SKINFLINT'S CITY DIARY
Selwyn Lloyd used a piece of typical Butskellian dogma when he introduced capital gains tax as a sop to those envious of the fortunes made from the property boom of the 1950s. Only when engaged in change do some people get a sense of freedom and Mr Lloyd's assured election as the next Speaker shouldn't blind us to the fact that he represented, next to Henry Brooke, all that was blind to productive ideas during the Macmillan years.
Capital Gains Tax
Even though the capital gains tax is demonstrably damaging to dynamism and enterprise and, after inflation is taken into ac- count, no revenue raiser, the deadening effect of the tax is, I suppose, here to stay. Even with the present Conservative leadership dedicated as it apparently is to realistic work- ing policies, it seems inevitable that there will be cringing to the drip-drip of lefty opinion and the Bow group. I notice that the first words of Christopher Tugendhat, the member for the City and Westminster, upon his election were that he was in favour of re- taining the capital gains tax. Neither Mr Lloyd nor Mr Tugendhat appears to realise that this tax does not hit the really rich who well know how to look after themselves, but is frightening away dynamic investment charitable trusts and, worst of all, is en- trepreneurs into offshore companies, private charitable trusts and worst of all, en- couraging many to reside abroad.
If you see little hope for reform and have a latent capital gains tax liability through a block of unrealised shares, you may care to consider this wrinkle which will help towards the cost of a country seat.
Do-it-yourself
Large houses in the country sell for very much less than their replacement cost even though, to those who are able to afford them, they offer a congenial life particularly when they are in good order and well appointed. Such houses as reach the market are almost invariably in a dilapidated condition and restoration is uneconomic and anyway beyond the means of most of us. For the Person with a potential capital gains tax to Pay, the position is very different. He buys the house and land that he likes and then in the words of that young female pools-winner from Bingley 'spend and spend and spend'. The house is gutted and lavishly re-ap- Pointed, the gardens are re-laid, swimming Pools, tennis courts and orangeries are built. As work progresses a careful record is kept of expenditure. On completion, the house is valued by professional valuers who, Inevitably, place a value on it of little more than the original cost since the running cost of large houses is beyond the reach of all but a few. The house is sold at valuation to the taxpayers children's discretionary trust (set 111) by, someone else), throwing up in the pro- cess a large tax loss, the difference between
cost plus improvements and present-day valuation.
It goes without saying that this is an over- simplification of a principle which is preg- nant with possibilities. Why not ask Theodore Goddard and Co the solicitors, for particulars? They have, I hear, helped in this way the son of a famous property developer of the 1950s with the reconstruction of an historic house in Buckinghamshire.
London Weekend Television
It is the capacity for economy which is the best test for the vigour and stamina of a suc- cessful company. Some time ago I referred to floundering Mr Aidan Crawley and London Weekend Television Ltd who are keeping their fingers crossed for a reduction or a withdrawal of the television advertising levy by the Chancellor presumably on the recommendation of Mr Christopher Chataway, who I have good reason to believe was against the levy when he was in opposition and before he fulfilled the first stage of his ambition by becoming Minister of Posts and Telecommunications.
I hope that for the sake of London Weekend Television (and in a small way, the SPECTATOR) that something is done in the next few months. If Mr Crawley was so min- ded, he could do something about the situa- tion as it is just now. For a start, he should presume his sales at not more than £10m less the levy. He should trim his expenses and profit target to this figure rather than add to costs by extra selling and programme effort which, even if successful, would be drastically reduced by the imposition of the levy at its highest rate. Candle-end economies (stamps, expense accounts, cars, telephone bills etc) are useful but his target must regrettably be reduction in staff. This means looking at the eighteen directors (as many as Mr Heath needs to run the country) and the 1,102 employees earning between them £2.56 million.
Disagreeable pleasures
Shrewd Clive Irving and Sir Arnold Weinstock, both directors, as well as Sir William Collins have, apparently, already sold their shares and no doubt other original participants in London Weekend Television have escaped with only minor loss but it is time for Mr Crawley (if he is to be the man) to reduce his Board to two or three executive directors (losing Stella Richman who is well provided for with her clique White Elephant Club) and one or two other unpaid directors (not from the merchant banks, insurance companies or pension funds) such as for instance, Mr Rupert Murdoch, Lord Hartwell and Lord Stokes (if he has time left from keeping afloat ,British Leyland). Mr Crawley should aim for a 25 per cent reduc- tion of the company's personnel which should mean a direct saving of about £640,000, which unlike a sales increase is a direct addition to profit without the im- position of the levy.
Once this disagreeable work has been done, Mr Crawley will find that he will be able to concur with that commonplace; 'Business is really more agreeable than pleasure : it interests the whole mind more deeply—but it doesn't look as if it did.'
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