that penalises people who by no stretch of the imagination can be considered rich.
I would be amazed if David Cameron does not put today's proposal straight in the Tory election manifesto, but it makes such obvious political sense that I would also be mildly surprised if some form of it does not also end up being purloined by Labour.
At the very least, ministers ought to consider some of the alternative options to outright abolition, such as exempting the main family home from the tax, or levying it at 20p rather than 40pc, or raising the threshold to £1m, so that it reverted to its original purpose as a tax only on the very wealthy.
Chancellor Alistair Darling today said the Government was "keeping the situation under review." Expect that review to have been completed well before the next General Election.