Comment: There is no fair way for Labour to levy this tax

`With the Clinton administration already making threatening noises about a discriminatory tax which disadvantaged American interests in Britain, it is plain that Labour is getting itself deeper and deeper into the mire'

More and more confused grows the Labour Party's position on its only proper tax proposal so far - the wretched windfall profits tax on privatised companies. As if the position were not bad enough already, Alastair Campbell, press secretary to Tony Blair, has been doing his bit to muddy the waters yet further. In a letter to the Independent Mr Campbell states that Labour is united in its commitment to "a one-off windfall levy on the excess profits of the privatised monopoly utilities".

Unsurprisingly, this has had the likes of Ed Wallis, chairman of PowerGen, and his opposite number at National Power, John Baker, cracking open the champagne, for while many might think of them as fat cat monopolists, actually they are not.

Nor technically are British Telecom or British Gas. The only true monopoly utilities in England are the water and electricity distribution companies. To them must be added the two Scottish electricity generators, which have a monopoly on distribution north of the border.

With the Clinton administration already making threatening noises about a discriminatory tax which disadvantaged American interests in Britain, it is plain that Labour is getting itself deeper and deeper into the mire. The US has an interest because so many of our regional distribution companies have been snapped up at the top of the market by Americans looking for a gateway into Europe.

Unlike earlier shareholders, the Americans have had little, if any, windfall gain, so it would be illogical and unfair to target them.

That, however, is the nature of the tax. There is no fair way of levying it. When Mr Campbell's clanger was pointed out to his office yesterday, we were treated to yet more policy on the hoof. Actually, the tax will apply to "privatised utilities", Labour insisted, a much wider net. Presumably it will be something else again tomorrow.

Dear Mr Said, have you ever considered Cowley?

By proposing to build his business school on protected turf right slap- bang in the centre of Oxford (or near enough anyway), Wafic Said has given Oxford dons a very convenient excuse for doing what many of them wanted all along - send the Syrian arms dealer packing. In an attempt to clarify the arguments, we suggest that dons draft the following letter to Mr Said. "Now you have to understand, Mr Said, that there is nothing personal in this. It has nothing to do with the fact that you are a shadowy arms dealer. Nor, as has been suggested in some quarters, is it because we dons believe business to be a subject unworthy of serious study.

"True, there are much more important things in life, such as the classics and medieval history, but business no doubt has its place. Not in Oxford, however. Manchester, perhaps, or London maybe, or you could even have stuffed Cambridge with it were it not for the fact that someone else got there first. But not here and certainly not on ground that according to ancient law must be held sacred for the playing of rugby football.

"However, we dons are a generous lot, so it has been decided by Congregation to donate to you [BMW allowing] a site in an outlying region of Oxford known as the Blackbird Leys estate. [A locater map will be forwarded at a later stage.] Now you've probably read a bit about this place and we can assure you that most of it is true. Not that we want to put you off, of course. Your John Kay wouldn't be seen dead there. In fact he'd very rapidly be dead if he ever visited the place. It just so happens that it contains the perfect site for a business school - the largely derelict Cowley car works. They even still produce a few cars up there, we've heard, so the site has the added advantage of a real live factory for your students to enlighten themselves with. It'll give a whole new meaning to the term Business in the Community. This is a joke, by the way.

"Should you wish to turn down this generous offer of alternative accommodation, we would entirely understand. But if you are genuinely interested, out of altruism alone, in founding an Oxford business school, then in pursuit of this you would even be prepared to accept the Cowley works. In these circumstances even the meanest-minded among us could not suspect you are just doing it only in your own self interest. Yours, The Dons. PS. If you opt for Cowley, you can have all the control over appointments you like."

Eddie has backed Ken into a corner

The crunch has come in the heavyweight wrestling bout between "Lucky" Ken Clarke and Eddie "The Hawk" George. After the lengthy preliminary skirmishes, we are about to find out whether the rule changes have swung the match in favour of the Bank of England's candidate or whether pressures of political timing will, as in the past, deliver victory to the man in the blue corner.

The Bank's Inflation Report yesterday upped the stakes. Although its forecast for inflation during the next two years is more optimistic than that of most other economists, the tone could not have been more confrontational. In effect, the Bank has said that if the Chancellor is serious about the inflation target, the time has come for him to prove it. The run-up to the election was always likely to prove the hardest test of the post-ERM monetary arrangements - would publication of the Bank's advice be enough to embarrass a Chancellor into behaving more responsibly than most Chancellors have in the past? And so it has turned out.

Many City analysts said yesterday that they expected Mr Clarke to shrug off Mr George's advice to raise interest rates by pointing to the strength of the pound and its likely impact on exports in the months ahead. This was the reason the Chancellor highlighted in his explanation of his June decision to reduce base rates by a quarter point.

It is an excuse the Bank went to great lengths to eliminate in yesterday's report. A stronger pound due to either a higher real exchange rate, as a result of higher oil prices, or the perception of looser monetary policy overseas, would have only a one-off effect on prices. Inflation might be temporarily lower in the short term but its longer-term path would be unaffected.

The pound's strength could improve the inflation outlook only if it is the lasting result of a change in perception that the UK is pursuing a genuinely tighter monetary policy than it has in the past. That will only happen if base rates do go up again. A stronger exchange rate is not a substitute for an increase in interest rates, but rather goes hand in hand with it. The Bank adds a follow-up punch: UK interest rates should be set to control the pace of domestic demand, which is accelerating, not to try to offset changes in the exchange rate. "It is better to aim for what you can achieve rather than hope for a miracle," as Mervyn King, the Bank's chief economist, puts it.

There is no doubt that Ken is the crowd's favourite. Neither right-wing backbenchers nor the general mass of pundits care all that much about the inflation target. But Eddie has backed him into a corner, and he will need all his luck to escape it.