Sir Alexander Belloc-Brayne returns from Southern Africa and delivers the last word on the Budget.
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March 2007
Good to be back in the old Green and Pleasant after our arduous fact-finding mission in Cape Town. Lady Belloc-Brayne is already fleshing out her travel diaries in preparation for a series of guides to Southern African countries starting with Zimbabwe on Two Dollars a Day, based on the testimonies of exiles currently on South African soil. For my part, I am much influenced by the Western Cape Regional Finance Minister Lynne Brown, whose advocacy of a Passenger Movement Tax is a shot in the arm for the local tourist industry and provides timely support for David Cameron’s “Greener Skies” philosophy. I would normally have forwarded the particulars to Whitehall, but for Her Ladyship’s observation that everything that moves in our country is taxed already.
Speaking of which – three cheers for HM Inland Revenue & Customs and the Ordnance Survey lot for combining their expertise in the cause of the accurate assessment of property taxes. Word is that the new “shadow agency” will employ satellite technology capable of magnifying a garden gnome 1,250 times and amending the corresponding Council Tax demand at the speed of light. Her Ladyship has drawn up plans for revisiting the “simple life”, which seems to entail demolishing the conservatory and the garage and encouraging the erection of “inclusive housing” sited so as to obscure any “nice view” that can be assigned a taxable value. Might be simpler to emigrate.
While on the subject of lifestyle change, I should add that I am a bit disorientated by the contents of the new national inflation basket. Satellite navigation, ring tones, LCD monitors and pro-biotic comestibles…? Good Lord! Whither the faithful Brussels sprout, video cassette and cathode ray television set ? Lady Belloc-Brayne says that modern inflation is increasingly a problem of the young since very little of what our generation consumes is recognised let alone acknowledged. I rather feel the chill draught of social exclusion, though there are still credit card charges and mortgage arrangement fees to reassure us that we have not been entirely abandoned.
I must say that I do not share the establishment appraisal of Gordon Brown’s “last budget”. Nor do I hold him solely culpable for the rash of stealth taxation on his watch. We are all guilty to a greater or lesser extent. I cite the recent High Court judgment that lap-dancers are liable for VAT on their performance and “sit-down” fees (though not apparently on “lie-down” charges). Her Ladyship is elated at the prospect of tuppence off the personal and standard corporation tax rates in 2008, a higher rate threshold of £43,000 (also from 2008) and an Inheritance Tax nil-rate band at £350,000 by 2010. Tell it not in Gath, but I sense that Mr Brown may well have drafted the Finance Acts for 2007 through to 2010 on the quiet, sparing his successor the chore of writing his own budgets.
The way I see it, the “gap year” allows for a snap general election before the “simplifying” abolition of the 10p personal band and the higher small-companies tax rate become apparent to the petit-bourgeoisie. In the meantime, Mr Brown will have earned the gratitude of our captains of industry, who will be content to underwrite the Labour Party’s cash flow without the expectation of honours. More Machiavelli than Stalin if you ask me, save perhaps for the fiscal purge of the middle-income kulaks. And while on the subject of party funding, let me commend Sir Hayden Phillips’s proposal of a 50p per vote commission rate. I dare say that Prodigal Life will be happy to provide sales training and support, in exchange for a few regulatory concessions.
Lady Belloc-Brayne ranks Mr Brown among the great reforming Chancellors of our time, citing the reversal of his own fiscal innovations (such as the 10p tax band) in favour of the simplicity of a tax credit system that still baffles the Inland Revenue. The way I see it, his true monument is the 1997 Budget with its overhaul of the Advance Corporation Tax (ACT) regime – which (with hindsight) was his finest hour. No blame attaches to him for the subsequent near-terminal damage to the pension system, acting as he was on the “best advice” of civil servants – a concept that appears to have a different meaning in the private sector. I would have sought clarification of the principle from the Financial Services Authority but for reports that it has breached its own Treating Customers Fairly rules by posting dodgy information on its website. I wonder how much it will be fined.
Anyway, rather than apportioning blame, let us give thanks unto the Second Lord of the Treasury for addressing the totally unforeseeable side-effects of his ACT reform with an £8bn bail-out of the Financial Assistance Scheme that turns out to have a present value of £1.9bn. For this relief much thanks… Her Ladyship has put this apparent anomaly into perspective by pointing out that rewards always appear smaller when viewed at a distance in time. The way I see it, benefit indexation and the tax-free lump sum must lie somewhere beyond the vanishing point.
Word is that Chancellor-in-waiting, Mr Ed Balls is very much in the unbroken Brown mould, in which case I predict another “simplifying” tax reform in the general area of private equity “shareholder loans” as his first act of creative destruction upon entering No.11. I have written to Mr Brown pointing out the risk of a hasty appointment and suggesting that he chair a competition for the post of his Apprentice, with candidates undertaking taxing tasks like running a whelk stall for a day. Strictly entre nous, my money would be on Culture Secretary Tessa Jowell, who has presided over the expansion of the Olympics budget from £2.37bn to £9.3bn in just two years – with only five to go. Mind you, she would face a stiff challenge from Margaret Beckett, whose administration of the DEFRA “dynamic hybrid” system for distributing European farm subsidies ran up £500m in EU fines, quick-fix costs and interest on late payments. Of course, there remains the possibility that Mr Brown will still be Chancellor after the Labour leadership election. G-d help us all then!
Incidentally, Lady Belloc-Brayne maintains that the Olympics exercise is nothing more than an urban-regeneration project disguised as a sixteen-day circus to divert the taxpayers of London. I, on the other hand, am rather persuaded by Ms Jowell’s argument that the procurement of the Olympics has galvanised our youngsters, who even now are surely abandoning their iPods, Playstations and hallucinogenic potions to run faster, leap longer and vault higher. Well, it worked for the Hitler Youth… Lady Belloc-Brayne feels, however, that our Spartan young are unlikely to get within sniffing distance of a live event in 2012 and will follow the Games from their living rooms and the public houses as they have always done.
Can’t sign off without some reflections on the 50th anniversary of the Treaty of Rome. I am intrigued by suggestions that the signatories appended their names to a blank document – which seems to have evolved subsequently into a blank cheque. Lady Belloc-Brayne says that I should write to Frau Angela Merkel recommending this strategy for a revived Constitutional Treaty. Meanwhile, Her Ladyship has added the original 1957 text to our faux library. The way I see it, that makes it the only authentic work on the shelves. Ha, ha!
Must rush. The Belloc-Brayne Model Portfolio is in need of attention after the turbulence on global markets during my absence – brought on by the retiring Dr Greenspan (who refuses to go quietly) and $1,200bn worth of mortgage arrears in the United States. Strictly entre nous, I sometimes regret the introduction of the sub-prime voter to the concept of the property-owning democracy. Really must go. Nurse is due any minute now on a “confidential matter”. I suspect that it has something to do with the unwinding of her personal carry trade with the Cape Town Waterfront emporium. I sense the onset of a period of industrial inaction.
