Leading Article: Lilley ends happy hour for remnants of an era

CITY dealers have already enjoyed that intoxicating feel- good effect when the economy rebounds, but few in the Square Mile will be raising their glasses to Peter Lilley this week. The Secretary of State for Social Security has strayed from his normal range of targets - scrounging foreigners, fecund inner-city dwellers and the like - to take aim at a group of Conservative sympathisers at the higher end of the earnings curve.

Mr Lilley has abolished the loophole under which city bonuses paid in fine wines or diamonds did not attract a liability to National Insurance contributions. It is, of course, a sensible move on the grounds of equity, fairness and the interests of Her Majesty's Exchequer. It has been estimated that about pounds 50m every year was lost because city firms were able to escape the normal 10.2 per cent employer's National Insurance contribution on bonus payments. All this is fair enough. Tax systems need to be credible in order to be effective. It was part of the Conservative tax dogma propounded by successive Howe and Lawson budgets that lower marginal rates should be accompanied by a simplified structure and fewer opportunities to avoid payment. However, the spirit of the age has also changed since the carefree Eighties, when conspicuous consumption was the order of the day. Lavish bonuses, fast cars and expensive vintages exemplified a style that some ministers may now find uncongenial. One may readily imagine the humourless smile playing upon Mr Lilley's features as he put his name to this edict.

From Clapham to Kensington, people will be drinking the consequences of his rigour at dinner parties down the remaining years of the decade, as Chilean Chardonnay replaces the Puligny-Montrachet and the last Chateau Haut-Brion gives way to a sensible Cabernet Sauvignon from Bulgaria. At least the diamonds were for ever.