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Capital Insight: The End Of Stealth

The End Of Stealth

By Sean Corrigan

The end of Stealth as we know it was announced last week.

No, the US is not going to send its bombers to scatter cluster bombs all over Iran with a full brass band accompaniment, but rather the Neuesarbeitspartei is beginning to run out of options with which to raise the necessary wherewithal to fund the spiralling costs of its foredoomed promises to improve public services and is thus beginning to think of overt, rather than its favoured 'stealth' tax, rises to plug the gap.

Minister-of-all-trades, Mr. Multiplicity Piet van der Hain, may have been swiftly slapped down by the First Citizen over his pronouncement that, 'those on very high incomes would be prepared to contribute more, provided we don't go back to the punitive rates of the past' - that 'more' being 50 and even 60% of income - but it has clearly resonated loudly among the redistributionists on the Labour backbenches, too.

The FT, for example, had no less than ex-Cabinet members Mandy Peterson and Steven 'More Sellers than' Byers expressing their support, while Robin Cook also issued a series of approving noises - though his peculiar style of delivery made it come out more like an imitation of school of Humpbacked whales on heat!

All this came in a week in which it was leaked by the Sunday broadsheets that literacy standards are to be adjusted down - yet again - in order to meet otherwise unachievable Politburo targets on education, in which hefty pay rises for GPs were sold to taxpayers as 'increased investment', and in which Scotsman revealed that we collectively showered largesse upon the nation's train operators to the tune of £1.32 billion, to run their services more poorly last year.

Just on that last, industry experts at Rail Business Intelligence estimate that, in the seven years since what has laughingly been called 'privatisation', the big train operators have received a total of £10.7bn from the public to run their services - and all this on top of the billions of pounds injected by the taxpayer into Railtrack and its successor Network Rail.

But, from taxpayer to South Eastern commuter. Industry Gruppenfuehrer Richard Bowker, the Strategic Rail Authority chief executive, said "Fares must keep pace with investment. There is universal agreement that investment is running at record levels. It is wrong for fares to keep falling."

Faced with all these disincentives, the Mail carried another outwardly depressing tale, reckoning the total cost of the endowment mortgage 'mis-selling' scandal (funny how no-one ever calls it a 'mis-buying scandal' !) at a cool £48 billion.

Citing joint results from its own survey and estimates by the Association of British Insurers, the paper reported that some seven million homeowners could be facing average shortfalls of £6,900, as a result of the drastically changed investment environment. The paper frets that 'nearly a half of homeowners facing shortfalls have made no provision to cover any outstanding debt once their policy matures' and noted the 'The Financial Services Authority and leading insurers are becoming increasingly concerned that so many homeowners have ignored the problem.' Of course, £6,900 is almost the same sum by which the value of an average house has appreciated so far this year, so perhaps the reason for this improvidence is none too hard to find - though that still does not mitigate the lesson that existing wealth is less than was supposed and that genuine saving is distinctly out of fashion. But, all of this can best be summed up by words from the closing chapter of one of the better known works of the writer, the anniversary of whose 100th birthday is fast approaching.

As that other Blair, Eric Arthur - better known by his pseudonym of George Orwell - put it, in Animal Farm:

'Somehow it seemed as though the farm had grown richer without making the animals themselves any richer-except, of course, for the pigs and the dogs.'

'Perhaps this was partly because there were so many pigs and so many dogs. It was not that these creatures did not work, after their fashion. There was, as Squealer was never tired of explaining, endless work in the supervision and organisation of the farm.'

'Much of this work was of a kind that the other animals were too ignorant to understand. For example, Squealer told them that the pigs had to expend enormous labours every day upon mysterious things called "files," "reports," "minutes," and "memoranda".'

'These were large sheets of paper which had to be closely covered with writing, and as soon as they were so covered, they were burnt in the furnace. This was of the highest importance for the welfare of the farm, Squealer said.'

'But still, neither pigs nor dogs produced any food by their own labour; and there were very many of them, and their appetites were always good.'

As for the others. There was nothing with which they could compare their present lives: they had nothing to go upon except Squealer's lists of figures, which invariably demonstrated that everything was getting better and better. '

Just remember that some taxpayers are also more equal than others!

- Sean Corrigan is a principal of Capital Insight ( and an adviser to the capital preservation-oriented Eidelweiss Fund (

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