CITY AND SUBURBAN
How Kenneth Clarke can solve his problems and please everyone except the French
CHRISTOPHER FILDES
Knneth Clarke has sensibly set off for Washington by way of Jamaica. Anything to get away from his post-bag. With his Budget now eight weeks away, it is crammed with suggestions which would make life harder for him: grants for this, allowances for that, a swift kick for the house market and, of course, tax cuts. This year's joker is the idea of a windfall tax on the electricity companies. He should know that a retrospective levy on the rich — even or especially the undeserving rich — is a precedent that a Conservative Chancellor will live to regret. I have a better idea, which will give widespread pleasure, solve all sorts of problems for him and not hurt anyone except the French. In his bag he will find the annual complaint about the whisky duty — leading British exporter, penalised in its home market, and so on. Further down he will come across a study (by Keith Boyfield) from the Adam Smith Institute, which shows what these duties are costing him. Duties are so much lower in France, and whisky so much cheaper that it pays to go and get it. In Calais, at least 30 supermarkets and cash-and-carry shops are specifically geared to the cross-Channel drinks trade. They include that splendid Gallic name, J. Sainsbury Bieres Vins et Spiritueux, which sold 100,000 bottles of spirits in its first year. Some shoppers bring bottles home to drink, some bring cases home to sell. Vans shuttle to and fro. Not a penny of the proceeds comes in to Mr Clarke. He could announce a Customs crackdown (go on, scare me) or ask the French to help him (just imagine) or cut his duties to their levels (when he already needs to borrow £600 million a week.) Or he can let Scotland compete.
Make a Scotchman happy
THE MEANS are at his hands. All he needs to do is to schedule the distilleries as freeports. The arithmetic is so simple as to be seductive. When we now buy a bottle of Scotch (as Keith Boyfield points out) two- thirds of our money goes straight to the Chancellor: out of an £11 bottle, £1.64 rep- resents Value Added Tax and £5.77 the excise duty, leaving £3.59 for packaging, marketing, distribution, retail margins and, somewhere at the bottom of the glass, the whisky. A distillery freeport would escape this counter-productive top hamper of taxa- tion. Instead it would contribute £1 — say — a bottle to the Kenneth Clarke Good Cause Fund. This year's good cause might be the public sector borrowing requirement. Every sale diverted from Calais to the Highlands would represent a net gain to the revenue. Every visitor diverted would be a net gain to the economy — most of all in the Highlands and Islands, where the distilleries are often the biggest employers. The trade gap, which has started widening again, would narrow. Mr Clarke might even make his party popu- lar in Scotland. Stranger things have hap- pened. For myself, I look forward to a fact- finding journey in the steps of Dr Johnson, who, caught in the rain outside Oban, called for a gill of whisky, saying, 'Come, let me know what it is that makes a Scotchman happy.' Now Mr Clarke has the answer.
Brothers and Cousins
I THOUGHT there was something familiar about Tony Blair. Now he is promising us the white heat of the technological revolution ((v) H. Wilson 1964.) All he needs to do next is to is to make his friend Bill Morris Secre- tary of State for Technology, in the seat once filled by Frank Cousins who, like Mr Morris, was the general secretary of the Transport & General Workers Union. The C.P. Snow slot for his side-kick might be harder to fill — Melvyn Bragg, perhaps? As for his shadow Chancellor, he has given post-neo-classical endogenous growth theory a rest for this year and concentrated on not frightening the mar- kets. What I find remarkable about the redis- covered revolution is not its white heat, but how well it has got on without interference from governments. The Internet (no, don't ask me) seems to have sprung up by itself, and no one suggests that it needs more resources and more public funding. No doubt Mr Morris will, but if it keeps him and his union happy, it will be cheap. Labour may be New but some things in politics are always constant.
Electric shock treatment
I AM getting bored with these billion- pound bids. A day does not go by without Someweb or Cardboard or Rutland Elec- tric finding itself on the receiving end of another giant cheque. Who would have thought that the local electricity boards, of all penny-plain companies, would prove to be such prizes? The truth is that the gold was in those rich seams all the time, but the previous owners and their managers felt no urge to look for it. It was only when the ownership changed hands that anybody looked to see what these companies could do without. They were stuffed with capital, bulging with capacity and thickly populated. Doing without has worked the transforma- tion. How much more — how many bil- lions' worth — could the public sector prove to do without?
Limited liability
MY congratulations to Toshihide Iguchi, the New York bond trader who has only lost £700 million for Daiwa Bank and kept the news from his employers for 11 years. Most Japanese banks have lost more as a matter of routine, many of them without leaving home. The Sybil of Wall Street (who must remain veiled) tells me that they now think it clever to borrow yen overnight from the Bank of Japan and invest in 30- year dollar bonds — a win or bust bet if ever there was one. Guess which.
Dry fly
IN THE prehistoric age before the Saatchi Brothers, British Airways had an agency which came up with a novel slo- gan: 'All airlines are the same — only people make them different.' This was so plainly true, and so perfectly summed up the trouble with marketing an airline, that the agency was fired. Since then admen have tried to invent differences for other airlines — gracious Belgian service, to Russia with love via Aeroflot, fly Dan Air if you dare, and so on. At last Saudia's admen have cracked it. 'You'll arrive feel- ing ready for business,' they tell us, 'all our cocktails are alcohol free.' In other words: Fly Saudia, the airline where you can't even get a drink.
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