9 JUNE 2001, Page 30

Freedom on Sunday eels get used to skinning, but it's a long worm that has no turning


It has been a long week, but we are guaranteed a happy ending, of a sort. We can look forward to freedom on Sunday. All this year we have been working for the Chancellor, who has helped himself to every penny we earn, but on 10 June, or so the Adam Smith Institute calculates, we can start to work for ourselves — that is, until next January, when the whole process resumes. We get used to it. Eels, as Churchill said, get used to skinning. All the same, there is nothing inherently likely about the idea that the Chancellor — any chancellor — can know better than we do how to spend more than two fifths of our incomes. Professor Tim Congdon observes that, until the last half-century, no peacetime government would have suggested it. Even Keynes, after advising on six years of wartime finance, thought that a quarter of our incomes was as much as we could be expected to surrender. Today's government is in no state to fight or finance any wars, spending less of the national income on defence than at any time since the Wars of the Roses, but can still get through the money. Health and education head the list, and all three major parties fought the general election on a policy of spending more and more on them. There has been no such economic unanimity since the 1992 election, when they all put their shirts on the European exchange-rate mechanism — a thoroughbred loser if ever there was one, and scratched five months later. Tim Congdon works out that if we used vouchers to pay for these services, and could top up our payments from our own pockets, we could start working for ourselves on 1 April. Even so, I fear that, when the next general election is called, Tax Freedom Day will be heading for July.

Discount for cash

TAXES are even higher in Europe, which explains why so many of its citizens take trouble not to pay them, which explains why they keep their money under the bed. It has always been like that. Geneva got its banks because it was as far as French merchants could stagger across the border, toting sacks of money, with the Sun King's tax collectors on their heels. Even today, a normal transaction in Italy can involve enough banknotes to choke a rhinoceros. Now, though, all these hidden notes are being flushed out into the open. This winter they are due to be exchanged for the new euro notes, and after that they will no longer be legal tender. They could still be paid into the banks, but that is the sure way to get questions asked — about money-laundering, for instance. Safer to get rid of them now. You could buy a Mercedes for cash, or, better still, have your house painted. Builders understand these things. Alternatively, you could trade your notes for Swiss francs or dollar bills, but you would have to sell at a discount. No wonder the euro and its constituent currencies are having a terrible time.

Lumping it

SOME of Europe's merchants and peasants are still so old-fashioned that, instead of banknotes, they hoard gold. They put up with the lumps in their mattresses and still sleep easily. Gold has done well for them. If, when the euro was launched, they had used their francs or marks or lire to buy themselves gold coins or bars, they would now be showing a profit of some 25 per cent. They know, too, that no finance minister or central banker can call in those notes or bars, or decree that they must all be changed for some new kind of paper money. A banknote is a promise to pay, and is thus a liability of the bank or treasury which issues it, but gold, as William Clarke says in The Golden Thread (Sweet and Maxwell, £10.95). is no one's liability. Its value does not depend on any promise. A month of listening to political promises should have taught us that they are a depreciating currency. The gold hoarders knew that already.

Leaden promise

STEPHEN BYERS offers us the leaden promise that the Department of Trade and Industry will be revamped. Not again. Revamps come and go there as often as ministers, and the DTI notoriously houses Whitehall's most rapidly revolving chair. At one time and another it has been the Department for Enterprise, complete with a hobbit-script logo, or the department for intervening before breakfast, or the sponsoring ministry for the brass button industry, or an economic power-base to rival the Treasury, which always sees it off. I liked Nicholas Ridley's style — defined by Gordon Brown as an empty in-tray, an empty out-tray and a full ash-tray — but that is not the Byers style. He even tried to find some dynamic figure from industry to come in as permanent secretary and run the department, but the pay was modest and I hear that there was no mad rush to work for Mr Byers.

Scrap and build

I HAVE good news for the hard-pressed directors of Marks & Spencer. They could make £500 million with minimal effort. They are housed in M&S's 4,000-seater headquarters in Baker Street, and they need only move out and have the old monster knocked down. The property-minded sleuths of Estates Gazette say that M&S pays a peppercorn rent for this prime site, on a lease which has a century to run, and that there is room on it for 750,000 sq ft of new offices or flats. Even after the cost of rebuilding, M&S, so the sleuths say, would have change out of its half-billion. The only danger would be that the directors might blow the money on a new head office. They have their eye on a tailor-made 2,000-seater at Paddington Basin, but I still think that something second-hand near the North Circular Road would serve to concentrate their minds.


MOBILE telephones need fixed masts, which are sprouting everywhere, so if you don't want one in your backyard, or if you would just like to know how the private citizen can fend off the big battalions, turn to Barry Bracewell-Milnes's Is A Mast A Must? (Book Guild, £12.95). Long years as an economist dealing with business and government have taught him the techniques: courteous, persistent, embarrassing. I liked his letter to British Telecom: 'I am writing because BT is always one of the most difficult firms to reach by telephone.'