Here's how to budget for a free economy on the last prom of the knights

Spectator, The, Jul 5, 1997 by Fildes, Christopher

It was a good budget, I thought. I liked the cut of one-third in the duty on wine, and the new tax allowances, designed to help the 'sandwich' class, as it was expressively called. There was still room to spend more on health, education, housing and so on, without any threat to the public finances, which remain rock solid. The forecast is for another year of strong growth and high investment, but this is no thanks to any fiscal engineering in the budget, or dramatic tax reforms. Taxes are needed for paying the bills, but beyond that, the best thing the government could do for a growing economy is to get out of its way. The economy has, indeed, been officially rated as the freest in the world.... It is, as you may imagine, Hong Kong's, and will roll on from the old administration to the new with no call for a reformist July package. Top tax rate: 20 per cent. Basic tax rate: 15 per cent. Capital gains tax, value added tax: never heard of them. Government's slice of the economy: less than half ours. Standard of living: higher. Modest disclaimer from Sir Donald Tsang, honoured in Hong Kong's last prom of the knights: `Market forces, not the annual budget, determine our economic performance.' Resemblance to any budget now on offer here: coincidental.

Never too late to . . .

THAT'S the trouble with grand projects. You take your eye off the ball for a moment and zip goes 170 million. Last month I was urging Chris Smith to call off his plan for celebrating the millennium on the contaminated site of Greenwich gasworks, while he could still find someone else to blame. It was then costed (if that is the word) at 580 million but as I explained to him, these numbers are elastic. Now they have mysteriously stretched again to 7 million. All this before the chaps in the decollete trousers have even been hired. Just wait till they start putting in for treble overtime - you do want the job done for this particular millennium, don't you, squire? That Tony Blair says he wants to bring the kids, and you wouldn't want them to be disappointed. In this cause the sports promoter Mark McCormack has been hired to make his way around the nation's boardrooms, seeking sponsors. He will do well to outhustle Michael Heseltine, who wasn't even on commission - I can think of boards that succumbed to his persuasions and would pay to be let out. Indeed, for a suitable commission I would pass their names on.

. stop backing a loser

NO DOUBT we shall be told that the decision has been taken and that is too late to turn back. We must have been told that by now about the Eurofighter. This project has been gestating for as long as the last two world wars put together, and may just be ready in time for the next: that is, if it can fly. The Germans seem to doubt this, which is worrying, since we have put ourselves down for L16 billion worth at today's prices. What price a plane that does fly? For which war? Yes, I know, this is a grand co-operative Euro-project, with advanced technology, providing work for many people who might be better off if they were paid to go away. As I say, it is never too late to call time.

U Who

I OBSERVE that Clare Short is a boondoggle fancier. She is paying up - well, we are - for Unido. U Who? The United Nations Industrial Development Organisation is one of the rarer and choicer specimens in the extensive UN range of boondoggles. It makes a matching set with Unesco, where she popped up this week to hoist the Union Jack, explaining how nice it felt to come back home. Home for Unesco is a Paris palace, but Unido hangs out in Vienna, where it is handily located for the industrially undeveloped world. Like the Anti-Luncheon League to which Clovis Sangrail's aunt belonged, it has friends and relations who claim that it is doing such a lot of good work in a quiet way. You might wonder what the whole global process of industrial development owes to it and how we would all get along without it. That question, in fact, occurred to Lynda Chalker, who decided to test it out by cancelling Britain's subscription. Clare Short has promptly uncancelled it. There will be relief in the sachertorte salons and wiener schnitzel parlours which depend for their trade on Unido's expense accounts and tax-free salaries, for the Anti-Luncheon League would find no takers in a boondoggle.

Don't argue with us

WHAT constitutes bad behaviour in the City? Arguing with the government, of course. That goes double for a shiny new Labour government with steam up. So the Legal & General argues with Helen Liddell at the Treasury and finds itself posted on her list of shame. In theory this is about pension mis-selling, but in practice it seems to be about showing who is boss. The same point was made about Alice in Wonderland's mother:

I am the Dean and this is Mrs Liddell: She is the first and I the second fiddle.

When Harold Wilson's government was new and shiny, Jocelyn Hambro off-handedly called him the worst prime minister since Lord North. This brought down on Hambros Bank the threat of a Treasury investigation, announced by the Chief Secretary in the House of Commons, with special reference to Mr Hambro's salary. That is what Humpty Dumpty would have called a nice knock-down argument.