You wouldn’t thank me for filling this column with arithmetic, but the way in which the government has sought to defend George Osborne’s proposed tax-relief cap for charity donations, and the way most broadcasters have tried to challenge it, has displayed woeful if not wilful ignorance of the tax maths involved. It’s as though ministers have been instructed by Downing Street on no account to consult the easy-to-follow section of the HMRC website headed ‘Giving to Charity: Individuals’ lest it deter them from parroting the line about the iniquity of the super-rich minimising their tax rates by exploiting reliefs. Likewise, it’s as though the leftists who populate BBC newsrooms, inherently hostile to charity and philanthropy, have never personally encountered a Gift Aid form — the most common route for tax-efficient giving — with its certification that ‘I will pay an amount of Income Tax and/or Capital Gains Tax in this tax year that is at least equal to the amount of tax the charity will reclaim on this gift.’
As George Bull of the accountants Baker Tilly says, ‘It is a myth that a person can reduce their income tax liability to nothing by gifting to charity.’ For a 40 or 50 per cent taxpayer to reduce his effective rate even close to the 20 per cent basic rate through charity relief, he would have to give away an enormous slice of his income. No one in his right mind would do that purely for the tax effect. As Tony Blair observed in a breezy Newsnight interview, ‘Yuh give it away, y’haven’t got it any more, yuh’ve lost it.’
What’s more, in my own experience of fundraising for a variety of causes, I cannot think of a single instance when I sensed that a donor had any significant motive other than wanting to help, and feeling able to do so. Of course tax relief encourages people to donate a bit more than they might have given without it, and there is satisfaction in giving to your chosen charity a cheque of which part might otherwise have been mis-spent by government. There may be also be a small and entirely forgivable element of vanity, in wanting to see your name in the programme or on the side of the building. But to have conjured up, as the government has accidentally done, an association between giving, tax-dodging and greed is howling nonsense, wholly against the interests of the civil society which Conservatives are supposed to treasure. Osborne should reverse himself on this one — swiftly, completely and with a very plain apology.
Reignition
The good news from the north-east is the ceremonial relighting of the blast furnace at Redcar on Teesside. This mighty industrial icon — the biggest in Europe when it was built by British Steel in 1979, and until the Germans built a bigger one — went cold two years ago when its then owner, Tata of India, declared it beyond salvation after failing to find customers for its output of steel slab. Tata it was that bought Corus in 2007, Corus being what survived of the merger of privatised British Steel with its Dutch rival Hoogovens. One way or another, steelmaking in this country had long seemed set on a path of terminal shrinkage, overwhelmed by forces of globalisation.
If reignition was impossible even in the hands of Tata, the shrewd conglomerate behind the resurgence of Jaguar Land Rover, surely no one could make it happen. But along comes another exotic owner, Sahaviriya Steel Industries, which bought the Redcar plant last year and will ship slab from there to rolling mills in Thailand, whence it will be sold in sheet form to auto and white-goods makers across Asia — securing some 1,800 Teesside jobs. And in an announcement timed to coincide with Redcar’s news, Tata says it plans to invest £800 million over the next five years in its ex-Corus business in South Wales, beginning by rebuilding one of its four blast furnaces at Port Talbot. In another striking reversal of history, Tata is considering mining its own coal beneath the site to make coke for the furnaces.
A new industrial revolution? Not quite, but a reminder that globalisation is also our ally and a justification for David Cameron — as he himself responded when accused of swanning round the Far East while his ministers were defending policy disasters at home — to put himself ‘on the front line of the sales pitch’ for inward investment.
Still sinking
What with Titanic still sinking night after night on our television screens, my thoughts turn to the shipping business. Two recent obituaries offer a vivid contrast. Sir James Cayzer (who left us in February, aged 80) was a scion of the dynasty that owned Clan Line and Union Castle, which merged as British & Commonwealth Shipping; but the Cayzers got out of shipping altogether after the industry was transformed by containerisation, while Sir James charmingly ‘devoted much of his fortune to having a lovely time’, so the Telegraph said. Meanwhile in Denmark, the curiously named Maersk Mc-Kinney Møller inherited the Maersk line from his forefathers and built it relentlessly into the world’s largest container-shipping operation with a huge tanker fleet alongside, retaining his grip on the company until his death aged 98 last week.
How could the Danes — otherwise famous only for Lego and low-welfare bacon — create a world-beating modern shipping enterprise when the British, with such an inheritance of sea power, could not? Our shipowners joint-ventured in the container trade but largely accepted decline as inevitable and put their money in land and investments instead, thereby knocking out most of our shipyards (the Danes still have those too) and the steelworks that supplied them. Perhaps we should blame the fluid but pervasive British class system, which took the competitive edge off our shipping men by turning them into bon vivant baronets like Sir James and lords like two of his cousins and the Inchcapes of P&O. The same can be said for many of our brewers, and much of the City of London. Is newfound nobility an antidote to business acumen?
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