Any other business

Why stamp duty doesn’t add up

9 October 2021

9:00 AM

9 October 2021

9:00 AM

‘Blame it all on business’ was the Tory strategists’ answer to petrol queues and the risk of a no-turkey Christmas that threatened to distract the party-conference faithful from adulation of the Prime Minister. As spin, it might have been shocking if it wasn’t so familiar. But as an explanation of the supply crisis, the idea that business has been deaf to years of warnings that it could no longer rely on immigrant labour is hogwash, rivalled only by the proposition that spiralling wages will lead us to a fairer society — rather than contributing to a bout of uncontrolled inflation in which higher pay actually buys fewer goods because all prices are rising.

The answer to all this lies in one word, productivity, in which the UK’s record is lamentably weak. Productive companies employ more robots and computers but fewer people — for whom higher wages are then justifiable. Yet Tory ministers have, until recently, celebrated the news that UK firms were creating more and more low-wage jobs, many taken up by immigrants, because an expanding workforce and a low unemployment rate looked so good in the headlines. Meanwhile, substandard education and training failed to produce a native generation capable of taking over from the skilled foreign-born workers who have left and won’t come back. It’s government, not business, that has been ‘drunk on cheap labour’ all this time.

Don’t blame Cherie

So far I haven’t been named in the Pandora Papers — the cache of almost 12 million leaked documents currently being trawled by investigative journalists — or at least not for avoiding stamp duty. I paid a stinging amount of it when I bought a London flat that counted as an ‘additional dwelling’; then, rather to my surprise, received a very prompt refund of the 3 per cent surcharge element when I sold my old house and the flat became my sole UK property.

What used to be a simple 1 per cent charge to pay for Land Registry bureaucracy now rises to 12 or 15 per cent on properties above £1.5 million, stamp duty having been turned into a cash cow by George Osborne with an eye on foreigners buying London homes.


It generates £12 billion a year which the Treasury needs, but the punitive levy clearly encourages avoidance through offshore companies — and it’s hard to be censorious about the Blairs using that device, when it was offered, to sidestep £312,000 of stamp duty on a Marylebone house that became Cherie’s office, by buying the British Virgin Islands company in which it was already owned by the family of a Bahraini minister.

As Cherie has said, this transaction was ‘nothing unusual’ — and that’s the problem. Impose a tax-grab that the rich can easily avoid and they’ll do just that, while the urban middle classes who need family-sized homes but can’t afford fancy advisers will grudgingly pay it. Economists left and right argue that stamp duty ought to be abolished, but I doubt the Chancellor will listen to them, this year or next.

Shining model

Oxford Nanopore, the DNA sequencing venture whose shares jumped 40 per cent on their first day of trading, is the most significant UK biotech flotation this year, not least because it launched on the London stock exchange rather than Nasdaq in New York, which is frequently preferred for its higher valuations and cannier investors. The debut makes multimillionaires of co–founders Gordon Sanghera and Spike Wilcocks, 16 years after their business was spun out of a university laboratory — making it a shining role model of what British science can achieve.

But the float has also brought chuntering from objectors to the exclusion of private investors, all the shares on offer having initially been allocated to institutions: ‘Disgraceful’, says Cliff Weight of the campaign group ShareSoc. That attunes with calls for ‘democratisation’ of markets, but the counter–argument is that well-targeted institutional investors are more likely to become the stable long-term shareholders a capital-hungry company needs, whereas today’s private punters, who often confuse investing with gambling, are more likely to seek quick profits and make the shares more volatile.

Given the complexity of Nanopore’s work, it might also be argued that small investors would be better advised to hold this sort of share through a fund managed by experts. Sadly, investors in Neil Woodford’s Equity Income fund would have been big winners that way had the fund not collapsed in 2019. Its 6 per cent stake in Nanopore that’s now worth well north of £200 million was sold last year by the administrator, Link Fund Solutions, for just £21 million.

Bush banking days

It’s exactly 50 years since the demise of Barclays Bank (Dominion, Colonial and Overseas), an institution whose very name would surely have to be cancelled today — but which once flew the flag for ‘global Britain’ far more effectively than any gone-tomorrow Tory trade minister. Established in 1925 by the merger of the Colonial Bank with the Anglo-Egyptian Bank and the National Bank of South Africa, ‘DCO’ nurtured a breed of self-styled ‘bush bankers’ who were, as one of their chiefs told me, ‘damned good at chucking a safe in the back of truck somewhere… and opening for business that day 500 miles across a desert’. Sometimes they got shot at too.

But they represented qualities of British probity and grit that the world admired — and they maintained a quasi-regimental esprit de corps of a kind not found in the inhuman corporations of today. In October 1971, the parent Barclays bought out DCO’s minority shareholders, embarked on a new international strategy and effectively brought bush banking to an end. But surviving pensioners gathered last week to toast the memory — and I was pleased to hear their venue was London’s Union Jack Club.

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