Skinflint's City Diary

The absurdity of attempting to control inflation through a prices and incomes policy and dividend restraint was never so obvious as at Blackpool last week. Like the TUC's counter-proposals they deal with the symptoms and do not seek to discover deep-lying truths. Denis Healey, the Shadow Chancellor, attempted to woo the unions through intellectually fatuous counter-proposals that have been shown repeatedly in the past to fail. For example, "a reversal of all the tax concessions given to the rich over the last two years" and the tackling of "the gross inequalities of wealth." His hurdy-gurdy song included the dog-eared idea of a wealth tax, together with a tax on capital transfers aimed at stopping evasion of estate duty. Time and again in the past it has been shown that these proposals push capital abroad to lie fallow or into the bunkholes of charitable and discretionary trusts and into long leasehold reversions that are difficult properly to attack.

Denis Healey is one of those who, doubtless, lays claim to that quality discerned by Harold Lever and shared by all civil servants worth their salt in the Cabinet Office Mess or the Reform Club, of having 'a fine mind,' on the strength of a degree of academic attainment a quarter of a century or more ago. This quality, when possessed by businessmen like Aubrey Jones ,is usually a 'sell' signal when appraising the shares of any company they run. These ` fine minds' have intelligence, but, alas, invariably at the expense of humility, imagination, originality or wisdom. Anyway, back to the Labour Conference; where Richard Crossman was regretting that the Attlee or Wilson Governments had not nationalised land. Presumably one argument against land nationalisation by a socialist government administered by a democrat like Attlee or Wilson, which they would have accepted as conclusive, was the charge of confiscation, since the servicing of compensatory government stock to this magnitude would be impossible.

Freehold Redemption Act

A wise investor, whatever his private hopes, should now accept that some form of land nationalisation is increasingly likely within the foreseeable future. Land and property values are increasing faster than inflation or anticipated growth. The rentier with his ready access to tax-free accumulated institutional funds lives on monopoly through what amount to property pools resulting in the forcing up of rents bleeding the private individual and keeping those involved in organic entrepreneurial business activity always just this side of liquidation.

Even the owners of large inherited agricultural estates are concerned at present land prices such as the £3 million paid for the 2,000-acre Brown Candover estate last week. It is difficult to weep with them as they discover that almost any form of death duty mitigation through insurance is impossibly expensive and that the break-up of their land is becoming inevitable.

These increased values speed up the perceptible transfer of real property from the private individual to the state and to the tax free institutions and into dubiously conceived private charitable trusts. If this process is inevitable let it at least he equitable, painless and assist in curbing the property value induced inflation that is behind so much of today's industrial unrest.

Few blue-dyed believers in the entrepreneurial capitalist system, like me, pity or believe in the rentier. There is one single simple act of legislation acceptable, if properly explained, to almost all (except doubtless old feudal landlords like the Prudential Assurance and the Westminster, Cadogan and Howard de Walden families) concerned with a healthy capitalist system moving forward into the next century at an unprecedented pace. This proposal of mine, if effected, should make estate duty, gift, wealth and capital taxes as well as much of income tax unnecessary.

The legislation might be called a National Freehold Redemption Act.' It would be a measure providing nothing more or less than the removal by statute of a private, corporate or charitable owner's freehold interest in land or buildings he possessed and the granting in substitution of a free 100-year leasehold interest vested in the owner by the state. A new and major department of state — a Ministry 'of Land — would at once be set to work to prepare a latterday Domesday Book and be empowered to redeem, deal in and re-lease property in anticipation of reversions 100 years later.

One might anticipate that the enactment of such a provision by a socialist government would be to a small extent confiscatory, by not repaying the freehol der the small amount between the value of the loss of his freehold and his new free 100-year leasehold interest which a Conservative government would very properly consider due.

Henry George wrote, before the days of estate duty, on a Land Value Tax, but did not, as far as I know, make any proposals on the gradual reversion of property to the state through freehold redemption.

Freehold redemption would not only be equitable but socially correcting and relatively unobtrusive. There would be a constant constraint, through the gradual deflation of property values during the expiry period of leases, on the wage and price inflation we have become obliged to believe we must live with in a postKeynesian world, in addition to the enormous opportunity for change that will become urgent by the turn of the century.

Marmalade Cat

The Industrial Expansion Team at the Department of Trade and Industry are placing large advertisements in the press with the heading, "The chance of a life time for your firm?" describing the excellent capital loans and grants available towards the cost of new industrial buildings and machinery.

Since Christopher Chataway has completely disappeared from sight like a Marmalade Cat it is good to see that someone is getting on with implementing the Industry Act 1972. However, a telephOne call to one of the Department's regional offices elicited: "They've jumped the gun again. We have had very little paper work sent through but should have something by the end of November." Meanwhile . . . back at the MliniStry of Social Security the dole queues presumably lengthen.

Land price inflation will be a subject for discussion at the Conservative Conference this week, Chataway may have disappeared from sight but his Parliamentary Private Secretary, Tom King, knows 'something of the subject. He has been energetic as chairman of his father4n4aw's business Sale Taney & Co They have just wrapped up a nice little deal selling seven acres in Bedfordshire for £350,000 which were in the books at £533, someone urgently trying to finance a factory extension in Yorkshire has been telling me.

Pewtered Steele

The Spectator has bought for its dining room some fine pewter wine goblets, advertised elsewhere in the paper, that have been cast to mark the 300th anniversary of the birth of Joseph Addison and Sir Richard Steele, the founders of the first Spectator.

Their Spectator was acclaimed for exposing "the false arts of life, pulling off the guises of cunning, of vanity and affectation." These goblets are a reminder of what should continue to be a high aim for this column. You don't have to look far to see the City has its share of "the false arts of life " and "the guises of cunning."

It may be as well if the goblets are displayed more than used since in one respect it may be as well not to follow Addison whose life was supposed to have been shortened by an excess of "Canary wine and Barbadoes water."