Skinflint's City Diary

Christopher Selmes, the twentysix-year-old financier,, made a reputation as a stock market operator building up the miniconglomerate Drakes, which was taken over by London and County Securities, the first of the fringe banks to collapse. Selmes sold the L & C shares that he had taken as payment for Drakes before the collapse and, borrowing very heavily indeed from Dalton Barton, a subsidiary of Keyser Ullmann, bought control of the publicly-quoted Grendon Investment Trust on the oper market at a cost of £18 million (borrowed at 18 per cent plus a commitment fee). The idea was to sell some of the property to Perula Investments controlled by the Hirsch brothers but this fell through.

Grendon became private, losing their quotation, which has concealed the extent of the loss suffered from this deal which was in essence a property break-up and we all know the mess the property world is in. Before the collapse Selmes was seen as a colourful young man in cafe society and in the bolder Dougie Hayward and Mr Fish sharp-dressing City set. For instance last year, failing to get a seat on a scheduled air service for a weekend to the C6te d'Azur, he rented an executive jet for £1,500 generously picking up the tab, conditional on his young chums paying for lunch on the stopover at Lyons. For the moment this is a life of the past and a penny-pinching retrenchment is in hand.

Less than a year ago Selmes bought 21 Cheyne Walk at auction under a blaze of television coverage. This Thamesside Queen Anne house, once the property of the artist Whistler, fell to Selmes for £105,000 under the hammer. Now, sadly, the forty-nine-year lease is once more on the market for a price "in excess of E100,000." Selmes may be down but surely only for the moment. He is one of the abler young men to emerge from the not particularly creditable conglomerate era. Market sentiment will be a long time reemerging, but when it eventually does I feel sure Christopher Selmes will be around tempting the fringe banks with interesting situations.

Property market

The property market is in an even worse state of collapse, following the return of a Labour government and with Mr Healey as the new Chancellor. There will probably be more sound than fury in his first budget, given the time he has had at his disposal and the lack of a Labour majority.

My argument with Mr Healey will be that he is unlikely to get his objectives in order. He will probably encourage the envy factor, making rumblings about ob scene property speculators, and producing an anti-capital philosophy. Mr Healey can tax as heavily as he likes. Even confiscate without compensation. But as a legislator he should give us a sense of his order of priorities.

For instance, it is more important to lower rents and property prices than it is to tax. Property prices affect general prices and thus inflation and exports. In the area of property, Mr Healey might achieve his ends by regional policies exerting a pull away from central locations, the easing of interest rates and, somewhat evilly, continuing to keep the property business in the centre of discussions as a political football, making investment less secure and taking yields up to money rates.

The less secure an investment in property appears the more deflationary its effect, and the more institutional investors will be encouraged to stay in gilt-edged, marginally pushing down interest levels. Equity investment will be seen to be a useful alternative which, in due time, should lead to a long-awaited lift in capital equipment investment. My old hobby-horse, the direction of institutional funds, might be considered by Mr Healey, though this is unlikely until the return of a majority government because of the electoral damage that a threat to savings might be made to appear to be by a mischievous Opposition.

Whatever Mr Healey does, domestic property will continue to be a useful low-yield hedge, and I'm staying with it.

Bed prices

It has become a matter of general comment that the realists of Conservative policy (quite incorrectly called the right wing) are finding their way through the same solutions to their own goals as the practical elements in the socialist party (known incorrectly as the ultra-left) are to their own. Rejection of the Common Market and the contemplation of its corollary, import controls, the application of free-market forces to prices and wage bargaining, and a considerable degree of economic nationalism are examples.

One little matter is the raising of the price of private beds in Na

tional Health hospitals, which are to go up 25 per cent to bring them in line with their cost to the NH Service. The left view this favourably as "soaking the rich.'' The liberal element in the Conservative Party see it as an attempt to put economic pressure on private medical facilities, though slightly higher BUPA fees will help. Realists of capitalism, however, should see this left-wing strategy as a free-market tactic in which they should readily concur. Bringing the cost of private beds in line with their value should mean the building of more private nursing homes such as the worldfamous London Clinic, and the Fitzroy Nuffield in Bryanston Square.

At this moment there is a site in St John's Wood Road which has been advertised for sale with the benefit of planning permission for a private hospital. it has been on offer for a considerable time and it has presumably been difficult to find a buyer while private beds in hospitals were being granted a hidden subsidy. Perhaps now at last it will be financially possible for it to be developed.

When the subject is raised in Parliament, Conservatives should be cautious in their criticism.

Sir Denys Lowsoii

The report of the inquiries by the chartered accountant, Mr Richard Langdon, and Mr David Hirst, QC, the two government-appointed inspectors, into share transactions undertaken by Sir Denys Lowson and his family and associates, Is said to be virtually complete, and the results will go to the Department of Trade within a few weeks. The inspectors were particularly asked to examine two publiclyquoted investment trusts involved in a deal whereby Sir Denys and others sold the National Group of Unit Trusts for £6.5 million to the Triumph Investment Group, having bought control earlier for £500,000. Since the original investigation, the examination has been extended to cover subsidiaries of another Lowson company, Australian Estates.

What is the betting that the report is not published by the Department of Trade, and the whole matter given a bill of health with Sir Denys emerging as clean as a whistle?