Untold riches

When a fund manager suggests that the government is set to make billions and billions and billions out of the bank bailout we should resist the temptation to shout hallelujah. It really is too good to be true.

No-one has deluded himself more over the Northern Rock affair than Jon Wood, whose SRM Global hedge fund became the biggest shareholder in the Newcastle-based lender when it invested £50 million for an 11.5% stake in September 2007.

That was after the bank's funding difficulties had come to light but Wood took the gamble that Rock would survive and he was getting the shares on the cheap. When you take a gamble you have to face the fact that you might be wrong and so he was.

However, Wood has chosen to ignore the fact that Rock’s problems were created by the unsustainable lending policies of its board and chooses instead to blame Alistair Darling for rescuing what he could from the wreckage.

It is tempting to hope that Wood will be proved right and the taxpayers will make a profit rather than continue to shovel cash into a black hole. The more realistic among us are hoping that the government can get out of Northern Rock with a loss of a mere £1 billion.

Somehow I fear that Wood’s forecast makes the economic forecasts in Darling’s Budget look believable in comparison.

Darling buds of April

A little sense of proportion is required in assessing Alistair Darling’s Budget, however difficult that may be when the figures involved are so mid-boggling.

The Conservative press has inevitably had a field day, with the 50p income tax band and the taxes on pension contributions the obvious targets, but one or two claims do not stand up to scrutiny.

For example, the Daily Telegraph spoke of Tony Blair’s despair over the 50p tax rate. Have they asked him? No. Unnamed friends are quoted, neither of them saying he is in despair. One actually suggests that Blair thought 45p would have been all right. A close ally says the move is a disaster but does not claim to be speaking for Blair.

The usually more reasoned Sunday Times got in on the act: We’re fleeing high-tax Britain, say City tycoons. The intro to the story doesn’t say that. Just two entrepreneurs (two people seem to make a page lead these days) are quoted and neither say they are leaving, they are just thinking about it.

One is considering a move to Switzerland and the other to Monaco, where I hope they enjoy the high cost of living.

The 50p tax band will undoubtedly encourage people who can run their UK businesses abroad to do so and Darling will surely find that his tax does not raise anything like as much as he hopes. However, I do wish the press would stick to facts rather than try to make the stories fit the headlines that they want to write.

Now the Telegraph, which reads more like the Daily Mail every day, is banging on about how people who save for their pensions are going to be penalised. Again, the facts cited do not quite fit the story. The Telegraph has discovered a hidden tax in the Budget under which highly paid people who will retire on two thirds of their final salary are to be taxed on part of the company contribution to their pension.

This is not the same thing as being taxed because you saved for your pension. This is being taxed because you maintained a highly favourable pension arrangement for yourself while scrapping it for your workforce.

Tiscali teaser

Chris Dunstone knows more than most people how to run a business which is why his Carphone Warehouse has been so successful.

One reason for that success, just to digress a moment, is that he recognises the value of a brand name. Carphone Warehouse has long ceased to be just about carphones or even just mobile phones and he operates shops, not warehouses, but who cares if you are doing well and the name is well known. Insurance group Aviva, which is busy destroying the much loved and respected brand Norwich Union at considerable expense, should take note.

Dunstone is once again considering buying the UK arm of Tiscali. Having refused to overpay a year ago, he finds that the increasingly desperate Italian telecoms provider is likely to let the UK arm go for half of what he was originally prepared to pay, which tells you a lot about Tiscali.

Tiscali first came to prominence in this country when it took over lineone.com, the free UK email service, in the vain hope that subscribers would switch to its paid-for service. But why would they when the likes of hotmail were providing a free service, and one that has proved less likely to break down?

If the lineone free service worked well, why pay for an alternative? If it didn’t, would you have the confidence to buy a service from the same provider?

Tiscali bought Pipex, a broadband service that was expanding aggressively by including 24-hour free phone calls for those who paid for broadband. The first thing it did was to scrap this arrangement, thus damaging the business it was so keen to buy.

Coal round

Time is circular and I look forward to the day when sacks of coal are once again delivered on the back of a horse drawn cart and tipped into coal sheds so we can stoke up those glorious smog-creating blazes in the hearth.

In the meantime we must be content with the notion that the well known property company UK Coal is going back to coal mining.

UK Coal has long been using its property profits to prop up its ailing and declining coal mining and I had regarded this as a dead company in a dead industry. The circle is moving round again. Revenue is up because coal prices are up and £55 million is to be invested out of £100 million that is being paid up front for long-term contracts with electricity generators.

With the government giving the go-ahead for four new coal-fired power stations it seems that coal is here to stay.