CITY AND SUBURBAN
Stay on the platform and wait for the Circle Line the Tax Express is going backwards
CHRISTOPHER FILDES
The party of low taxation has set us to work for the tax-gatherers until the end of May. After that we shall be permitted to work for ourselves. This party, which you may not at once recognise, is the Conserva- tive Party and the description is the Prime Minister's. In his New Year message, he assures us that the question to ask about tax cuts is not whether but when. The jour- ney towards a 20p basic rate for income tax will be resumed as soon as possible. Please remain on this platform and await further announcements. Quarrelling voices in the control-room can be heard arguing about the composition of the train: should it con- vey full-fare passengers (what British Rail calls silver service) or should it be a jolly excursion on the Essex line? What these announcements do not tell us is that the train has been rolling backwards for some time. Gabriel Stein, trend-spotting for the Adam Smith Institute, was there with his notebook and ball-point pen to see it. He works out that for the first 149 days of this year the average income earner will hand over all his income to the government. Then comes 28 May — Tax Freedom Day, 1995! It is getting later. Last year it fell on 23 May and the year before on 17 May. It would be something to halt the train, let alone to get it moving in the right direction, but the easiest method has its dangers and has already been tried. This is to raise money by borrowing instead of taxing. Unfortunately, Government borrowing (as Nigel Lawson pointed out) is tax deferred. Last year and this, the Government will have borrowed almost £80 billion, the interest on that now runs at almost £7 bil- lion a year and someone has to pay it. Allowing for that effect, so Mr Stein says, Tax Freedom Day this year would fall as late as 10 June. Please remain on the plat- form, but really, you might as well wait for the Circle Line, and it will get you just about as far.
OHMS, RSVP
SOME people claim that they would vote for a party of high taxation. They confide this to the opinion pollsters and feel better. Rather than sacrifice our public services, they promise, we would happily pay more. Kenneth Clarke and his luckless predeces- sor should have taken them at the word and called VAT on the gas bill the Public Services (Maintaining High Standards) Tax. It would have come to grief all the same. When the taxman's brown envelopes crash through the door — this is the season for them — enthusiasm flies out of the win- dow. It gives way to calculation: only 141 days to go to Tax Freedom Day . . . Any votes for the party of low expenditure?
Local boy makes good
IT IS 48 years since Dennis Weatherstone started work as a 16-year-old City clerk. Some prescient manager gave him a start at the Guaranty Trust of New York's London office. Then Guaranty was merged into the Morgan bank and its rising star found his way to 23 Wall Street, where visiting Chan- cellors as far back as Denis Healey would come to learn about the markets from him. Now Sir Dennis has retired as Chairman of J.P.Morgan. He has seen its business trans- formed, from blue-chip lending to advanced financial engineering, but has striven to keep it what old Jack Morgan said it must be — first-class business done in a first-class way. The Bank of England has signed him up for its Board of Banking Supervision, but his connection might have been closer still. He is, so I learn, one of the very few people — Oliver Franks may have been the last — to have been sounded out for the Governorship and, politely, turned it down.
Where the Cream is
THE CHESHIRE Cat, you will, remember, vanished slowly, starting with its tail and ending with its grin. This vanishing trick has now been performed by British Coal. Scarcely anything remains but the grin on its two pension funds, worth more than £15 billion between them. The funds also own their capable managers and, this year, will float them off. These funds were created, partly at the taxpayer's expense, to serve an industry which once employed 750,000 peo- ple. Now they and their industry are scarce- ly visible and all that remains is this vast, broad grin floating aimlessly about in space. How the miners and ex-miners must wish that they owned their shares of that £15 billion. How I wish the Government had accepted my reasonable offer to take British Coal off its hands, complete with its pension funds, and give the mines away.
The wild bunch
I SAY, how dreadful. Maurice Saatchi reveals that his fellow-directors were held up by a bunch of shareholders. They threat- ened, he says, to call a general meeting, at which they could outvote others. The alter- native was to take the chairman quietly into the corner and shoot him. Of course, if more shareholders would vote in favour of shooting the chairman than not, that ought to tell him something, but the point seems to have been lost on Mr Saatchi. Now he is off, and his friends have been telling us how all of the good business will go with him. That would be no compliment to the other 10,999 people who worked with him, but it may be so. Boardrooms, like graveyards, are full of indispensable people. If Mr Saatchi is one of them, investors will have to reassess him. They should rate him as if he were a mine: an exhaustible resource, to be exploited until the ore-body runs out or the roof falls in, and then abandoned. Per- haps they have. It is a long time since they hit pay-dirt at Saatchi & Saatchi.
Auld Laing Syne
THAT'S the way the cookie crumbles. The Conservatives must brace themselves to do without the backing of United Biscuits hitherto good for a six-figure contribution. The biscuit-bakers' fervour must have waned with the retirement of Sir Hector Laing, chairman for 18 years, now life pres- ident as Lord Laing of Dunphail, and a sturdy hustler for the party. A tycoon grum- bled to me that Lord Laing had just button- holed him in their club: 'He said to me: Do you know what I want? No, I said, Hector, I don't. He said: I want a cheque for £5,000 to the Conservative Party. Well, I said, Hector, why don't you write one? '
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