Across the board, tax yields have been lower than they should have been for this stage of the recovery.This in turn may have been caused by the changing nature of the workplace. It is not just in the area of corporation tax and VAT – where the accountants have been working overtime to minimise returns – that the tax take is falling short of expectations. Just as this has been a recovery without the feelgood factor, for much the same reasons it has also been a recovery without the expected rise in tax yield. This is only in part due to the Treasury’s notoriously unreliable forecasting record. Nor is it wholly accounted for by the Government’s failure to deliver promised cuts in public spending. The villain is a much lower tax take than anticipated.Both the Treasury and Customs & Excise have begun inquiries into how they could have gone so badly awry.

The answer is likely to be that it wasn’t really their fault; the economy has changed so fundamentally that it doesn’t behave as it used to. Government figures later this week are expected to confirm that public borrowing last financial year was at least pounds 3bn higher than the Treasury forecast at the time of the last Budget and some pounds 11bn higher than predicted 18 months ago. As it is, the Government has chosen to knock the shares out as if they had fallen off the back of a lorry. Labour’s bluster won’t halt this one.Flexible labour makes for a feel-bad factorAt the Lille jobs summit earlier this month, ministers and officials went out of their way to extol the benefits of the flexible, deregulated labour market.

However, there is at least one aspect of Britain’s approach to the jobs market that Kenneth Clarke will not be boasting of to his European counterparts, and that is its tendency to deliver a lower tax take than the old “jobs-for-life” way of organising things. In the first couple of years, Railtrack will be reimbursed for almost all the penalties incurred, and they will not be fully phased in until after the end of the century.It was always inevitable that Railtrack would be priced to sell rather than to maximise revenue for the taxpayer. Bar giving this company away, the Government could scarcely have done more to ensure a successful issue.These share incentives are only part of the investment story. The regulator has also agreed that Railtrack can keep 75 per cent of property profits above those already taken into account in setting track access charges.

More important than both of these, the regulatory regime, setting track access charges at inflation minus 2 per cent from now on, is a good deal less onerous than might it might have been.Furthermore, the sting has been taken out of the performance regime which in theory should be forcing Railtrack to pay compensation for any mishaps that delay trains. What better way to whet the appetite of investors than to complain they are being offered outrageous dividends. Well done, Clare.Together with the pounds 30m interim next February, the dividend commitment will bring a handsome 12-month return of 11-12 per cent on the 190p part- paid shares And there is plenty more where that came from. Private investors get the first instalment at a discount to the institutional offer.

The result is that the total first-year return is approaching 20 per cent – tax free for those who use Peps – or about four times as much as from a building society.Furthermore, the second instalment is payable in a new tax year, allowing those who want to fill their boots – and their single company Peps – with Railtrack to use a full two years of allowances. But it certainly hasn’t done prospects for this most controversial of privatisations any harm.
On the contrary, it served to underline the generosity of the post-privatisation dividend policy, giving another kick to the smoothly orchestrated marketing campaign. Did SBC Warburg set a trap for Clare Short, with its little wheeze of paying a pounds 69m dividend out of last year’s Railtrack profits, earned while the company was in the public sector?

She described the initiative, confirmed in yesterday’s prospectus, as a “monstrous outrage” and who knows, from a moral perspective she may well be right. They voiced strong opposition to a new set of government inspectors, and some suggested using the national insurance inspectorate.. Some said a minimum wage would create a strong incentive to switch work to the “informal” economy.Many were concerned that a minimum wage would not simply set a floor to wages, but would be used to raise the incomes of the low-paid relative to the average over time.The employers also raised practical concerns, such as whether a lower training rate for young employees would be allowed, whether the introduction of a national minimum wage would be phased in and how it would be enforced.