Bespoke – Grant Thornton

Bespoke
FOR PRIVATE CLIENTS
ISSUE 1 SUMMER 2009
200 tractors
and counting
The pleasures of
unlikely hobbies
Celebration wine
Sir Alex Ferguson
recalls aprevious
league title and
the ’61 Petrus
that got away
The great
crash of 1720
How the South
Sea Bubble
made fools of
princes and
paupers alike
Inheritance
tax
Nasty, brutish
and easy to
mitigate
National Treasure
Philip Mould on selecting art
that will keep its value and bring you joy
>
>

OF INTEREST
2
BUDGET 2009
High net worth individuals
were heavily targeted in this
year’s Budget with higher
taxes, reduced personal
allowances and restricted
pension relief. Francesca
Lagerberg and Lindsey Wicks
of Grant Thornton investigate
the details:
■ CHANCELLOR ALISTAIR
Darling exceeded expectations by
introducing a‘super-tax’ rate of 50%
for earnings over £150,000, to come into
effect from 6April 2010. This was both
higher and sooner than predicted, and,
incorporating national insurance
contribution increases scheduled from
April 2011, the tax rate will be 51.5% for
employees on income over £150,000.
■ APRILNEXTYEAR will also
see atapering away of personal allowances
for anyone with asix-figure income.
At an income of £112,950 you will have
no personal allowance (currently £6,475).
There are likely to be PAYE operational
problems for many and to add to the
confusion, those with incomes falling
between £100,000 and £112,950 will pay
an effective tax rate of 60%. Those with
income of £110,000 could theoretically
see their total tax bill rising by 5% in three
years. In the case of earners of £180,000,
the increase could be nearly 9%!
■ IN TWOYEARS’ time the
amount of tax relief available for pension
savings will be down from 50% to 20%
for those earning between £150,000 and
£180,000. Incomes above this will only
qualify for relief at the basic rate. There
is an anti-forestalling provision in place
to prevent pension alterations before
then, atax charge of 20% of ‘additional’
contributions in excess of the special
annual allowance of £20,000. Regular
51.5%
The tax rate on income over
£150,000 for employees as of
April 2011
ongoing pension savings in place before
22 April 2009 are unaffected.
■ ALSO FROM 6APRIL 2010
there will be three rates of tax on dividend
income. Where income falls within the
basic rate band, the 10% tax credit will
extinguish any liability, as before. The
equivalent rate for 40% taxpayers remains
at 32.5% but anew rate of 42.5% will be
introduced where income will be taxed at
the new super-tax rate of 50%. Trusts of
course are not left alone. From the same
date the additional rate of tax for trusts
will also rise to 50%, with anew higher
trust rate of tax on dividends of 42.5%.
■ THEONLYREALGOOD news
for savers is that the ISA limit is raised
from £7,200 to £10,200; however,those
under 50 will have to wait until 2010 for
this benefit.
CREDIT
CRUNCH
HITS DIVORCE
‘The financial carve-up that
follows adivorce settlement
will be at the forefront of a
couple’s mind.’
AGRANTTHORNTON survey
among 70 leading matrimonial lawyers
reveals that nearly half expect the credit
crunch to result in fewer divorces reaching
the courts. While money trouble is a
well-documented cause of tension between
spouses, it could be that some couples stay
together because of their financial situation.
Robert Kerr,partner at Grant Thornton’s
Forensic and Investigation Services
practice, says: ‘The financial carve-up
that follows adivorce settlement will be
at the forefront of acouple’smind.’
He cites the prominent case of the
hedge fund manager Brian Myerson, who
agreed to give his wife a£9.5 million
divorce settlement only to see his personal
wealth suddenly fall dramatically.Many
other individuals of high net worth could
find themselves similarly vulnerable.
Clean break settlements (also known as
‘lump sum financial agreements’) are likely
to decline, with acorresponding increase
in maintenance-based divorces, according
to 65% of lawyers. This is not surprising,
says Kerr,given that ‘individuals’ assets
will be falling in value in the current
economic climate, thus reducing the pot
of wealth for the parties to share’.
52% of responding lawyers
predict that there will be an
increase in pre- and post-nuptial
agreements due to the
economic slowdown.
‘Pre-nups have become increasingly
more popular as people are looking to
secure the wealth that they have
accumulated prior to their marriage,’ says
Kerr.‘Therefore, it is no surprise in an
economic climate where individuals’
income levels will be fluctuating that they
would like more guarantees over their
finances. The recent case of German
heiress Katrin Radmacher taking her
husband Nicolas Granatino to court to
uphold apre-nuptial agreement so that
she could protect her wealth is afurther
example of the uncertainty around
pre-nups and the call by many to
make them legally binding.’
MORE NEW THINKING
For more research and insights
from our experts go to
www.grant-thornton.co.uk/thinking
www.grant-thornton.co.uk

welcome
This is the first issue of Bespoke,the magazine produced by
Grant Thornton for our private clients. It follows on from our previous
publications to highlight issues we hope will be of interest to you, to
introduce afew of our clients and showcase some of our thinking.
In this issue we offer our insights on tax havens, personal finance
and the Budget, divorce, family-run businesses, and some pertinent
historical episodes that cast illuminating light on current events in
financial markets.
Inheritance has been aripe topic for literature for hundreds of
years, and it is fascinating to discover that Charles Dickens based
his novel Bleak House on areal contemporary case; the story is
coupled with some up-to-date advice on how to best look after
your family’s future.
Our main interview this issue is with the inimitable Philip Mould,
who runs aleading London gallery and is ahighly regarded
specialist in British portraiture. Is it possible that more traditional
artworks are currently holding their value better than experimental
pieces? We hope you enjoy the conversation and find it of use.
COVER TERRY JONES BY STUART PEARSON WRIGHT ©PHILIP MOULD LTD
contents
2 Of interest
4 First person
8 Family Limited Partnerships
9 Devil’s advocate
10 National treasure
4
14 South Sea Bubble
18 Bleak house
22 Need to know
24 Viewpoint
26 Sir Alex Ferguson
14
26

FIRST PERSON
PASSIONS
4
RESTORER OF
THE FLYING ‘B’
In these days of mass-produced,
computer-guided cars there are few that
can stir the blood the way avintage
open-top Bentley can. As Richard Ford
has found, once driven, forever smitten
INTERVIEW GLYN BROWN PHOTOGRAPHY JAMES PFAFF

‘Each is different.
Some are more
powerful, some
are smoother –
but Inever pick
favourites’
RICHARD FORD is going to have to
live with the fact that he’s named after
the wrong breed of car; quartered in the
garage of his Warwickshire home are six
gleaming vintage Bentleys, five deep
green and one blue, which he cherishes
like the thoroughbred racers they are.
‘I’ve been interested in Bentleys since
Iwas achild but could never find the
time or money for one. Then 13 years
ago [he’s 63] Ifinally bought my first.’
Richard says he’s not an emotional
man. Still, he repairs Bentleys as ahobby
–and spending 7,000 hours (‘with abit
of help from friends’) on one vehicle
sounds like alabour of love to me.
True Bentleys are those made between
1919 and 1931, when Rolls-Royce took
over the firm. The cars have apoignant,
Brideshead Revisited feel, long-bodied,
with muscular rising fenders. Do they
have personalities? ‘Each is different.
Some are more powerful, some are
smoother –but Inever pick favourites.’
These cars were made to chew up the
open road. Richard unleashes his on
international tours which the Bentley
Drivers Club organises. So far, he’s taken
them to the States, Australia, New
Zealand and South Africa. Do they like
the terrain? ‘Well, you have to be careful
driving through hills and mountains, keep
watching the temperature gauge. They
often run better in the rain. But since they
don’t have hoods, you tend to get wet.’
Said so jovially, this is clearly no deterrent.
And how easy is the driving?
‘Technically, it’s exceptionally tricky.
Without synchromesh gears, you have to
get the timing right. But though it’sabig,
heavy car, once called the fastest racing
lorry in the world, it isn’tphysically hard.’
Richard’s wife Jenny might disagree. On
last year’s tour of New Zealand, with her
husband in the passenger seat following
an operation, she drove the 3,000-mile
round trip. ‘They’re very physical cars,’
she laughs. ‘By the end of the day, you
definitely feel it in your shoulders.’
The motor’s often overlooked racing
history is most impressive. Walter Owen
(WO) Bentley was 31 when, in 1919, he
fired up the first of what would be a
legendary marque, in amews off Baker
Street. Prototypes went straight into
competition, winning at Brooklands,
Indianapolis and Le Mans. Richard has
taken his turn at racing the cars, and
putting them through their paces is
encouraged. (Says aDrivers Club
commentator, keeping one unused is
like keeping agreyhound in abox.)
An exquisite piece of engineering, the
parts were made to be in motion.
‘That’s itexactly,’ says Richard.
‘I mean, you drive acar like this with
care and concern, you always have a
certain amount of worry that everything
stays in tune. You’re listening to the
engine.’ His brow uncreases. ‘But
that long-stroke Bentley engine –
what asweet, fantastic sound.’

FIRST PERSON
PASSIONS
THE COLLECTOR
For sheer diversity, Bill Kemball’s collection of
agricultural machinery is hard to beat. When you add
up the number of different machines –200 tractors
alone –it’s clear the word ‘hobby’ falls pitifully short
INTERVIEW GLYN BROWN PHOTOGRAPHY JAMES PFAFF
6
BILL KEMBALL, 70, comes across as
something of aRenaissance man. His
primary income comes from warehousing
and haulage firm Debach Enterprises.
His other major concern is the 1,650
acres of Wantisdean Hall Farm, deep in
the Suffolk countryside. ‘That’s what
Ireally am: afarmer, and afarmer’s son.’
And aspects of both come together in
Bill’s overwhelming love of vintage
agricultural vehicles.
‘Mechanical engineering has been my
interest since Iwas aboy. Istarted
collecting old tractors after Ileft school.
Now Ihave quite afew.’ For years, Bill
was single-handedly able to put on a
Power of the Past display at Wantisdean,
featuring vintage tractors, steam engines,
gyrotillers, alarge, steam-driven
reciprocating saw and –cue strains of
Tubular Bells –heavy horses, the
magnificent Suffolk drays.
Having been to events like this, Ican
vouch for the sheer hair-raising thrill of
these machines, so big they seem alive.
‘Yes, as alive as the horses. They’re
massive things. Some of the steam
engines go back to the 1800s; many
of the tractors are from the First World
War.’And offhand, you’d have, say?
‘The collection of tractors alone, in
excess of 200. And really quite anumber
of steam engines. Then there’s the
vintage commercial vehicles, delivery
vans and things, the oldest built in 1911.
Solid rubber tyres, some of them. Plus a
collection of old army vehicles, as well
as Model TFords. Are you familiar with
those? I’ve got seven.’ Good lord.
Where are so many vehicles stabled?
For the most part, in aircraft hangars;
another string to Bill’sbow is former US
Air Force base Bentwaters, now known as
Bentwaters Parks. To this day, the site has
airfields, control towers, decontamination
showers, dog kennels and nuclear
weapons stores. It gets used for film and
TV –‘TopGear, Dog Borstal,stuff like
that’ –but, being pretty secure, it can also
handle storage of valuable vintage
machinery.‘We also have recording
sessions in what’sknown as the Hush
House, where they tested aircraft engines.
And there’savegetable production group
I’m involved with, and another company
putting in banks of computers. Then
we’ve got fireworks in old bomb stores,
vintage wine, classic cars…’
Despite the diversification, Bill
still seems to care above all about just
two things. In September, Wantisdean
will hold aWartime Weekend. ‘It’ll be
astep back in time, aweekend in the
middle of 1943, with Land Army, Home
Guard, making and mending, all that.’
The biggest parts of that weekend,
however, asfar as Bill is concerned, will
be preparation of farm-grown food, and
the astonishing, rattling equipment that
once helped produce it. ‘My heart is and
always will be in agriculture –the family
farm.’ Ashrug. ‘And all my life, my
hobby has been restoring and caring for
beautiful old machinery.’
www.grant-thornton.co.uk

PEOPLE AND PLACES
‘Mechanical
engineering has
been my interest
since Iwas aboy.
Istarted collecting
old tractors after
Ileft school’
www.grant-thornton.co.uk

INSIDE STORY
Silver bullet
or rusty nail?
8
HOW
THEY ARE
WORK
Donors contribute assets to a
Family Limited Partnership (FLP)
in return for apartnership interest,
which they then give away to family
members. There must be at least one
‘general partner’ (GP), who has
unlimited liability and manages the
FLP. The GP may have asmall
capital interest and income
entitlement. Typically, the GP will
be aprivate company owned by the
contributor of the funds, with
directors who would otherwise take
on the role of trustees in anormal
trust arrangement. There can be any
number of limited partners, who
take the majority interest in income
and capital. When passing assets to
family members the type of entity
used has an impact on the tax and
reporting requirements of the gift.
Family Limited Partnerships have been much talked
about since 2006 when the trust rules were significantly
altered. But are they all they’re cracked up to be?
THEY
ANY
GOOD?
The main advantage of using an FLP
is that there is no Inheritance Tax
(IHT) charge on the transfer of the
assets into the partnership. In
addition, there are none of the IHT
exit and ten-yearly charges that are
now levied on most trusts.
The gifting of partnership
interests is treated as adisposal
of the underlying assets for
capital gains tax (CGT) purposes.
While an FLP structure has more
restricted deferral reliefs available
to it than atrust, it is nevertheless
possible to defer aCGT liability
in respect of business assets held
by the partnership.
OUR
VIEW
‘Although FLPs have their place,
they can be limited in application,
and may only be suitable for
particular cases. However, at
Grant Thornton, we have devised a
number of ways of adapting the
basic premise. We can allow for
wider applications and greater tax
advantages by combining key
principles of some of our other
capital gains tax and inheritance tax
planning ideas. This way, the FLP
may be auseful tax planning tool
and aviable alternative to trusts.’
Andrew Westhead, TaxPartner,
Grant Thornton
www.grant-thornton.co.uk

DEVIL’S ADVOCATE
NO PLACE TO HIDE
There is much talk of anew global era of transparency in
banking, but does it really amount to anything? And what,
if any, are the consequences for individuals in the UK?
ILLUSTRATION PETER JAMES FIELD
he April 2009 meeting of the
developed nations (the G20
summit) looked in advance as
though it was going to produce
little but hot air. Inthe end the various parties
involved managed to find anumber of subjects
on which they could all agree, including amove
against so-called ‘tax havens’. The G20 final
statement noted that it would ‘take action against
non-cooperative jurisdictions, including tax
havens. We stand ready to deploy sanctions to
protect our public finances and financial systems.
The era of banking secrecy is over’.
So what does this mean for high net worth
individuals in the UK with offshore accounts? For
many the answer is ‘not much’; they will already
be disclosing all that they are required to under UK
law. However, for those who have enjoyed banking
privacy, the rules of engagement are changing.
The first step is working out what qualifies
as a‘tax haven’. There is no formal definition.
The Organisation for Economic Co-operation and
Development (OECD) believes atax haven will
have no or low taxation, protection of financial
information (secrecy) and alack of transparency or
exchange of information with other jurisdictions.
Pressure from the OECD has led to a‘white list’ of
40 countries which have substantially implemented
its tax standard of information exchange and
transparency. There are two ‘grey lists’ of countries
which have committed to the standard but have not
yet substantially implemented it. There are, then,
four countries on the blacklist: Costa Rica,
Malaysia, Philippines and Uruguay, although all
four are now stating that they want to take steps
to take themselves on to the ‘grey list’.
The G20 summit has tasked the OECD with
pushing hard on the issue of tax havens and to
report back in November 2009 at ameeting of the
G20 finance ministers. Whether this will result in
any concrete proposals remains to be seen. But
what does appear to be happening is that effective
PAUL ROBERTS
Partner,Head of Tax
Investigations,
Grant Thornton
behind-the-scenes negotiation is bringing country
after country in line with the OECD standard.
Closer to home, the last few months have seen a
number of jurisdictions entering into negotiations
to increase the transfer of tax information.
Liechtenstein has begun discussions with the UK
with aview to anew agreement that will include
the ability to access information about UK residents
that have invested money in Liechtenstein without
declaring the resultant income to the UK authorities.
Switzerland has announced it will no longer use
banking secrecy as areason not to disclose
information to foreign jurisdictions about persons
who deposit money in Switzerland.
Arange of countries such as Jersey have entered
into TaxInformation Exchange Agreements (TIEA)
with the UK. The global financial crisis has meant
that no one wants to be left as the ‘bad boy’ of
the tax world.
For those in the UK there will be aNew
Disclosure Opportunity in the autumn. This will
be another chance for those who have offshore
accounts whichshouldhavebeendisclosed on UK
tax returns to come forward and face acapped
penalty, the details of which are still to be
announced. Anyone concerned about these issues
should contact their Grant Thornton representative.
The global financial crisis has meant
that no onewants to be left as
the ‘bad boy’ of the tax world
www.grant-thornton.co.uk

10
National
treasure

FINE ART
Art has much to offer the investor, but it can be tricky to navigate.
Renowned art expert Philip Mould provides guidance on the riches of
English portraiture, and overleaf shows examples of what to look for
WORDS LISA FREEDMAN PHOTOGRAPHY BRIJESH PATEL
IN ANOTHER AGE Philip Mould might have
been aprivate detective. He has the same cool
English reticence, the same sharp eye, the same
instinctive appreciation for when something is
‘not quite right’. Fortunately for those of us less
interested in dastardly deeds and more concerned
with finding attractive bodies to furnish our
library, Mould decided to confine his sleuthing
to the world of English portraiture.
Mould, who appears regularly as an expert
on the BBC’s Antiques Roadshow, runs an
internationally renowned gallery in London’s
Mayfair, where you’ll find museum-quality
likenesses of five centuries of the rich and famous.
And, if you’re trying to build up acollection or
track down aportrait by an artist such as Sir Joshua
Reynolds or Sir Peter Lely, you couldn’t find a
better place to start.
Mould himself began honing his art detection
skills early in life. (‘When Iwas 13 Icollected
shoe buckles; they were cheap and Icould conquer
the field.’) But it was only after studying art
history at university and joining his older
brother in the antiques business that the field
he hunted in became portraiture.
His first major discovery was atiny painting
by an unknown artist of the young Prince Arthur,
elder brother of King Henry VIII. The portrait
had in fact been correctly catalogued by Sotheby’s,
but what the experts at the international auction
house had failed to realise was that this was the
only likeness in existence of the short-lived heir
to the English throne.
Hardly surprising, then, that Mould’s motto
is: ‘Fortune favours awell-prepared mind.’
His boy-scout thoroughness, combined with
an encyclopaedic knowledge of many artists
(‘identifying signature stroke’), has helped him
unmask ahost of extraordinary works –often
in the unlikeliest places.
‘Five years ago Ibought an Ipswich-period
Gainsborough for $200 on eBay,’ he says
casually. ‘The whole body had been painted
brown but the face, even in adigital image,
was clearly Gainsborough.’
Many of his clients would be delighted
if he could perform similar miracles for them.
But although cheap-as-chips Gainsboroughs
will always be in short supply, if you’re looking
for aspecific period or artist, Mould is happy
to work to order and can usually track down a
significant work by awell-known painter within
amatter of months.
‘Some of the greatest old masters were
remarkably prolific,’ says Mould. ‘Gainsborough,
for example, painted 200 to 300 paintings ayear.
And VanDyck, who worked with astudio,
completed amajor work aweek. Alarge number
of these paintings left the UK in the late 19th and
early 20th century, but they can still be found.’
Mould’s business has grown alongside the recent
fashion for the ownership of large country homes.
His advice to new collectors is concise: ‘The key
things to bear in mind are: authorship, beauty,
historical importance and condition.’
The growth areas he is seeing at the moment
are 17th-century miniatures, early 20th-century
portraits and works from the Tudor period.
‘Tudor portraiture has agraphic quality, which
works unusually well in acontemporary setting,’
says Mould.
Whichever period you’re interested in, however,
you can feel confident that the best portraiture
will hold its value remarkably well. ‘It’sthe tortoise
to the contemporary-art hare,’ says Mould.
‘Good-quality historic portraits have seen asteady
annual rise of about five per cent. They never
experienced the enormous rises of modern art,
but they haven’t seen the drops, either.’
Philip Mould Gallery is at 29 Dover Street,
W1S 4NA. www.philipmould.com
Sleuth: The Amazing Quest for Lost Art
Treasures by Philip Mould is published
by HarperCollins

AN EXPERT’S GUIDE TO ENGLISH PORTRAITS…
Henry VIII, school of Holbein
Ann Davis, by JM Wright
12
TUDOR
Henry VIII, school of Holbein
This handsome portrait of Henry VIII was
painted either shortly before or after his
death by afollower of Holbein. ‘Henry’s
image is one of the first truly defining
images of kingship,’ says Mould. ‘With his
richly embellished clothing and stately
display of jewels, Henry isthe quintessential
monarch.’ Portraits such as these became
widespread during the late 16th century,
when the owners of Elizabethan country
houses, needing to furnish their newly
built ‘long galleries’, began to hang
portraits of kings and queens and other
contemporary celebrities.
Names to watch for: Hans Holbein,
Guillim Scrotts and Hans Eworth.
Prices from £5,000 to £30 million.
LATE 17TH CENTURY
Ann Davis, by JM Wright
This charming portrait by John Michael
Wright demonstrates the sharp shift in
portrait style which took place during
the reign of Charles II. Rather than the
stiff, formal poses of the preceding century,
here we see amuch more relaxed and
naturalistic representation of female beauty.
While the sitter’s arms and drapery
are reminiscent of classical antiquity, her
tumbling hair and revealing décolletage
are typical of the rather louche style of
the Restoration court. The face itself is
painted with vivid clarity.
Another growing area of investor interest
from this period is portrait miniatures.
Remarkable for their intense, jewel-like
quality and detailed realism, miniatures
were invented in the 16th century and
remained popular in marriage negotiations
and as keepsakes.
Names to watch for: In portraits,
Sir Peter Lely, Gerard Soest and Mary
Beale; in miniatures, Nicholas Hilliard,
Richard Cosway and Samuel Cooper.
Prices from £15,000 to £1 million
for aportrait; £2,500 to £500,000 for
aminiature.
18TH CENTURY
The Hon John Tufton, by
Sir Joshua Reynolds
Joshua Reynolds is undoubtedly one of
the greatest names in English portraiture,
atowering figure who, with his rival
Gainsborough, dominated the 18th century.
Reynolds spent several years in Italy
studying the style and technique of the old
masters to create a‘grand style’, which
married classical allusion with the demands
of face painting. The first president of the
Royal Academy, Reynolds exhibited large
portraits treated in ahistorical manner.

FINE ART
The Hon John Tufton,
by Sir Joshua Reynolds
Terry Jones, by Stuart Pearson Wright
Lady Diana Cooper, byAmbrose McEvoy
BRIJESH PATEL/© PHILIP MOULD LTD
During his long life he painted as many as
3,000 portraits, including almost every man
and woman of note. Gainsborough, who
was perhaps greater at catching alikeness
and who allowed his sitters to wear their
own fashionable clothes, was equally prolific.
Names to look for: Sir Joshua Reynolds,
Sir Thomas Gainsborough, Sir Thomas
Lawrence. Prices from £20,000 to £3 million.
EARLY 20TH CENTURY
Lady Diana Cooper, by
Ambrose McEvoy
At the turn of the 20th century, British
portrait painting began to react against the
restrictive standards and conventions of the
Royal Academy and looked to France and
the French Impressionists for astyle that
concentrated on the effects of light and
colour on living objects. Early 20th-century
English portraiture is very much agrowth
area and prices remain relatively accessible;
as Mould points out, you can still pick up
an époque-defining image for as little as
£10,000. This attractive, impressionistic
work by Ambrose McEvoy, acontemporary
at the Slade of Augustus John and Walter
Sickert, is thought to be of the famed society
beauty Lady Diana Cooper.
Names to look for: William Orpen,
Augustus John, Duncan Grant. Prices
from £10-50,000.
CONTEMPORARY
PORTRAITURE
Terry Jones, by Stuart Pearson Wright
For investors, rather than pleasure
purchasers, buying contemporary portraiture
is the most problematic area. ‘If you’re
dealing with art inthe past, there is an
empirical understanding of historical value,’
says Mould. ‘But contemporary art is much
more speculative.’ Occasionally, however,
he feels he can predict with confidence
when an artist will endure. ‘Stuart Pearson
Wright is original, incisive in his
characterisation, and his painting is intense
and arresting,’ he adds. ‘I know technical
brilliance, and Ifeel strongly this will last.’
Pearson Wright has painted some of today’s
leading figures, including JK Rowling, the
Duke of Edinburgh and John Hurt. His work
hangs in The National Portrait Gallery.
Names to look for: Susannah Fiennes,
Brendan Kelly, Lucian Freud. Prices from
under £1,500 to more than £1 million.

14
Bubble
trouble
It was the mother of all get-rich-quick schemes: the South Sea Bubble. During the spring
and summer of 1720 it seemed the whole country was swept up in afever: to become
wealthy –very wealthy indeed –for wondrously little effort. Astory with afamiliar ring,
and perhaps some lessons for investors three hundred years later
WORDS GAYTHORNE SILVESTER
www.grant-thornton.co.uk

INVESTMENT
King George Ibecame the governor of the fledgling
South Sea Company in 1718, providing credibility and
aboost to the shares. His mistresses, the countess of
Darlington and Duchess of Kendall, were heavily involved
and suffered harsh criticism when the bubble burst
THE BUBBLE ITSELF
In 1711 agroup of merchants had
formed the South Sea Company and
were granted exclusive trading rights
in Spanish South America. At that
time, when the whole of America was
being explored and settled, the ‘South
Seas’ was what we called South
America and its surrounding waters.
In return for its trading monopoly,
the company guaranteed to
underwrite £9 million of UK
government debt incurred by war,
assured by the government of a6%
interest rate –£540,000 guaranteed
annually. Despite very little real trade
being conducted with the Spanish in
the following years, fanciful talk of
golden opportunities, encouraged by
the merchants in the company, led to
acontinual increase in the value of the
stock. In 1718 King George became
governor of the company, and its
success was assured. Buying into the
South Seas became the fashionable
way to riches.
THE ART OFSPIN
In early 1720 the stock started to
soar. Parliament had accepted the
company’s proposal to take over
the national debt and the company
expected to recoup itself from
expanding trade as well as the increase
in value of shares. On the latter point,
at least their hopes were well founded:
fuelled by continuing extravagant
tales of treasure in Spanish America,
the shares went into overdrive, rising
from £128 in January to more than
£1,000 in August.
KEEPING THE PLATES
IN THE AIR
Fortunes were made overnight and
no investor, itseemed, could afford
to miss out. The company cannily
passed on stock to politicians and
aristocrats to ensure that they would
keep talking up their shares: stock
in the company was ‘sold’ to them at
the going market price. However,
rather than paying for the shares, they
simply held on to what shares they
had been offered, sold them back to
the company when and as they chose,
and received as profit the increase in
market price. Their interest was
bound to the fortunes of the
company: in order to secure their
own profits, they had to help drive
up the stock.
The Prince of
Wales became
the governor
of one company
and is said to
have cleared
£40,000 –the
equivalent of
£61m nowadays
LITTLE BUBBLES
OF ACRAZY NATURE
Agreat froth of speculative projects,
soon dubbed ‘Bubbles’, sprang up in
the wake of the South Sea Company’s
success, some genuine and some
frankly preposterous. These included
heat-resisting paint; trading wool
with Barbary and ‘preserving our
countrymen from being carried into
slavery’; dealing in hair; trading in
woad; importing broomsticks from
Germany; extracting silver from lead;
and that favourite of the truly
hopeful, the perpetual motion
machine –‘capital, one million’. More
than 100 were advertised in June 1720
alone. The Bubble Bill had to be
devised by Parliament, most of whose
members were in the scam up to
their necks, to suppress them before
they diverted too much cash from
the South Sea Company itself. The
Bubble Bill required all new joint
stock companies to have aRoyal
Charter as ameans of preventing
the fraudulent ‘Bubbles’ that were
springing up.
‘TOTAL REVOLUTION
IN THE ART OFWAR’
Among the characters of the
moment was James Puckle, aveteran
‘Projector’ (the name given to
those who spent their time devising
money-making schemes) who
promoted afiendish machine gun
that could fire both round and square
bullets. The latter were to be
employed against the Turks as they
hurt more. He then added apatent
for asword he had invented, writing
to Charles Stanhope, Secretary to
the Treasury, that it was ‘worth
avictory to the army that first has it’.
THE MADDEST ONE OF ALL
The most outrageous scam of all was
an advertisement for abusiness
proposition ‘for carrying out an
undertaking of great advantage, but
nobody to know what it is’.
Enthusiastic crowds are said to have
surrounded the company’s office in
Cornhill, snapping up £100 shares for
deposits of £2 each. By three o’clock
the unknown author of the ploy had
sold 1,000 shares, and he shut up
shop. That same evening he was on
the boat to the Continent, never to
be seen again.
GETTING SATIRICAL
Pamphleteers and the newspapers
mocked the absurdities and came up
with their own, confusing the
situation further. Among those listed
in apamphlet called ‘The Battle of the
www.grant-thornton.co.uk

16
The most outrageous scam of all
was an advertisement for abusiness
proposition ‘for carrying out an
undertaking of great advantage, but
nobody to know what it is’
Bubbles’ were ‘Automatons –i.e.
Carriages for conveying single
Persons… without the help of Four
footed beasts, the Motion is to be
performed by the Person carried, who
is to wind up his Wheels every
two Thousandth yard’. There was
also the exciting news that
‘A Flying-Engine is under the
Consideration of the Author
of the Automaton, and is speedily
expected to be seen in the Air’.
WHAT SORT OFMONEY ARE WE
TALKING ABOUT HERE?
The Prince of Wales became governor
of one company, and is said to have
cleared £40,000 by his speculations.
Afigure not to be sniffed at now but,
using the British Retail Prices Index,
the relative value nowadays would be
£61.4 million*. Fortunes were not
Oneofaset of playing cards
which mocked the many ‘bubbles’
that sprang up in 1720
restricted to the upper classes, either.
The housekeeper to Sir Theodore
Jansenn, sub-Governor of the South
Sea Company, who was married to
acustoms officer, made £8,000, the
equivalent of just over £12.2 million.
ASILVER LINING
The Bubble had its beneficial side.
Sir Thomas Guy, asouth London
bookseller, put his considerable
windfall, judiciously turned to cash
in June, to good use. He died in 1724
at the age of 81, and left £240,000 to
found the great London hospital that
still bears his name.
THE BUBBLE BURSTS
Of course it couldn’t last. By the
beginning of August it was obvious that
the shares, at £1,000, were hopelessly
overvalued. The directors of the
company started to unload their stock,
as surreptitiously as they could, and
those who had borrowed money from
the company to buy their shares at the
height of the market suddenly found
they couldn’t make their repayments.
Wholesale selling resulted in panic and
acollapse of the price –down by more
than £800 to £124 in December.
Thousands were made bankrupt,
suicides were commonplace, and the
inevitable search for scapegoats began.
THE GIFT OF HINDSIGHT
The scientist Isaac Newton lost
£20,000, commenting: ‘I can calculate
the motions of heavenly bodies, but
not the madness of people.’ The king,
his mistresses, 462 members of
Parliament and 112 peers, an
embarrassing line-up of the great
and the good, had not listened to
the few lone voices who had spoken
out against the scheme, Robert
Walpole among them. But now
they cried out for vengeance.
THE CALL FOR BODY BAGS
(AND SNAKES)
Some cries for retribution were shrill
and intemperate. Lord Molesworth,
in aspeech in the House of Lords
which was thankfully not heeded,
proposed that anew punishment
could be legalised which would
copy the Roman practice of tying
up the guilty in sacks filled with
snakes and throwing them in the
Tiber. The Thames, flowing
conveniently outside the House,
would be employed. In the event,
Parliament confiscated property
and profits from the blatantly
corrupt, anumber of government
ministers were imprisoned, and
others fled the country.
AND NOW, 289 YEARS LATER…
When Gordon Brown calls his
ministers to order in the Cabinet
Room at Number 10, there is a
portrait behind him that his colleagues
may occasionally glance at in hope
of inspiration. It depicts Sir Robert
Walpole, who was called on by the
anxious Parliament to steady the ship
after the debacle of the Bubble. He
had actually dabbled himself in the
notorious shares, but he had spoken
out against the scheme and was not
tainted like so many others. In 1721
he became First Minister, ineffect
Britain’s first Prime Minister, and now
he looks down on another set of
ministers as they wrestle to restore
economic confidence.
In his day, the Bubble had shown the
people in their worst light: greedy,
dishonest and gullible. Plus ça change…
*Basedon2007 figures.
CORBIS, GETTY IMAGES, PRIVATECOLLECTION/BRIDGEMAN ART LIBRARY
www.grant-thornton.co.uk

INVESTMENT
INVESTING IN
TURBULENT MARKETS
Faced with the current market uncertainty,
Grant Thornton has established strategies
for protecting private wealth.
ASSET ALLOCATION
Our bespoke investment proposition involves
distributing wealth across different investment
avenues so that poor performance in one area
does not jeopardise the entire investment plan
over aperiod of time. The short-term
downsides of market volatility are lessened by
holding adiverse portfolio and using a
long-term approach.
DIVERSIFICATION
Asophisticated extension of the common
sense approach: ‘Don’t put all your eggs in
one basket.’ By spreading funds across a
number of different investments, specifically
chosen based on your attitude to risk, this
strategy is designed to optimise the trade-off
between risk and reward by avoiding anarrow
focus in one particular area.
LONG-TERM APPROACH
The investment industry typically thinks in
five-year periods, seeking to achieve returns
from acombination of income and capital
growth in this relatively short time span. Our
approach to portfolio construction focuses on
the long term, providing acombination of
investments which take into account your
specific long-term goals and the individual and
providing greater leeway to counter market
uncertainties. This can be much better suited
to individuals who are investing for their whole
life or to provide for the next generation.
MORE INFORMATION
To find out about asset allocation speak to your
usual Grant Thornton contact or email
bespoke@gtuk.com
Acontemporarywoodcut
showing the frenzied
buying of shares in Change
Alley in London during
the South Sea Bubble
Investors should remember that past performance is not an
indicator of future performance. The information presented
here is not asubstitute for full professional advice and
specialist assistance should be sought in relation to any
individual circumstances.

Bleak
house
Take awealthy family with abeautiful
country seat. Add the death of the father
and mix with abizarre will. The resulting
saga set 19th-century newspapers alight
and became the basis for afamous novel
WORDS MARK HARMON
18

PROTECT YOUR WEALTH
SPARE ATHOUGHT for Peter Isaac
Thellusson. He was 36, newly married
and exceptionally upwardly mobile, when
his father died in 1797. Suddenly, the
young Thellusson –who at the time was
MP for Malmesbury, Wiltshire, and later
became the first Baron Rendlesham –was
financially secure for the rest of his life.
Or so he thought.
His father,who was also called
Peter Thellusson, had been afabulously
wealthy man. Indeed, at the time of his
demise he was thought to have been worth
around £700,000 –that’sapproximately
£34 million in today’smoney.Even if he
had decided not to favour his eldest son
and had shared his fortune equally with
all six of his children, none of them
would have had reason to complain.
In financial terms, they were about to
live happily ever after.
So imagine the scene when the family
solicitor read out the terms of Peter
Thellusson’swill. What drama. Presumably,
his widow Anne (née Woodford, who
hailed from aLincolnshire landowning
family) gathered together her brood in
the drawing room of Brodsworth Hall,
the flamboyant stately home in Yorkshire
that her husband had acquired seven
years earlier.
Expectation hung tantalisingly in
the air. The ornate, symmetrical room
provided aperfect backdrop to what
would become acause célèbre in high
society and alandmark in legal history.
‘There was no indication of what was
to come,’ says Caroline Carr-Whitworth,
acurator at Brodsworth Hall, which
English Heritage acquired in 1990. ‘Peter
Thellusson was not thought to have been
an eccentric man, or mean or strange. In
fact, he was atypical merchant financier
who put money into several ventures and
reaped the rewards. He had been successful

20
in business and, like many men of that
period, he wanted to buy alarge estate
in the country.’
His will caused asensation. None of
his children, grandchildren or greatgrandchildren
was to benefit from his
fortune, apart from asmall, shared
bequest. Instead, his estate was to be
left in trust to accumulate for three
generations, whereupon it would be
divided between ‘the eldest male lineal
descendants of my three sons then living’.
If there were no such descendants,
it was to be used to help pay off the
national debt –anotion that must have
raised morale within the Treasury. Indeed,
how the current Chancellor of the
Exchequer must lie in bed wishing for
such exceptional circumstances to come
his way in 2009.
The Thellusson family were
dumbfounded and angry, dismissing the
will as ‘an object impolite and pernicious’.
Immediately, they sought to have the will
reversed in court, amove that guaranteed
abarrage of publicity that would not have
been welcomed by his three sons, all
of whom had gone into politics.
‘Peter Thellusson has been portrayed
as amiser but Idon’t think that was the
case,’ says Carr-Whitworth. ‘Certainly,
he was aprudent man and it would seem
that he wanted his sons to continue in
business rather than join the ranks of the
The family was
dumbfounded
and angry,
dismissing the
will as ‘an object
impolite and
pernicious’ and
immediately sought
to have it reversed
idle rich. He had astrong Protestant
work ethic and he wanted that to be
passed down the generations.’
To his children’s chagrin, the courts
upheld the will. But the case eventually
led to Parliament passing the
Accumulations Act 1800. This, in short,
made it illegal to leave money to people
not yet born. Ironically, by the time
the Thellusson family could claim its
inheritance, in 1856, the amount of
money to be shared between Frederick,
the fourth Lord Rendlesham, and
Charles Sabine Augustus Thellusson was
not much greater than that originally
bequeathed, largely because of the money
spent on litigation.
Parallels have been drawn between the
Thellusson/Woodford situation and
the Jarndyce versus Jarndyce case in
Charles Dickens’ Bleak House. Dickens
never referred directly to the Thellusson
controversy, but in the preface to
Bleak House he singles out one particular
case in the Court of Chancery that caught
his attention.
‘At the present moment,’ he wrote,
‘there is asuit before the Court which
was commenced nearly 20 years ago;
in which from 30 to 40 counsel have
been known to appear at one time; in
which costs have been incurred to the
amount of £70,000… which is (I am
assured) no nearer to termination now
than when it was begun.’
Brodsworth was in limbo for nearly 60
years, after which Charles Sabine Augustus
Thellusson set about rebuilding the
house, employing alittle-known architect
called Philip Wilkinson to supervise the
work. The result is adelightful blend of
Italianate High Victorian and urban
efficiency, reminiscent of grand London
homes and clubs. Naked marble maidens
pose in niches of dark yew; evergreen
shrubberies surround acroquet lawn;
and aparterre is screwed to the earth by
monster monkey-puzzle trees.
Perhaps fittingly, Brodsworth went
through another period of uncertainty
in the late 20th century, when successive
generations struggled to maintain the
house, at which point it was placed on
the English Heritage Buildings at Risk
Register. In1988 Pamela Grant Dalton,
the granddaughter of Constance
Thellusson, gave the house, its contents
and its gardens to English Heritage,
and anew chapter began.
Today, Brodsworth is open to the
public and makes for an exceptional
day out. But as you wander through
the immaculately preserved rooms and
lovingly restored gardens, it’s hard not to
think of the children of Peter Thellusson.
They must have loved the place more
than anyone but spent their entire adult
lives fighting for the right to enjoy it.
PHOTOS ©JOHN CRITCHLEY, ENGLISH HERITAGE PHOTO LIBRARY. ILLUSTRATION PETER JAMES FIELD
www.grant-thornton.co.uk

PROTECT YOUR WEALTH
The case for awill
Inheritance tax reliefs are greatly under-used and yet they offer
excellent succession planning for families and businesses
ILLUSTRATION PETER JAMES FIELD
nacomplicated world it is often
surprising how one simple thing can
make alarge difference. In the UK,
statistics consistently show that well
over half the adult population have not
made awill. The relatively straightforward act
of making and then regularly updating awill not
only helps ensureyour wealthcascades to where
you would like it to go but also that you can
effectivelysuccession plan for your familyand,
if relevant, your business.
The implications of having no will can be
significant. Imagine ayoung honeymoon couple.
The groom is very wealthy. His new bride is less
so. Tragically they are killed in amotorbike
accident and there is no way of determining who
died first. They had not made their will. Under the
laws of intestacy, in this case the wealth of
the husband would pass to the wife and then
immediately to her parents. Do you think he
intended to give his whole estate to his in-laws?
Or take the common occurrence of second
families. Maybe awidow remarries but of course
still wants to ensure her children from her first
marriage benefit on her death. Her new husband
may have anumber of children from his previous
marriage. Without awell-constructed will she may
find that the children from her first marriage are
left with little or nothing.
There is also what has been termed the ‘vulture
syndrome’ with family squabbles post-death.
Arecent survey of 3,000 adults by aLondon
law firm highlighted that aquarter had fought
over adeceased’s estate, sometimes for as little
as £250, often driven on by the inadequacies
of the will drafted.
Much painful heartache, time and money
can be saved by getting awill right. The new
transferable nil rate tax band provisions help
married couples or civil partners transfer any
remaining proportion of their inheritance tax nil
rate band (currently £325,000) to their surviving
spouse, for them to claim on their own death.
However, many people will have estates
worth far in excess of two full nil rate bands and
will want to consider using trusts within
awill to maximise flexible giving and minimise
tax. For example, they may already have access
to value inheritance tax reliefs, like business
property relief (BPR), which can give 100%
relief on certain business assets, and careful
will planning can ensure none of this relief
is wasted. Arecent case on BPR (Trustees
of Nelson Dance) also suggests this relief may
be available in far wider circumstances than
previously thought.
It therefore pays both to have awill and
to keep it under regular review to make
sure that your wealth is distributed according
to your wishes.
FRANCESCA
LAGERBERG
Head of Tax,
Grant Thornton

Standby
for super
22
If you have asix-figure income, you
will be aware that the April budget singled
you out as one of its key target areas. A
new ‘super-tax’ rate of 50%, loss of
personal allowances and significant
pension changes could all affect your tax
bill. Eric Williams, Grant Thornton’s
Head of Private Client, has this advice
ILLUSTRATION PETER JAMES FIELD
tax
rom 6April 2010,
it is proposed that
entitlement to basic
personal allowances
for income tax will be reduced for those
with higher incomes. These allowances
give everyone a‘tax-free’ amount but
where gross income (before personal
allowances are deducted) exceeds
£100,000, the allowance will be reduced
by £1 for every £2 of income, until the
basic allowance is extinguished. This means
those with income of around £113,000
will have no personal allowance at all.
But that is not all. From 6April 2010 a
new 50% rate of income tax will apply to
taxable income above £150,000. The rate
applicable to trusts will increase from
40% to 50%. The rate of income tax on
dividends for individuals subject to the
50% rate and on trusts will be increased
by 10% to 42.5%. This will increase the
effective tax rate on dividends received
from 25% to over 36%.
These changes give rise to some very
high effective tax rates. For example,
individuals whose income (excluding
dividends) falls into anarrow band of
income above the £100,000 threshold
will have an effective income tax rate
of astaggering 60%.
The rate increases do not apply to
capital gains, which will continue to be
taxed at 18% (or just 10% if you can claim
www.grant-thornton.co.uk

NEED TO KNOW
the very helpful Entrepreneurs’ Relief).
This will drive apreference towards having
capital gains rather than much higher taxed
income, although this is not always
straightforward. There are afew ways to
achieve this, although, as with all planning,
this should only be done in the context
of what is appropriate and practical for
you. Share incentive schemes are another
method that could help reduce income
taxable at higher rates.
When it comes to pensions, the
withdrawal of higher-rate relief for
pension contributions will make many
revisit their pension plans. Those with
income over £150,000 will see higher-rate
relief withdrawn from 2011, although
complex forestalling rules are already in
effect, restricting what you can do now.
Under these provisions, an additional tax
charge of 20% could be levied with effect
from Budget day, 22 April 2009, for
contributions above what is perceived
to be an individual’sregular (at least
quarterly) contribution pattern before
Budget day.
All is not lost though, as there are many
things to consider that might help you
keep your tax bill down. For employeeowned
companies, it may be possible to
pay dividends and suffer alower effective
rate of income tax, although this must be
considered alongside the corporation
tax implications for the company.
HM Revenue and Customs approved
share schemes are atax-efficient means of
providing benefits. They work by way
of granting options over shares in a
company, which are eventually
‘exercised’, then the shares are sold by the
individual. If all the relevant conditions
are met, then there is no income-tax
charge on the grant or the exercise of
the options. On asubsequent sale of
the shares there is acapital gain on the
difference between the exercise price and
the sale price. This enables what would
have potentially been an income-tax
charge to be converted to acapital gain.
If making acapital disposal, you should
review the position in respect of
Entrepreneurs’ Relief, as there may be
simple steps you can take to benefit from
a10% effective rate of tax.
Incorporation may be an option for
high-earning sole traders and partners
who would otherwise suffer income tax
at 50% on their profits. Provided profits
do not exceed £300,000, any retained
profits will be subject to a22%
corporation tax rate from April 2010.
However,there will be further tax
charges, as mentioned above, when
withdrawing income from the company.
As aresult, consideration should be given
to whether profits may be retained within
the company or if cash will need
to be extracted.
Non-UK domiciled individuals who
may have substantial overseas income
may benefit from claiming the remittance
basis in order to avoid suffering these
higher tax rates. However,the remittance
rules are extremely complex and it is
imperative that specialist professional
advice should be sought in advance of
making any claims or returns.
YOUR NEXT STEPS
It is important to consider what your
income position will be after 6April
2010 and 2011. If you are likely to have
income in excess of £100,000, is there
anything that you can do to restructure
the income you receive? Grant Thornton
is happy to talk you through the best
options for you.
Whatever you decide to do, the sooner
you can start planning, the better position
you are likely to be in.
The rate increases do not apply to
Capital Gains Tax, driving a
preference over higher taxed income
ERIC WILLIAMS,
Grant Thornton’s
Head of Private Client
www.grant-thornton.co.uk

ADAY IN THE LIFE
ARTWATCH
Interesting art auctions
from around the world
FINE ASIAN ART San Francisco
Monday 29 June 2009
www.bonhams.com
Tony
Deep MBE
24
Arriving in the UK aged 18 with just £3.50 in his pocket,
Tony Deep set up East End Foods. Now worth £100 million,
it sponsors afoundation that promotes organic farming
always wake up at four in the morning. Today I’m staying at a
small house just outside Delhi. It is the local office for the Heart
and Soil Organic foundation. The first thing Idoistake medication
for my diabetes and then Imeditate for an hour. That’s when one
can talk to oneself.
‘I lost three members of my family to diabetes, which led me to
good organic food. The foundation is concerned with sourcing organic
spices and foods for the family business. Idrink green tea while Icontact people
on the internet. Itried to set up organic sourcing in England but was told, “It’s
not going to happen. You’re dreaming.” But here in India we now have 200,000
farmers growing organic food. This is the time of year when the spice crops are
coming in and it is important that they are delivered directly to us so that we can
keep up the Soil Association’s standards while we process them for export.
‘At eight o’clock Ihave some breakfast –anomelette of two egg whites,
some cornmeal bread –and, of course, my insulin injection. Then it’s back
to work. Icall myself retired. I’m 67, but Iwork about 12 hours aday. Itry to
avoid political meetings, but they have to be done. We’re talking with the Indian
government about exporting cereals, lentils and beans. They are currently
banned for export as the government doesn’t think there are enough for the
home market.
‘Delhi is very crowded so car journeys to meetings can take more than an hour.
Iwould normally do two or three during the day. Sometimes it’s over lunch, and
often, like tonight, there will be an evening meeting. There are around 700 people
involved with the foundation and in simple terms our aim is to make food as good
and pure as the food our ancestors ate.
‘I’ll be back about 10.30pm and go to bed at about 11pm. Idon’t really do
anything to relax as my work is quite leisurely –I’m not pushed like Iused to be.
Ihave no trouble sleeping. Iwatch the news; that always sends me to sleep!’
Afine 18th-century Sino-Tibetan gilt
bronze figure of Vaishravana –The
Guardian of the North dressed in
military costume. Overall 30cm high.
Estimate: $10,000–$15,000
RENAISSANCE &BAROQUE
The Barbara Piasecka Johnson
Collection London
Wednesday 8July 2009, 6pm
www.sothebys.com
Christ carrying the cross, Andrea
Solario, Milan, circa 1465-1524.
Overall 51.6cm high, 52.1cm wide
Estimate: £250,000–£350,000
MASTER PAINTINGS WEEK
London, 4–10 July 2009
www.masterpaintingsweek.co.uk
The most distinguished names in
Old Master galleries, along with two
auction houses, will showcase
their expertise and great paintings
with special displays or events.
BONHAMS, SOTHEBY’S AMSTERDAM, MIKI ALCALDE

LATEST THINKING
What to do with cash?
Three experts provide their take on the best strategy
ILLUSTRATION PETER JAMES FIELD
■ The £75 billion committed to
quantitative easing has had afairly
dramatic effect on medium-term
UK Government bond yields.
Longer-term rates are likely to fall
further as aresult.
■ We feel that UK rates are likely
to remain low over the next 12
months as inflation falls and we enter
adeflationary period. Beyond that,
we see inflation returning as the
new money entering the economy
takes effect.
■ Asensible strategy for managing
significant sums in this market is one
that places cash on the balance sheets
of highly rated banks or building societies
that have either explicitly or implicitly
received Government support. Also,fixa
proportion of the cash for up to 12 months
to protect against persistently low rates.
■ Fixing cash rates for longer than 12
months might be worthwhile for a
small proportion of the available
balance, given the likelihood that
inflation and therefore rates will be on
the increase in 2010.
■ We can supplement this approach by
looking to pick up yield through some
short-term investment strategies that
exploit factors such as the high volatility
in equity and currency markets and
deliver returns in atax-efficient manner.
Rory Gilbert, Managing Director of UK
Private Bank, Barclays Wealth
■ The outlook for all the major
currencies in the next year or so, at
least to some extent, is abattle of the
‘least bad’. All of the policymakers face
major challenges, and each of them
is undertaking monetary and fiscal
risks that threaten their currencies’
long-term purchasing power.
■ Quantitative easing, together with
fiscal expansion, is usually arecipe
for currency disaster. The only
dilemma is that all of the US, UK,
Japan, Switzerland and, in an indirect
way, the eurozone, are doing this.
This is why many people currently
like gold.
■ So where is the pound going?
By default, we like it at Goldman
Sachs. It has fallen alot already,
and because of this, two things
make it attractive. It is cheap
on our measures of fair value,
especially relative to the euro,
Swiss franc and yen, and to amore
moderate degree against the dollar.
In addition, there are signs in leading
indicators that the UK might be the
first major economy to show some
‘green shoots’. We expect that the
pound will be closer to 1.80 than
1.40 against the dollar by this time
next year, and agood 10% stronger
against the euro.
Jim O’Neill, Head of Global Economic
Research, Goldman Sachs
■ As the consequences of the
credit crunch started to emerge,
many investors initially fled to
capital safe options. However,
many are now looking for abetter
interest rate in addition to capital
security for their short-term
cash deposits.
■ With base rates so low and
predicted to stay low in the
near term, ‘better than base rate’
interest rates are available if you
shop around.
■ For significant sums, ensuring you
keep to the £50,000 (per individual)
Government compensation scheme
limit would complement the strategy,
while watching out for those deposit
takers that are part ofthe same group
of companies.
■ For medium to longer-term
investors willing to accept adegree
of risk, having set aside acash
reserve, then diversifying your
investments into aportfolio which
includes avariety of asset classes
may be asuitable option.
■ The volatile investment periods
that we are currently experiencing
often create opportunities for the
longer-term investor. These investors
could benefit from any turnaround in
economies around the world.
Richard Wheatley, Partner, Private Client
Services, Grant Thornton
www.grant-thornton.co.uk

PRICELESS
Cheeky
bouquet
Sir Alex Ferguson on the joys of
sharing along-anticipated wine
INTERVIEW PETER BUHLMANN
26
collect wine and that’s mainly kept in
London in bond, but I’ve got some
great stuff at home. I’ve about 500
bottles, Iimagine. I’ve got some
Penfolds Grange in the house, that’s
abeautiful wine. Iwas trying alot of different
wine houses for quite awhile there and Isaid
to myself, “Look, the best way is to stick to
what we know…” and that’s sticking to the best
brands because they don’t disappoint, to be
honest with you.
‘About two years ago Ihad a1961 Chateau
Petrus which was absolutely fantastic. I’d had it
for two years and Ilaid it out the day before a
big game between Arsenal and Chelsea. They
had adraw, sowewon the league and Iinvited
all my staff and their wives up for acelebration
drink that night. Itold them to come by at
seven o’clock and at six o’clock I’d opened the
Petrus and was ready to enjoy it.
‘Of course the doorbell rang –and there was
my assistant and the fitness coach standing at the
door! So Icouldn’t doanything else but invite
them in and give them ashare of my ’61 Petrus!
Ishould have told them to drive around the
block about three times.
‘It was agreat year, anyway –Idon’t think you
get abad year with Petrus, to be fair, but that was a
1961
CHATEAU PETRUS
Value: £9,000 upwards
fantastic wine. It was so smooth and velvety
and the taste lasted so long in the mouth. Ithink
that’s one of the secrets of agood wine; the
taste lingers there and you can maybe only
take one glass and not touch it for another 10
minutes because you’re still relishing the odours
and the ingredients of it.
‘My favourite years are 1961, ’82 and, well, ’47
if you can get it. Ithink some of the years that have
excelled have surprised people –1986 is very good
and then 2003 is turning out very well, too. Ihad
some 2003 and it was beautiful –aPavie Decesse,
an excellent wine.
‘I’m always looking for value. Awhile back
Iwas in Glasgow, inmyfriend’s restaurant, and
Isee that there’s aPesquera Ribera del Duero,
which is an excellent Spanish wine, and they had it
down at £12! Imean, it really should be 30-odd
quid. So Isaid to myself, “£12! Let’s get in here.”
The owner was sitting at the table –hewanted
some dinner –soItold him, “I’ve picked us a
nice Pesquera.” He asked if it was any good and
Isaid, “It’s fantastic, James, and I’ll tell you
something, you’re selling it for nothing!”
He jumped out of that chair and got hold of the
wine waiter and said, “What’s going on here?”
Iwound him up about it terribly. Isaid, “I think
I’ll take some home with me…”
‘There were about 10 of us as I’d just won the
2000 Guineas at Newmarket with Rock Of
Gibraltar, and we’d flown up the same day to
celebrate. Aye, it was agood day.’
CHRIS TERRY /CONTOUR BY GETTY IMAGES, SOTHEBYS

‘All Iask is a
chance to prove
that money can’t
make me happy’
Spike Milligan
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Grant Thornton International and the member firms are not aworldwide partnership. Services are delivered by the member
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28
‘For those who
have enjoyed
banking privacy
the global rules of
engagement are
changing.’
Paul Roberts,
Head of TaxInvestigations, Grant Thornton
www.grant-thornton.co.uk