Any other business

Why David Cameron is best placed to win the crucial Ikea vote

Plus: the homesick non-doms of HSBC; and some ways to reform inheritance tax

2 May 2015

9:00 AM

2 May 2015

9:00 AM

If Ikea were a constituency, it would be a three-way marginal. That was my thought one morning last week as I walked a mile and a half round the Batley branch of the great Swedish retailer behind two keen shoppers (one wearing a pedometer) whom I had driven there as a birthday treat. Here are middle-aged parents buying nursery stuff for pregnant daughters, engaged couples fitting out first flats, Polish families bickering over bargain kitchenware, Muslim housewives chattering behind niqab facemasks, and even what I thought might be a transsexual under a blond beehive.

There’s a Scandinavian sense of equality: no fast track through the labyrinth, no exclusive luxury floor. The customers all seem to belong to that floating-voter category now labelled ‘hard-working families’. They all want to own and improve their homes and make a better life for their children — and all must have a steady breadwinner or they wouldn’t be filling their trolleys.

All are evidence of the continuing turnaround of the economy, in which average earnings are at last rising at 2 per cent above (zero) inflation, and growth in household disposable income has returned to pre-crash levels. But if the store is not crowded as it might be on high days and holidays, that’s because some consumers are still paying down debt rather than racking it up anew, which surely can’t be a bad thing.

The rate of growth took a surprising dip to 0.3 per cent in the first quarter, from 0.6 per cent in late 2014. The annual Rich List tells us that the wealthy have doubled their net worth while the rest of us are only fractionally better off than we were before the financial crisis. That’s two news items the Tories could do without after such a lacklustre campaign. But it doesn’t change the bigger story. The recovery is a work in progress. As George Osborne said, ‘the future of our economy is on the ballot paper’ — and for all the problems he hasn’t solved, and some he’s made worse, the aspirations of Ikea’s voters will be best served by keeping him and David Cameron in Downing Street.

Back to Hong Kong?

When the Hongkong & Shanghai Banking Corporation — as it was then — tried to buy Royal Bank of Scotland in 1981, its chairman Michael (now Lord) Sandberg was treated with cold hauteur by Governor Richardson of the Bank of England, and the bid in due course was ruled out by the Monopolies Commission. When the Midland Bank was in trouble in 1992, the men from Hong Kong were made welcome as rescue bidders, but under the condition that Midland should continue to be run from London. In the nervous phase ahead of the handover of Hong Kong to China in 1997, it suited the new owners — their origin now disguised in the acronym HSBC — to transfer their domicile to the safety of the UK.

But they remained Hong Kong men at heart, and the prospect of commuting to Canary Wharf from London’s suburbia was no substitute for a mansion on the Peak, a yacht in the harbour and a day’s racing at Sha Tin. Some consolation, perhaps, that as career-long expatriates they could claim non-dom status, and they worked for a bank that could provide top-class tax-sheltering services in Geneva. But Hong Kong tax rates were rock-bottom anyway — and over there, even after the territory joined the People’s Republic, neither the politicians nor the media kicked off about what top executives were paid.

So if you were chief executive Stuart Gulliver and his cohort, you might be thinking every morning as your limo noses into the Limehouse tunnel: why don’t we just go back east? Why stay here, paying Osborne’s punitive ‘banking levy’ and taking all this flak, when only 20 per cent of our global workforce is in the UK and we’ve got to ‘ring-fence’ our branch network into a separate company by 2019 anyway. Maybe we’ll rename it Midland and sell some or all of it to someone else who’s prepared to put up with the hassle, while we make a bigger bundle in Asia and the Middle East. All we need is a convincing excuse — and luckily we’re about to have a choice: a Miliband government that’s even more hostile to big banks than the coalition has been, or a Cameron government that calls an in-out EU referendum, with all the ‘business uncertainty’ that implies. It will be a deep blow to London’s status as the pre-eminent global financial centre, but — you might be thinking, as you catch sight of your drab tower-block HQ, so much less glamorous than HSBC’s Norman Foster masterpiece in Hong Kong — they’re practically inviting us to pack up and leave.

A penalty on aspiration

My item on inheritance tax last week generated lively responses. If Osborne is back next week, here are some ideas for his post-election budget that go beyond vote-grabbing towards the principle that it’s a good thing for those with spare cash to be able to give it away during their lifetime to those, in the family or outside, who they feel deserve or need it, without creating potential tax liabilities.

Why not radically increase the £3,000 annual individual gift allowance that has been frozen since 1981, and the marriage gift allowances that have been frozen since 1984? And why not create a specific allowance that enables the cash-rich to contribute to the school fees of their grandchildren, or other people’s children, without it being counted in their eventual IHT calculation: what could be a better way of distributing wealth down the generations?

The greatest unfairness of IHT (if you accept the principle of it at all) is that, as one reader says, ‘it’s a voluntary tax for the very rich’ who can avoid it by making exempt transfers out of surplus income, or buying swaths of agricultural land, or deploying offshore devices concocted by expensive advisers. But for ‘hard-working families’ it remains a distressing penalty on aspiration. So, George, if we’ve re-elected you, let’s see some action. And if I’m addressing Ed Balls: just don’t make IHT worse, and we’ll all hope to outlive your tenure.


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  • Sean Grainger

    Of course there’s Hodge offshore trust socialism Miliband deed of variation inheritance socialism Bob Crow council house to go with £96,000 salary socialism and Frank Dobson (who he?) with his three-bedroom mansion flat on the cheap from London Borough of Camden socialism. But they all reserve the right to consider everybody else’s money theirs to redistribute to the feckless and university students of less than average intelligence.

    • SalmondFishing

      You forgot to mention Scotland which will single-handedly deliver the change you require.

    • Yvonne Stuart-Hargreaves

      Plus the Jeremy Corbyn ,least expenses of any MP , I get the bus home,never waivered in my principles socialism.

  • Hermine Funkington-Rumpelstilz

    I noticed the IKEA lampshades in Call me Dave’s kitchen. It made me change mine.

  • Precambrian

    “and all must have a steady breadwinner or they wouldn’t be filling their trolleys”

    Or they have a newly acquired credit card / equity release loan (better described as a elderly-fleecing loan) with which they fund this supposed “growth” in our economy by using a debt bubble (and sooner or later the music will stop and the parcel cease to be passed).

    No small part of which is funded by the HSBC, which is happy to profiteer in the short-term whilst Rome burns.

    The breaking down of the wall between lending and investment banks was the undoing of the economy (which Labour gladly joined in).

    • post_x_it

      “The breaking down of the wall between lending and investment banks was the undoing of the economy (which Labour gladly joined in).”
      No it wasn’t. This seems to have become accepted wisdom now, but where is the evidence?
      Many of the most egregious failures during the financial crisis were not universal banks. Northern Rock was pure retail. Lehmans and Bear Stearns were pure investment banks. AIG was (is) an insurance company. Etc.
      Yes, RBS is a universal bank, but it didn’t fail for that reason. It was pushed over the edge because it over-leveraged its balance sheet when it tried to swallow ABN AMRO.
      Several of the biggest universal banks had a pretty good crisis and came out ok the other hand, as did their customers. HSBC, JP Morgan and Santander spring to mind. They were arguably stronger as a result of diversification.

      • Precambrian

        You misunderstand.

        The banks which failed did so because they were gambling in an economy that was crashed by themselves and the other banks (in many cases funding their gambling with savers money). Buyiing up MBSs and CDOs, often with saver’s money, supporting the existence and continuation of sub-primes.

        The whole sector was destabilised by Big Bang and the ability for big banks to buy out the small stock firms and then profiteer to their hearts content.

        A key part of the solution is divide lending from investment, undo big bang, and reintroduce stronger controls on credit/loans etc.

  • Jingleballix

    Deeply ironic how communist China is providing the capitalist West with a sobering example of economic theory………supply and demand, light touch (perhaps excessively) regulation, strict punishment for corruption, reward for diligence and dedication.

    The West is crippled by incompetent charlatans who feel angry and/or guilty for corporate success, and extol and ‘money for nothing welfarism and an abundance of non-jobs.

    Chasing away big business and the people who work in it is crass; Cameron and Osborne are arrogant and foolish………Miliband just a moron (propped up by a dangerous, hateful Marxist).

    FFS the picture has already been painted……..France…….do none of the British politicians not know how many productive french people have left France in the past 10-odd years……Hong Kong, Bangkok, Singapore, Sydney are suffering biblical plagues of Frogs.

    Socialism doesn’t work……….nor does Socialism-lite.

    • Kennybhoy

      “… are suffering biblical plagues of Frogs.”

      Lol! 🙂

      You forgot London though.

  • post_x_it

    “…your drab tower-block HQ, so much less glamorous than HSBC’s Norman Foster masterpiece in Hong Kong”
    The drab tower block in Canary Wharf was also designed by Foster. By that point he was in his boring phase where he thought that every building should be plain grey.

  • StrategyKing

    You lot still don’t get it do you? Any complaining on behalf of the banks is an automatic vote loser.