Incisive and topical campaigns and commentary on today's issues and tomorrow's problems

We are a few days away from the results of the Crimea referendum. The EU and the USA need to think through what they will say and do if the Crimean people vote to join Russia and leave the Ukraine.

The current EU position seems to be that the referendum will not be legal or binding on the Ukrainian government, because the Ukrainian government did not agree to it. There are several difficulties with taking this stance.

The first is that the government itself in the Ukraine is not elected. It draws its authority, such as it is, from a  vote of the Ukrainian Parliament. Many people in the Crimea do not accept the authority of this interim Crimean administration.

The second is that if the referendum is fairly and sensibly conducted and produces a strong majority for leaving the Ukraine, the lack of support for this referendum in the Ukrainian Parliament could be  offset or compromised by the strength of the result in Crimea. The result would serve to highlight the gap between the wishes of the Ukrainian Parliament on the one hand, and the wishes of the Crimean people on the other.

The third is that the referendum itself does have the support and the organisation of the Crimean government and Parliament behind it. Whilst this is currently a subsidiary body to the Ukrainian Parliament, it does not mean it is without democratic authority. What if the UK Parliament had refused consent to a Scottish referendum, yet Mr Salmond had gone ahead and held one. Many would think his support for it as the elected First Minister made it of more than passing interest. The rest of the UK would have to respond to any strongly expressed wish of the Scottish people to leave the UK.

The fourth big problem for the west is the presence of the Russian army and navy, or their loyal helpers, in all the key places in the Crimea, promising or threatening to support the wishes of the Crimean people. The west argues this is an illegal outrage, but it is also a fait accompli which the west is unlikely to challenge militarily.  If you wish to assert the supremacy of the Ukrainian Parliament views over those of the Crimea, it would be easier to do so if the Ukrainian army still had command of the territory.

I suspect the truth is that if the Crimean people vote strongly to leave the Ukraine they will do so. There will need to be negotiations over important arrangements, and provision made for the military personnel of the Ukraine currently blockaded by Russian sympathising troops and ships to transfer to the Crimea or to leave and continue in employment in the rest of the Ukraine.

The Ukrainian government and their friends in the EU had better start thinking through how they will respond to this fast moving situation, when they have allowed most of the momentum and the power so far to rest with the Crimean government and their Russian allies.

The following interesting letter has come to my attention:

Dear Lucy,

I am concerned to read that there could be an enquiry into the funding of UKIP partly from taxpayers money from the EU. Whilst civil servants should not condone possible misuse of funds and should at all times be impartial politically, we need to be savvy in the run up to important elections. We need to realise that there could be a political motive to these allegations against UKIP, and their timing is most unfortunate.

Our primary concern is the good and orderly conduct of government here in the UK, am important part of the EU. The last thing we want now is the disruption of a referendum on the UK’s membership, which the Coalition government has rightly prevented the Conservatives offering during this Parliament. I am of course entirely neutral when it comes to elections and who we should serve, but it would seem to be worrying if the public are dissuaded from voting for UKIP as opposed to the Conservatives  by the intervention of the authorities in allowing an enquiry into funding at this sensitive time. Our concern with the stability of our governing arrangements, and with ensuring Ministers do always accept and conform with our EU obligations, is made easier by the split in the Eurosceptic votes in recent elections. Is there anything we can do to ensure the forthcoming European election  is not affected unreasonably  by external enquiries and interventions?

I was very pleased to see – and hear – from leading businesses concerning the case for our continued  membership of the EU. It appears that the Liberal Democrat Ministers in the Coalition led by the Business Secretary  as well as the Deputy Prime Minister have been active and successful in flushing out the business case for staying.  However, our research and consultations tell us that business is becoming increasingly concerned to increase non EU trade rather than EU trade, given the temporary slower growth on the continent.  This makes it ever more imperative that we push ahead through the EU with trade agreements at EU level with the other important parts of the world. We need to be able to argue that all our trade, not just our EU trade, rests on our membership of the EU. I understand that the CBI is sympathetic to this approach.

The use of the 3 million unemployed figure  if we quite is coming under some pressure. It would be good to revisit this figure and show how many more jobs depend on our total world trade, as this too comes to depend on EU agreements.

Yours ever

Roy

As someone who has been a Chairman of industrial companies  in the past I have always thought it best to express no political views in such a role. The interests of a  business  require the company to get on well with customers, advisers and suppliers with a  very wide range of political views. Plunging the company into high political controversy may simply alienate people you need to keep on side. The company needs to show it understands and can work with people of very differing opinions. It is also a community of people with very different attitudes and backgrounds.

If government decides to take an action like imposing a new law or tax that would damage the business interest, then of course the company may wish by agreement between the Board and shareholders lobby or argue against the proposal. This is best done through the proper channels. Companies, like individuals, belong to a particular constituency and can always approach their constituency MP to take up their case. They can also write in directly to Ministers. Some choose to spend money on lobbyists, which should be done   carefully and requires good  choice.  Lobbyists who become too enthusiastic or too careless about the rules can get the company into trouble.

Recently there is a new vogue abroad. Various companies have decided to give us their opinion on the Scottish referendum, and on membership of the EU. As a democrat who  believes in good debate, I have no objection to this. I merely ask the companies two questions. Will their expression of view help the cause they espouse, or could it put people off if they think they are being hectored by big business? And is it wise for any individual business to declare a political view on one or both of these very emotional and sensitive subjects?

I can seek to answer this question from an independent viewpoint, as businesses are interfering in the Scotland question mainly on the side of the Union which I also  support, whilst companies talking about the EU mainly speak on the other side to my view.

It seems to me in the case of the Scotland debate it could become counterproductive for too many companies to claim they will leave Scotland if the Scots vote for independence. It would not be good if the independence cause is associated with resisting the pressures and hectoring of big business, with Alex Salmond reassuring people that they probably do not mean their threats. Companies that appear to be anti Scotland may lose support in Scotland for their pains.

In the case of the EU argument any business which puts forward the lie that we will lose 3 million jobs if we vote to leave the EU but have instead some kind of trade arrangement deserves to lose customers  and annoy people. I am glad to see the CBI accepts that if we change our relationship or simply vote for out we will not lose all our export jobs, if for no other reason than the rest of the EU will still want to sell us more than we sell them and will seek successor arrangements to do so.

So maybe I should welcome misguided businesses trying to mislead electors about the trade and jobs position, as the electorate will see through it and respond negatively to those who put out that lie. What we do know from the polling is any company being too trusting and supportive of our current EU entanglement is upsetting more than half its potential customers in the UK.

We also need to remind electors that in the past certain big  businesses intervened in the debate in favour of the Exchange Rate Mechanism, a ruinous policy which destroyed many jobs and hopes. These same big companies also tried to get us to join the Euro, though here wiser decisions were made by the politicians. As these pro Euro companies have been twice badly wrong, their credibility as they tell us today the current EU is just fine for them should cause us to doubt rather than to fall in line. I do not recall any large company leaving the UK in the way they threatened when we did  not join the Euro, so they presumably did change their mind in a sensible way about that aspect of the EU plan.

A few days ago we read of the strong relationship between Germany and the UK. Mrs Merkel was feted on her arrival here, and given the “royal” treatment to show her importance to us.  I wrote then that Mrs Merkel was never going to offer the UK a good deal prior to an election and without any threat of withdrawal if we are not offered  a sensible new set of arrangements. She was bound to wait to see what happens, and heard from Mr Miliband and Mr Clegg that they do not want either a referendum or a new relationship with the EU. The time to demand a new deal is after the election, if the Conservatives win, when we can explain to her the wish of the majority to simply leave the EU if a new relationship that works for us is not forthcoming.

Yesterday I found myself in agreement with Mrs Merkel when she argued against economic sanctions on Russia. On this occasion the UK seemed to have forgotten their aim of building a stronger friendly alliance with Germany, and instead disagreeed with her over this issue. Mrs Merkel clearly has no wish to run the risk of losing access to Russian gas, vital to German industry. Nor does she want to stop selling BMWs and Mercedes to the Russian state and its richer citizens.

If Germany does not think the Ukraine’s sovereignty is worth the loss of some luxury car sales, the UK should not think it worth the loss of  financial and banking services for Russians in London. If western banking centres are regularly overriden by governments seeking to freeze or confiscate foreigner’s assets held here, the banking centres will soon be undermined. Of course in extreme cases where leaders of foreign countries commit crimes against humanity and are likely to have to stand trial in due course at the Hague we can take early action on their money. Individual rich people who have committed financial crimes also are a fair target for the authorities.  It would not be wise to extend this to disagreements about courses of action which fall short of the criminal.

The best thing to do in the Ukraine is to await the outcome of new elections. Then a democratic Ukrainian government can negotiate with Russia over Russia’s military rights in the Crimea. It is probably going to take at least much strengthened devoltuion to the Crimea from here, or possibly the Ukrainian government accepting the outcome of a referendum of all the Crimean people on what they want for their future. The west should favour new elections and a referendum, to settle things democratically, and should tell Russia she too should pledge to respect the outcomes of these forthcoming votes.

 On Tuesday evening I had dinner with representatives of the Engineering industry. The Chairman of the EEF made an impassioned speech about the damage dear energy prices are doing to UK  industr. He explained just how high the energy bill of a UK steel producer is compared to the bills of equivalent producers in the USA.  He told us that there are periods of some winter days when penalty tariffs come in, making it necessary to close a plant. I agree with him that this is a big problem for the Uk , given its sensible wish to create more industrial activity here.

The EU thinks it knows what you like – dear energy.  Their latest plans for new carbon dioxide targets entail cutting CO2 emissions by 60% compared to 1990 by 2030. 27% of the electricity must be generated from renewables as part of their preferred method of hmitting this new target.

It is true that this time they are not imposing individual targets on individual states, unlike our current demanding targets. However, I assume we must take these new targets seriously. They mean a further substantial rise in EU energy prices.

I assume the EU expects success partly because this policy must cause substantial furtehr de industrialisation in the EU. Given the much higher energy prices this implies compared to the USA’s cheap gas or China’s coal, they must be factoring in a furtehr large transfer of industrial activity outside the EU.

It would have been better if their new targets had been CO2 emissions needed to produce what we consume, rather than the CO2 taken for what we produce. Importing energy intensive products will not help the overall world csamapign againstg CO2, though it will leave us poorer and the parts of the world making things richer.

Let us hope the UK can get on with its own shale revolution, and discover enough cheaper gas to give us a chance. The US is both  cutting its CO2 and providing plenty of cheaper power for an industrial revival. We need to follow that example. One of the ironies on Tuesday night was to hear businesses who rightly complain about the cost of UK energy at the same time defend our current memebrship of the EU, without apparently understanding the importance of EU decisiosn to the UK’s dear energy.

The BBC’s film on Monday night about London’s economy was a good discussion of an important issue. It showed the dynamism and growth of London well, from the hi tec cluster around Old Street to the redevelopment of Euston, from the new London Gateway deep water port through to Crossrail.

Large cities do attract large amounts of investment and talent when they have the right framework of tax, regulation and transport to make themselves attractive to the footloose and entrepreneurial of the world. On balance the BBC argued that the rest of the UK benefitted from London’s success. They showed people commuting over long distances to obtain better paid jobs. They showed large companies like Google attracted to London by the people and the opportunities in the capital. The general story showed that nothing succeeds like success.

London has its critics elsewhere in the country. Some say London gets too much of the nation’s public investment, citing Crossrail and tube investment in recent years. Yet if you look at public spending per head in total London is at the bottom of the table for the UK, falling way behind the North East or  North west of England. My recent visits to other cities around the country demonstrate substantial public capital investment in  trams, trains, and new public buildings outside London, as well as the much higher levels of revenue spending.

The proramme did not consider the amount of tax London pays. Given the much higher incomes enjoyed on average in London, London does contribute far more on a per capita basis than other parts of the country to the general taxation totals. The ability of London to entice in the rich and famous from around the world, and to provide offices for many high paying companies, does ensure much higher tax revenues for the UK as a whole.

Some seem to think there is a given lump of  private investment for the UK and that London takes too large a share of that. As Mr Davis argued, London is in competition with other large cities around the world. If a company or rich investor decided he did not like London, he would probably go to New York or Shanghai or Hong Kong. Manchester and Birmingham would be less likely on his list of places to consider.

Mr Davis made a good comparison with the nineteenth century when the industrial north contributed relatively more to UK GDP, income and tax than it does today. It then provided an additional motor to London for the UK economy. It would be good indeed to recreate such success elsewhere in the UK to complement London’s achievement. Having a successful London is not an obstacle to success elsewhere, as the nineteenth century showed. We need to show skill in harnessing London’s success to help generate more growth in our other cities as well. Oxford, Cambridge, Edinburgh and Milton Keynes show that you can do so from a smaller base.

               The EU visionaries want an EU empire from the Atlantic to the Russian border. I assume even they do not wish to push on to the Urals, well inisde Russia’s own territory, though sometimes rhetoric says otherwise. Recent events have shown just how difficult that will be to achieve.

                 In Scotland some want to split from the UK. The UK is relaxed about it and has agreed it will be settled by a referendum of the Scots. The EU is anything but relaxed, threatening an independent Scotland with no membership of the EU. The EU fears that a Scottish exit from the UK and the EU could create a popular precedent, likely to be followed by Catalonia. If both the UK and Spain were split, parts of the western edge of the EU would crumble. If Scotland left the UK, maybe England would be even keener to vote out of the EU altogether.

                Meanwhile, in the east, the EU empire has pushed too far too fast to get the Ukraine into the EU net. Russia has  preditably baulked at that, and has responded by seeking to split the Ukraine into a Russian sympathising area and an EU one.

                 The history of European empires, unions and currency unions  is a history of instability and break up. An EU empire from  the Atlantic to the Russian border is too big to be realistic. There will be several areas, regions or countries that do not agreee with this drift of policy. We are now seeing the costs of this vision, and the problems posed by the f0rces who disagree with it.

                Let us hope the EU wakes up to the reality that a lot of people inside the current EU and its  wider sphere of influence do not want to belong to a new European empire, before the actions of those straining to get out causes worse problems .

One of the biggest errors  the pro EU advocates advance is the idea that the EU prevents war in Europe. As we are now seeing, there is the opposite danger. The EU’s actions and words in the Ukraine have helped create a dangerous power vacuum which Mr Putin is exploiting for Russian advantage. Whilst it is Russia which today threatens the peace and has acted illegally and rashly, we do need to study carefully the origins of this flare up.

The intervention of the EU in the break up of the former Yugoslavia also failed to prevent war, and some would say made that conflict more bitter and damaging.

The EU was all too ready to encourage  those who wished to overthrow the elected President of the Ukraine because he had declined to advance the interests of the EU in the Ukraine, preferring a stronger relationship with Russia.  I have no time myself for the evicted President, nor for the way Russia is behaving. The main threat to peace comes today from the Russian army, which seems to have taken control of Crimea on the pretext that they were invited in by the Crimean government, against the wishes of the Ukrainian government. Russia has violated the sovereignty of the Ukraine against international law.

I do however, think the EU should be more careful in how it proceeds. The President of the Ukraine  might well have been evicted in an election quite soon if as the EU thinks enough people in the Ukraine prefer the EU to Russia. A little patience would have allowed an orderly transition to a newly elected person with more moral and political  authority than the present interim government of the Ukraine.

Instead, pre-emptive and illegal action against an unpleasant regime led to the deaths of protesters, and the deaths of some police, before enough police defected and the regime fell. There is now a power vacuum, with a new unelected government who cannot command the support of the east of their country. This has allowed Russia to enter, claiming an invitation, with a wish to win a referendum to split the country. The west has been wrong footed. The Russians have taken the initiative and have gained a stranglehold over the Crimea well before the interim Ukrainian government or its friends in the west could organise any response on the ground.

The EU does not have the military power to take on Russia. The west will have to look to the US President to lead its response, as only his words are backed by overarching military power which even Russia respects. It looks as if the western response will be controlled, and based on imposing sanctions against Russia all the time she has troops occupying parts of Ukraine. Russia is likely to press on with its plan to hold a referendum and secure the consent of the Crimean people to the return of Russian government. If the west is lucky from here the limit of Russia’s ambitions will be the Crimea.

The UK should stay well out of this conflict. We should also make it clear that the UK does  not want to be part of a common EU approach on this matter, and certainly has no wish to commit troops to any common purpose EU force to intervene. The UK has never signed up to the concept of a common EU army. We must make sure this type of crisis does not lead to one by stealth that involves us. The world does not need another large power seeking to enforce its views of the political future on smaller states.

Some in the media condemn the west’s weakness for not make military moves over Ukraine. I for one am glad the west is not threatening military action. Just because the UK saw the Crimea as an area of concern at the height of our imperial power, does not mean that today the future of the Crimea is worth the lives of British soldiers. The UK has to accept it does not have the military might sufficient to take on Russia, so it should not attempt some modern equivalent of the charge of the Light Brigade.

It is true that Mr Obama’s refusal to make warlike noises may well encourage Mr Putin to intervene by proxy in the Crimea. Mr Putin sees the Crimea as a crucial interest, close to home, once part of the Soviet empire, and important to his Black Sea fleet. Mr Obama has a simple choice to make. Does he wish to threaten Russia, saying he will strike against any Russian troops deployed? If he did this how could he be sure they were just Russian troops he hit? What if they are fully supported by the local Russian speaking population? How could he confine the military battles to local troops concentrations in the Ukraine without extending it into a fight against the whole might of the Soviet military? Any threat or intervention is fraught with difficulty.

Mr Obama as always on military matters is gripped by indecision. A stronger President may well have threatened Russia with the full might of the US military machine. A credible President would by this means have deterred a Russian advance. Mr Obama does not have that stature or image in the world, so he has to accept that Russia will push the boundaries of acceptable behaviour more.

As for the EU, it is all talk and no might. May it stay without might, but will it learn to speak accordingly?  I have no wish to be dragged into a war about who governs the Crimea thanks to membership of the EU. I do not see the Kiev government as some new saviour of democracy and upholder of my values, any more than I like the people who have taken some power in the Crimea.

House prices in much of London are very high, making it difficult or impossible for many to become home owners for the first time in the capital.

This is not a new phenomenon. The nearest I could get to London where I worked as a young man was to buy a home in Didcot and get on the train. Then as now central London was expensive.

However, today prices are even higher relatively in central London. There is little property available on the market. The two observations of course are related.

Today more is being built in central London than in the past. There are many new towers of private sector flats rising on the skyline and along the Thames. Many of those are being bought by overseas buyers, who like the idea of a well appointed home in the centre of one of the world’s greatest cities. I have commented before that it is one of our luxury exports, just like the Germans selling the same rich people powerful and expensive cars they do not really need either. The flats do generate jobs and income for Londoners involved in building, maintaining and servicing the properties.

There is another reason why London property is scarce. Few people who currently own a flat or house want to sell. Even if they no longer use the property very much, they hold on. If they think they might like to move to the country beyond the city and get more house for less money, they often hold back.

One of the reasons is tax. The new high levels of Stamp Duty are a consideration for anyone thinking of moving. If someone owns a London flat as a second home, they are unwilling to sell and pay 28% on the gain they will have made. Why not hold on for a bigger gain later? Why not hold in the hope that the government might return to Labour’s lower levels of CGT sometime?

Tax and regulation damage markets. The housing market in London is currently suffering from an acute shortage of supply of second hand properties. Part of the reason is tax based. Stamp Duty is effectively a tax on London.  The government could see if it can help. There is also space for more development in London, as more new homes will also assist.