The tax monster opens a bleary eye and its jaws will surely follow
CHRISTOPHER FILDES
Tax is back. In fact, like death, the old monster never goes away, but it has been known to lie down and adopt a pacified expression which we may be rash enough to accept at its face value. Then we move into range, and then its jaws open. So now. The Budget brought us Gordon Brown's new model National Insurance, the tax that dare not speak its name. The Prime Minister took to musing on the need for better public services and, with that, the need to pay for them. Peter Hain, one of his reshuffled ministers, complained that hard-working middle-class families paid income tax at the top rate and thought that the rich ought to pay instead. This brought a clatter of official disavowals. Raise tax rates? Us? We don't mind taxing pensions, or fiddling with the income tax allowances and letting inflation do our dirty work for us, but that's different. Indeed, when it comes to raising tax, this Chancellor is the champion. The size of his budgets has swollen by one-third, he is still budgeting for public spending to grow twice as fast as the economy, but it has to run at that pace for its services to stay more or less where they are. They have their own inflation rate, which means that much of his extra money goes on paying more to the same people or to even more people to do the same thing. By an odd coincidence, the figures that would show this are held up in the Office of National Statistics, which is reviewing its methods. While we wait, we can study the Guardian, whose reams of public sector sits vac have made it the market leader in recruitment advertising, while the private sector is down in the dumps. Perhaps it can sense the taxman's brown envelopes coming.
Soak the bankers
This week's contribution to the tax debate comes from Stephen Byers, whose grasp on financial reality was so evident when he was at the Department for Transport. He wants to bring all those pesky international bankers into our tax net. They may be living here (residing, the taxman would say) but if their domicile is somewhere else, that is where they pay tax. He wants them to finance the birthday present that Gordon Brown now plans for every baby. They could, he reckons, contribute 11 billion — unless, of course, they go and live somewhere else and take their business with them. It knows no frontiers, no divine right brought it here, and if London lost it, the hole in the Chancellor's revenue would be many billions deep. Last week's inspired suggestion from Britain in Europe was that Mr Byers would be just the leader to revive its faded fortunes.
Double up
On the Great Threadneedle Street Stakes, the betting opens early. In February of last year I was saying that the in-house candidate for Governor of the Bank of England. Mervyn King, must have a favourite's chance — hut that if Whitehall was fielding an outsider, we should keep an eye on Rachel Lomax. Then in temporary exile at the Department for Work and Pensions and subsequently diverted through Transport, she had been Nigel Lawson's private secretary and had stood up to Jim Wolfensohn at the World Bank: She would be the Bank of England's first Governess.' Backing the favourite to win and the outsider each way would have paid dividends, for on Tuesday they take over as Governor and Deputy, and Sir Edward George retires to his Cornish garden. He said his farewells to the City last week at the Mansion House dinner — the twenty-seventh of these events he has had to sit through, waiting restively for the loyal toast and permission to smoke — and for five minutes the bankers and merchants stood and applauded him. A few days later the Bank raised a $3 billion loan for the British government on finer terms than the United States government could have obtained. It has not lost its touch.
Improvident x 3
The National Provident Institution is joining Australian Mutual Provident (and, of course, the Holy Roman Empire) as a triple-decker misnomer. It is closing its books to new customers, which, in life assurance, usually means a sentence of slow death. When AMP turned up in London, like an uncle from Down Under with more money than sense, National Provident was one of the businesses for which it paid, or overpaid. To think that this historic life office once had John Maynard Keynes for its chairman, until more conventionally minded colleagues eased him out! Mediocrities know how to look after each other. Alas, they then offer to look after us.
Hello again, Dolly
New thinking is needed at PPL Therapeutics, which achieved its moment of fame when it cloned Dolly the sheep. Now Dolly has gone to green pastures aloft, and the investors who flocked to PPL's shares when they first came to market have lost most of their money and fear that they may lose the rest. The obvious solution presents itself. What this company must do is to clone some more investors. It has the technology, after all, and what goes for sheep would go double for shareholders. Once the technique had been demonstrated, PPL could go on to supply the nation's boardrooms. Nomination committees, for instance, could order non-executive directors, fully compliant with all the latest codes. Or PPL could turn out investment managers who would be programmed to think just like other people. Tracker fund managers do this for a living. Perhaps the cloning technique is already at work.
Course work
Once I had opted to spend last week on a course, Ascot was plainly the course to be on. Captain Threadneedle, my racing correspondent, marked my card. Extending the Royal meeting to a fifth day represented a severe test of stamina, he says, but class triumphed, as it will. If the Queen can stay the distance, so can the rest of us. The next test for her advisers is to decide where to take the meeting when the builders are in at Ascot, and my correspondent's money is on York. It is not for me to suggest how she might be accommodated, but her great-great-grandmother's very comfortable train (or so my railway conespondent, I.K. Gricer, tells me) is housed in the National Railway Museum, an easy canter from the course.
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