3 JUNE 1972, Page 29

01% a Year the Stock Exchange Council ti8 fi nance game for

the schools and 140 Ytear it Was won by a team of six boys j V p‘ve girls from the Loughton College ',41tedlItther Education. Each team was Ptern-iu t° invest a notional £25,000 l'oek 111,,Bond prize over a period of ten Pit:ihe winners finished up with a 01,,oludi sum of £31,297 after expenses lille 'llg capital gains tax of 30 per cent. e 0,,(111ers were not far behind. Eightyof ninety-five entrants showed a ket'c't1 might say that in a raging bull sti,;,,,hY one could pick winners simply e1 -sling a pin blindfold into the back 2s ,c)1 the Financial Times, but a profit cent in ten weeks is phenomenal le7ints to something like genius in e,41 economics. The team might write Ilie–Illhn while I am on holiday. ft,,,Itisecret of success in investment is, rs ett ,', to avoid spreading risks widely, t, iTerY few but make certain they are th'nit trusts are not allowed to do wh'ell are bound to spread widely. That th they do not often beat the index. h Year ending March 1972 the whole doe bonds and shares quoted on the 1 kelitstock Exchange appreciated in to t t., value by £29,000 million or 24 per lehu a grand total of £149,562 million 0 Olt41 Points to the immensity of the 0 1 th Illarket in the UK). Since March titt,,le,Intich quoted FT index of thirty pers'al shares has appreciated by over 1 k ca cent (which points to the virtue of ' Ual selectivity). But when selective 4PPlied with skill and imagination 0114vest!lting appreciation can be fantastic. owth Just seen a broker's analysis of the t °f property share assets. The net Da values of thirty-eight property Derrlies since 1960 have appreciated by k ,. cent per annum compound. Six of t ;11Preciated by 40 per cent to 55 per tdill'ekr annum compound! (Star, Great 15 Y 55 per cent and Trafalgar House to rher cent). This calculation is made 0, 1.01;`le end of 1971 and does not take the mad rise in property values qetar, Neill's vast accretion of capital wealth , it'ahried by the Labour Party, now ,ally i.,s dominated by the Left, to be 4( vu • 'Ai isive and unfair. It is therefore 5sino ° a wealth tax, in addition to a gifts tax, complete with the paraphernalia of an annual declaration form reciting your total possessions from Stock Exchange securities down to the lawn mower and the kitchen stove. Now a gifts tax is manageable and also perhaps a tax on capital increment. We already have a 30 per cent tax on capital gains. But a wealth tax is unmanageable — it would cause a breakdown in the collecting offices of the Inland Revenue — and moreover it is uneconomic. It would allow for no depreciation in money values wnich is unfair, and it would take capital away from the wealth creators. To switch capital from the private sector to the public sector would no doubt increase social investment but would decrease private investment out of which comes the manufacture of goods for the export trade. It is only the private entrepreneur who pays for our imports with the export of his goods. Tax his wealth unfairly and he will leave the country for fairer climes where he can earn more money and produce more goods for some other country's exports.

While it must be admitted that the rich do much better than the poor out of this bonanza in the capital market, it is absurd to argue that the worker is being victimised in our present acquisitive society. In the first place he is continually enlarging his share of the national income cake. An annual increase in wages of only 7 per cent compound will double his income every ten years. In the twelve months to March wage earnings increased by over 10 per cent. This rate compound would double wage incomes every seven years. The share of the national income taken by wages and salaries has gone up from 68 per cent to 75 per cent in the past eight years while that taken by company profits has declined from 15 per cent to 91 per cent. In the second place the worker can participate in the rise in market value of the securities on the capital market by joining the Trade Union Unit Trust, This was started by Lord Hirshfleld some twelve years ago and since March 1971 the units have appreciated in value by 60 per cent. I cannot understand why the trade unionist does not take more notice of this admirable way of participating in capital growth but where there is communist influence the unions will have nothing to do with their own unit trust. I remember pleading with Mr Wilson and Mr Callaghan in 1964, after I had drawn attention to the alienation of the working class in The Split Society, to set up a public unit trust, so that workers might invest their saving without a heavy loading charge, but they would have none of it. A public unit trust would have been the means of funding the national pensions scheme.

The Tory government is not unaware of the importance of encouraging worker participation in capital gains. When the clause came up in the Finance Bill giving company executives more favourable tax treatment on stock option schemes Mr Patrick Jenkin, the Chief Secretary of the Treasury, said he would consider a Labour amendment to give employees favourable rights to acquire shares. "It is not our intention that these schemes," he said, "should be confined to executives only. Shareholdings for men on the shop floor are equally valuable." Mr Christopher Tugendhat, the City member, supported the Labour amendment.

It is good to see the social conscience moving in the direction of fair capital shares for all. What has stirred it lately is the constant flow of take-overs and mergers during a bull market which generally end in the acquisition of great wealth by the few rather than the many. On the occasion of the take-over of British Lion by Barclay Securities the valiant Maurice Edelman, chairman of the parliamentary film committee, has been suggesting that the directors controlling British Lion should disgorge some of their vast profits to the public purse which carried the company in its deficit days. On the occasion of the take-over bid for Watneys by Grand Metropolitan Hotels the trade union staff have written a strange letter demanding not a share of the swag but protection against "the cynical raids of greedy strangers," who might, for all I know, pay them more. When everyone is on the grab in our painfully acquisitive society — capitalists, socialists and communists together — someone, of course, is bound to get hurt.