Skinflint's City Diary
Christopher Booker is on to a good thing writing about the property speculators, supplementing his freelance earnings as a journalist. But what is his objective? Surely the gravest damage is not the profits that the developers make, since, when all is said and done, they have put up something and if the buildings are hardly Medici-like the indictment should be against the pathetic state of architecture (which has not a single artist within its ranks and has become a rag-bag of draughtsmen and loophole snoopers) and the planning authorities. No, the target for Mr Booker's journalism should be the high level of rents in the commercial sector which is driving small business away from the centres of our cities as remorselessly as did the shopping centres in the United States. Mr Rippon's ridiculous decision to grant no more Office Development Certificates, coupled with his complicated and collectivist action against unoccupied office buildings, may possibly mean that he is dropped in the rumoured reshuffle.
Rents will be driven down not only by building more offices than are needed (no difficult task) but by taking powers to control the direction of tax-free institutional funds, for a time, away from being net investment in commercial buildings. Yields and rents would fall as site values collapsed. Why no one in authority would grasp this nettle used to defeat me. Now, however, I have discovered that neither Mr Barber, Mr Walker nor Mr Rippon realises, as elementary as it may seem, the significance of institutional funds in not only being the buyer of last resort but the source of the funds that permit buildings like Centre Point to be kept empty. Withdraw new institutional funds, except as bridging finance, and there would once more be a two-way traffic in central London property and a healthy fall in values.
Investing to modernise
There has been some welcome discussion on the subject of industrial investment. Again the answer lies with the direction of institutional funds, and for Treasury policy to follow a policy of corporate profit retention instead of that present ugly creature maximised profits (much of them capitalised charges and capital profits brought into profit and loss account) with dividend restraint. A profit retention policy should be coupled with free depreciation and an Excess Profits Levy by which 'standard profits' exceed profits in, say, 1968/69. This tax, not to be confused with the wartime Excess Profits Tax, should be modelled on the 1952 Finance Act and aimed at taking some of the excessive profits made from inflation, entry into Europe, the wrong-headed 'dear money' policy that has so enriched banks and moneylenders, property speculation, and other signs of the troubles through which we are, it is to be hoped, passing. A 15 per cent Excess Profits Levy over and above Corporation Tax would hit hard only if investment in new plant was not made since this investment cOuld be written off completely in a single year as a charge against tax. The answers are so simple. The present Government is the creature of the merchant banks and the tool of the insurance firms, unfortunately. If only there was someone somewhere to speak up for industry as Joseph Chamberlain once did for Birmingham.
Enterprising Arabs
It's all very sad about oil prices, but. . . . After all, the Western countries have been milking the Arabs in fixed markets for a good many years now, and it hdrdly behoves; a Conservative government which once, some time ago, believed in the principles of a free market system. Where a serious difficulty does arise is in the psychology of international politics which has caused the Arabs to change from a baksheesh oriented attitude of meniality towards the west, to one of some real content. The note was most effectively struck by the Shah of Iran who, though not a supporter of the oil boycott (he has been auctioning some of his own hoarded reserves at very high prices indeed), frequently gives a lead to the Arab, and particularly the Gulf, states. The Shah said that the factors making for the prosperity of countries like Britain were less their ability to purchase cheap energy and raw materials than their technological ingenuity and willingness to work hard. If, he said, countries like Britain went on paying people almost as much not to work as to work, and if the industrial relations situation continued as it was now going, then Britain would simply have to forget about prosperity. Buck up and unite was the essence of his message. And however bad the spirit in which we British take criticism from foreigners, it has to be admitted that there was a lot of truth in what the Shah said.
Eating cake
My feelings that the Shah was right were confirmed very quickly when I read a report that the Heriot-Watt University in Edinburgh has asked Mrs Thatcher to increase student grants because today's youngsters are endangered in their mental and physical health because of financial difficulties. Every — or practically every — really successful man I know went through a period of real poverty in his youth, and it helped shape not only his character but his success. Today's pampered youth simply have no idea of the meaning of either struggle or of hard work. And it is undoubtedly time they learned. After all, our universities are kept in being, with their vastly inflated numbers, and their continually declining standards, only because the poor taxpayer is forced to lash out huge sums he cannot afford to fill, metaphorically speaking, the bawling mouths of modern undergraduates. Let 'em eat cake, say I, and produce a good deal more in the way of industry and general good citizenship before anybody thinks of putting up their already generous allowances. The only really good educational news nowadays, indeed, has been the announcement of cuts in higher education building programmes as a result of the present crisis.
Tightening belts?
1 know we have been told that the ordinary British citizen completely ignored the dire economic situation and spent even more on his Christmas spree than last year. I thought so too, seeing the spending going on in the shopping centres I visited, and the gleeful faces of the shopkeepers. But I don't know. I learn that only thirteen people were convicted of drunkenness in West London this festive season: it was the lowest number of convictions ever recorded at the local magistrates' court. So it may be that some of our people are taking the whole thing seriously, and pulling in their belts.
One of my colleagues tells me a story which certainly suggests some awareness of the situation: a shop near his house, which sells, among other things, fuel, has a notice reading "No coal or coalite available because of the state of THIS COUNTRY"
Wrong accent
London Broadcasting have announced some major changes, though they are still retaining Janet Street-Porter, the urchinaccented partner to that most unlikely sounding, though you will be lucky if he lets you forget it, Old Etonian, Paul Callan. London Broadcasting are overlooking at their peril that rule of business, 'Know your market' in retaining Miss Street-Porter. To advertisers, her voice sounds as if it goes with Bisto and dripping and not with the good things in life.
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