Sir Anthony takes drastic action

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The Independent Online
SIR Anthony Jacobs, whose open letter to Norman Lamont, the Chancellor, was published yesterday in the Independent and several other national newspapers, described the exercise as 'Keynesian pump priming designed to generate debate'.

The quarter-page advertisements cost the British School of Motoring's former chief pounds 25,000. But Sir Anthony, who sold BSM two years ago for pounds 40m, is not concerned by such minor details.

He chose a public platform to air his ideas on making all interest payments tax deductible because, he says, radical ideas, even if ministers like them, tend to be watered down by civil servants. 'That is the British way.'

Sir Anthony thinks the British way compares poorly with that of the Japanese, whose economy is in the same dire state and who are pouring pounds 43bn into efforts to get the economy moving.

Despite a long-standing connection with the Liberal Democrats, Sir Anthony insists he has had no input from any political party. 'I have not discussed my ideas with a single politician. If I had, they would be rejected out of hand,' he said.

Sir Anthony's largesse has considerably helped Liberal Democratic finances over the years. He has acted as a joint treasurer and economic adviser to the party.

His ideas have come out of discussions with industrialists, he insists. He points out that all interest was tax deductible in the UK until 1972 and adds he is only suggesting the move as a temporary measure, to be phased out as interest rates fall.

Sir Anthony sent his letter privately to Mr Lamont on Wednesday. There was no immediate response from the Treasury.

'This idea stands up to close scrutiny,' Sir Anthony said. He pointed out that he had no vested interest in its implementation and that it did not necessitate leaving the exchange rate mechanism or devaluing the pound.

'I am not a crank, although occasionally I go slightly off the edge,' he added. Sir Anthony admits he has not costed his idea, but hopes it would cost at least pounds 5bn. 'I am worried it will not cost enough.'

He said any short-term addition to the public sector borrowing requirement would be offset by increased tax receipts and lower payouts on unemployment benefits as the economy spluttered into life again.