Billion pound backstep
JOHN REDWOOD was another City manifestation — lately the instant pri- vateer of N. M. Rothschild, now floating back from the Government to say that life should be made easier and cheaper for personal shareholders. This sensible sug- gestion earned him a ten-figure smack in the eye. No sooner had his ministerial car rolled back to the Department of Trade and Industry than the biggest investment trust of all, Globe, stopped a bid from the British Coal pension fund. Investment trusts are tailored for personal sharehol- ders, and Globe has more than 30,000 of them. Pension funds, of course, have no shareholders, any more than British Coal has. With this bid, privatisation steps a billion pounds backwards. Mr Redwood, rubbing his smacked eye, should ask him- self two questions. First, what chance has he of encouraging personal shareholding, or even of checking the long drift away from it, while the tax system is so heavily weighted the other way? The personal shareholders in Globe, if the bid goes through, will be liable for capital gains tax at anything up to 40 per cent. Pension funds do not pay capital gains tax or any other kind of tax. No wonder the pension funds and other institutions have become the dominant shareholders in almost every major British company. Then Mr Red- wood should ask what sort of a fist these institutions are making of their responsibi- lities as owners — why do they leave the bidders to do their work for them? More simply he should ask Sir James.
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