Andrew Tyrie is probably the smartest MP outside the Cabinet. Here he is: “The further policymakers lose sight of simplicity, the more taxpayers are forced to spend money on the only people capable of making sense of their affairs.” Mr Tyrie is the Tory chairman of the Treasury select committee, and he has written to the chancellor savaging the changes to inheritance tax.

Like Gordon Brown before him, George Osborne cannot resist the temptation to fiddle. IHT used to be a relatively straightforward tax, paid by the affluent middle classes who trusted their relatives less than they trusted the taxman. The rich, of course, never paid it. Now that domestic property has been elevated to the status of a British national religion, the rules are being changed to treat houses as little financial temples.

Avoid dying before 2017, and your beneficiaries will be rewarded with an extra £175,000 individual transferable tax-free allowance on the family home. This will allow a couple to pass on a £1m house tax-free, but be careful lest your castle becomes too valuable, or the relief disappears. Be careful, too, to leave it to a “direct descendant.” This is a bonus to those wanting to live with their siblings in their late parents’ semi in an agreeable outer London borough. To the rest of us it’s just another tax-driven distortion to an increasingly disfunctional property market.

Rather than fiddle with IHT, the chancellor could cut it to, say, 10 per cent and make everybody pay it when they died. He might even find the yield from the tax going up as the rich ditch their expensive avoidance schemes. Instead, as Mr Tyrie says, Mr Osborne’s changes are “a mess of complexity and uncertainty.” Suddenly, you can see why he is not a member of this administration.

Heathrow: the government decides

The government has made up its mind on London’s next runway. The predictable decision, is to decide not to decide. Just as it has been for many decades now, the problem is too difficult, even for a prime minister who will not face another general election. Further studies are promised, as they always will be.

Some had expected Heathrow Hub, the imaginative proposal to extend a runway west to create a new one, to be thrown out, in order to produce the illusion of progress by narrowing the choices down to two. The hub proposal does at least allow David Cameron to argue that he is sticking to his pledge of no third runway at Heathrow, although the idea of two planes on the “same” runway spooks many people.

Meanwhile HS2, that white elephant on rails, is going ahead, bludgeoning through all opposition, and regardless of expense. The return on this project is so poor that the private sector will not risk a bean. Heathrow, on the other hand, is such an attractive asset that even a few landing slots are considered good enough collateral for Virgin Atlantic to raise £220m in long-term debt at “very attractive” rates. Go figure.

That’s more than enough from her

‘Ping! It’s a cheery Christmas message from Katherine. That’s Katherine Garrett-Cox, the Empress of Dundee, telling us shareholders that 2015 has been an eventful year for Alliance Trust, including the appointment of new board members. Ms Garrett-Cox cannot bring herself to welcome the arrival of Chris Samuel and Karl Sternberg, probably because she and her fellow directors fought hard to keep them off until they realised that the shareholders disagreed.

Since then Karin Forsake has forsaken the chair, and Ms Garrett-Cox herself has slipped from chief executive to the same title at Alliance’s principal subsidiary. It’s not obvious why or how this token move will improve the poor performance of the trust’s portfolio, but in between the “real challenges” she can see “moments of genuine positivity” even if others cannot.

She concludes that Alliance is “transforming into a company that will be ideally positioned to deliver for its shareholders for the long term.” Perhaps. But after seven unsuccessful years as Queen Bee, the delivery might be better managed without her. Time to say Goodnight, Katherine.

 

This is my FT column from Saturday

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