This morning, Gordon Brown will appear before the Commons Treasury Select Committee to explain the Budget. There is plenty of explaining to do.

The Budget made a meaningful step forward on two important fronts: simplification of taxes and lowering the corporate tax burden. But the glow of the Chancellor’s final flourish — the 2p cut in income tax — has already faded, as it has become clear that the rejigging of taxes leaves most people no better off.

A week on, it feels as though the Chancellor behaved like a Las Vegas card-dealer, shuffling the pack with theatrical gusto but not changing the odds for the average punter. And the worry is that the Chancellor’s revenue-raising claims are as illusory as the promises of personal tax cuts.

For Mr Brown has forecast a huge windfall from the sale of government assets. “In the PreBudget Report in December, I said that from now to 2011, asset sales would release £18 billion for front line services,” he told the Commons last week. “But because I can announce today the sale of spectrum, a £6 billion sale of the student loan book, and further financial and corporate sales at home and overseas, asset sales will rise from £18 billion to £36 billion.”

This statement left the impression that the sale of spectrum would earn the Treasury billions. However, people in the telecoms and media industry are sceptical.

In 2000, telecoms operators paid a fortune for 3G mobile licences and the Government thereby raised £22.4 billion. But the telcos are still paying the price, burdened with debts for spectrum that still goes largely unused. Vodafone’s 3G service, for example, operates at only 16 per cent capacity. Without eager buyers, Mr Brown does not have a very valuable asset. And, in the words of one senior telecoms executive, Mr Brown’s implied valuation of spectrum was “bogus”.

To be fair, the Treasury is being deliberately vague about the value of spectrum. This is partly because they do not yet know what they are selling and partly because they hope the outcome, like last time, will be a pleasant surprise. This looks like wishful thinking. Even before Mr Brown gets the chance to bring the MoD spectrum that he has earmarked to market, Ofcom has another series of spectrum sales in the pipeline. The sale of the “L-Band” spectrum for mobile television, for example, will further sate the telcos’ modest appetite for more bandwidth.

Mr Brown’s Budget was, like the man, complex and clever. The job of the Treasury Select Committee is to ascertain whether he is trying to conjure money out of thin air.

No wonder at Woolworths’ fall

Which company — Jessops or Woolworths — will be first to go to the wall or succumb to a predatory bid?

The news from both high street retailers yesterday was dismal. Jessops saw its shares fall by 70 per cent after it issued its third profits warning in three months. By the close, the company was worth £15 million. This is a fraction of the £160 million it was worth when it floated in 2004 and a quarter of its debt. The chairman and the commercial director have gone. Chris Langley, the chief executive, is left to figure out a strategy.

Woolworths, meanwhile, reported a 62 per cent fall in full-year profits. Trevor Bish-Jones, the chief executive, managed to maintain the dividend, but also a posture of do-nothing stoicism. In the face of calls for a break-up of the business, he said: “The structure of the group is the structure of the group.”

Both companies have been slow to respond to changes in consumer behaviour wrought by new technologies. Jessops has seen the sale of its digital cameras and camcorders slump. And who can be surprised, when nearly every modern mobile phone has a digital camera built in? Likewise, Woolworths clings on to the CD business as downloads to iPods and MP3 players soar. Both companies, too, have seemed to rely more on hope than action. They have warned on declines in their business, again and again. How can Woolworths say that sales were below expectations, when expectations were precisely of a continuing collapse?

The one difference is that Woolworths has been in long-term decline. Jessops’ problems are more recent, dating back to its flotation in 2004. After several failed attempts, the business was loaded up with debt and floated off by the private equity arm of ABN Amro.

Anxious investors will see shades of Debenhams. They will worry about the prospects of niche retailers, like Sports Direct. And they will worry about companies brought to market by private equity.

Bmi dilemma

Sir Michael Bishop, chairman and controlling shareholder of bmi, has achieved a rare thing: starting an auction for his company while refusing to put it up for sale. It is widely rumoured in the airline industry that Sir Michael, 65, is considering his options and may sell the British carrier. The former chairman of Channel 4 television should be a candidate for the chairmanship of the BBC — abandoning the skies to return to the airwaves.

The news that British Airways would be interested in buying bmi has clearly spooked the industry. It provoked a response from Sir Richard Branson, the chairman of Virgin Atlantic, demanding that competition authorities block any such move. Virgin has long been considered a suitor for bmi. It tried and failed to acquire it four years ago and Sir Richard’s swift denunciation of BA/bmi rather shows his hand.

Bmi would not only give Virgin more slots at Heathrow, it would also provide a domestic and European feeder network. Other airlines, particularly Emirates, might look at bmi for the same reasons, but Virgin still looks the best match. A BA bid, on the other hand, would be about the Heathrow slots, not the short-haul service. It would be about defending its preeminence at Heathrow, after the Open Skies liberalisation of the transatlantic routes.

Bmi’s business is not for sale, but the battle lines are drawn: Virgin as the expansive bidder, BA as the defensive buyer. Open Skies may yet have been worth the wait.

Barclays has called in Citigroup as yet another investment bank adviser — its fifth — on the proposed merger with ABN Amro. It wants to tap the expertise of Citigroup’s well-regarded Financial Institutions Group. The appointment prevents the US bank coming in as a gatecrasher on any deal. Barclays now needs only to hire Royal Bank of Scotland, BNP Paribas and BBVA and it is home free.

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