These alternative routes are also likely to be more complicated, and therefore costly. Unfortunately, this means that commercial needs will play second fiddle to tax considerations.The main fear is that while the industry takes time to wake up to the effect this change has brought, a steady stream of management buy-outs has been proceeding on the old type of equity ratchet, so that the managers involved will face unexpected tax charges at a time when they have no money with which to pay them.Having jumped in at the deep end the Revenue is now left with just two ways in which it could help. This cannot be what the Chancellor intended.In practice, the worst case scenario is unlikely to materialise, as any skilled tax planner will be able to seek out alternative ways of making an equity ratchet system work. The result could be extreme short-termism, as managers clamour to turn paper profit into cash proceeds by selling the business in order to pay off their income tax bill.

Such managers would be required to pay tax before realising any profit.Clearly, this situation would be unacceptable to managers involved in a buy-out. SEVEN prison officers were suspended at a private jail last night after an inquest jury ruled that an inmate awaiting trial had been unlawfully killed after he was placed in a necklock during a violent struggle. If I’m drafting a report, or writing a letter that he’ll put his name to, it has to be absolutely perfect.”Diana Blois-Brooke, PA to a partner of a successful London property firm, agrees. Even so, investors will have to wait at least seven years before the tapering relief on CGT compensates for loss of the indexation allowance.This assumes investments grow at 8.5 per cent annually. while inflation stays at an average rate of just 2.5 per cent. If inflation starts to increase, then investors could end up paying tax not just on a “hybrid” basis, calculated under both the old and new systems.Under the old system, losses on share disposals could also be offset against gains, effectively reducing an individual’s tax liability. The basis for such offset has also been changed, allowing losses to be deducted only from gains before these are subject to tapering relief.

The net effect is to reduce the value of this allowance.New rules on bed-and-breakfast impose a min- imum 30-day limit on re- investment into shares previously held and disposed of in the same year. Bed and breakfasting was used in two ways to reduce CGT bills.Firstly, it allowed investors to “use up” the annual exemption, while keeping the same portfolio of shares. Secondly, it allowed them to “re- base” the price of these shares at a higher value, without paying tax on gains.Of all the changes to CGT made in the Budget, this has provoked most controversy among stockbrokers and tax advisors.Bryan Johnston, of the stockbrokers Bell, Lawrie, White & Co, says: “It will result in tram-line investing; selling one lot of shares and buying another, both in the same industry sector, both heading in the same direction.”Brokers are already working on ways round the abolition of bed and breakfast.Last week, there were reports that stockbroker Charles Schwab & Co is developing a product based on share derivatives designed to allow investors to re-invest into the same shares after 30 days without loss.IG Index, the city’s bookmaker, has already launched a betting system which allows someone selling shares to bet on their going up or down in value over the 30-day period. “This is due to a 5-per-cent increase in train miles,” said Mr Prescott.Aslef, the train-drivers’ union, has long criticised Railtrack for its safety record and yesterday Lew Adams, general secretary, said it was launching its own initiative which would see drivers “moderating their speed” over track they considered “dangerous”.. Sir Robert Horton, Railtrack chairman, said: “There are real congestion problems at certain times of the day and these have to be overcome. The problem is in part the need for ever- increasing numbers of passengers on the network.” Paul Prescott, a Railtrack director, said: “Some train companies require to grow by 10 per cent a year.”However this increase in “train miles” has adversely affected punctuality. Figures show an increasing number of poorly performing train services.

He received strong backing from the Deputy Prime Minister, John Prescott, who welcomed Mr Swift’s action. Industry observers say the plans contain little new money for the network. Despite the headline figure, pounds 16bn was promised last year and a further pounds 640m is part of a deal with Richard Branson’s Virgin group to upgrade the west coast line.The ride for passengers is also set to get worse Railtrack identified 15 congestion hot-spots on the network. Despite this, the situation will not improve until 2002 at the earliest.

But John Swift QC, the regulator, said the programme contained “very few firm commitments to deliver significant improvements” for passengers and freight customers.
Mr Swift said he would find out if train operators thought Railtrack’s management statement met their needs. Plans for a 10-year, pounds 17bn spending spree on the nation’s railways were attacked by the industry regulator yesterday after intervention by the watchdog saw his office launch an immediate investigation into the “commitments” to passengers. Railtrack, which owns Britain’s stations and signalling, published its spending programme, which it described as “a blueprint to regenerate the railways”. Of those who are detected, fewer than 1 per cent is taken to court. The new Government is about to grasp that nettle.The Commons report said that fraudsters almost never face prosecution, despite the fact that an estimated 400,000 of them are milking up to pounds 2bn from the state each year. Just under half of all local authorities brought even one prosecution last year.”The waste of public money on housing benefit fraud is massive and inexcusable, and it has gone on for far too long,” the report says.Tackling fraud will be one of the key elements of today’s Green Paper, and Housing Benefit will be a critical target for crackdown.. That could include answers on the Child Support Agency, benefits for the long-term sick and disabled, and housing benefit.The seemingly intractable problems of housing benefit were exposed yet again yesterday, when successive social security ministers – Tory and Labour – faced scorching criticism from the Commons Public Accounts Committee for not tackling massive levels of housing benefit fraud.