Author: johnredwood

The economies of Europe rely in no small measure on building luxury brands and selling the products to the better off of the world.

The brand of champagne is one of the oldest and most famous of these products.We can learn from the French success at building this brand. It is a way for relatively affluent French workers to maintain their living standards in a very competitive and tough world.

The brilliance of the brand and the marketing is obvious. The product is defined by association with success, happiness and life’s landmarks. Most want or aspire to a champagne wedding, a champagne moment in sport, a glass on graduating, a taste at landmark birthdays. This wine gets ample free publicity every time someone wins a grand prix or a test match. No-one suggests putting the champagne on ice for a funeral, or to drown sorrows if you have just failed your exam or lost the race. Champagne, by ruthless control of the settings and the brand values, has achieved the ad man’s dream of only good associations.

They have also achieved the use of the word for something more than just a product description. A “champagne moment” is not literally one where you sip champagne whilst taking the perfect cricket catch or scoring the best goal. The champagne lifestyle is more than affording a bottle of bubbles on saturday night.

The brand is sustained by strict controls. No-one outside a specified area of France is allowed to make a champagne, though there are plenty of winemakers elsewhere in the world who can make great bubbly wines, and can use similar techniques to the French. Controlling the use of the name keeps the wine scarce and keeps prices high.

The high prices are buttressed by draconian controls in champagne country itself. Only designated fields can grow champagne grapes, and the wine can only be made from three controlled varieties. Other fields adjacent to the vineyard, with similar soil and same aspects, are not permitted for crop expansion. The premier cru wine has to be made from just a few designated special village areas. No other grape will do, however good the alternative grape might be.

Talk to the believers in champagne and they will tell you it has to stay this restricted. The “magic” comes from the scarcity. Others outside might say that as the world is producing so many more better off people who want their own champagne moments, maybe they could expand the vineyards and increase the output more rapidly without damaging the brand and the prices. After all, Germany has mass produced luxury cars under the Mercedes and BMW labels and got away with it. They are still thought to be luxury or special by many people, even though there are so many of them now.

If Europeans want to keep up their high living standards in a world where many more countries are working smarter and harder, Europe will need more of these great brands. Europeans also need to know how and when to stretch the brands, so they keep their magic but serve many more people. French winemakers underestimated the excellence of their Californian competitors in the second half of the last century, only to be forced to recognise their quality and excellence in the end.

         It is conventional wisdom that a party needs to be united to win an election. This bears little relationship to reality. After  all the Conservative party of Margaret Thatcher was divided between wets and dries,with very different views on the economy and public spending, yet won three big victories. The government of Mr Blair was dominated by a major rift between himself and Mr Brown with daily stories of their rows from the battlefront, yet they too won three  large majorities, albeit with a falling percentage of the vote.

           However, perceptions matter and many people write the line that unity is good. I agree that it is better if the party is happy and broadly of the same view on the main issues, encouraging and supporting  the leadership in the preferred direction of travel. To achieve this requires not just mature conduct by followers, but also wise choices by leaders. It also requires controlled and supportive briefings of the press. Some argument and disagreement is also a good idea as well as inevitable,  showing and recognising  that the party is actively thinking and debating how to do better. The party in the country and most of the MPs want the party to move quickly to giving us a new relationship with the EU that frees our democracy from EU government intervention.

           I have read in recent days that the Chief Whip is to be replaced. I have seen reference to at  least three people who might get the job. It is possible all this is made up by bored journalists, but it is more likely that someone thinks this kind of briefing is helpful. All it can do is pit colleague against colleague and lead to disappointments.

           I also read of several members of the 2010 intake who are due promotion to the threshold of the Cabinet, and several others who need to be brought into Ministerial positions. That is great for them if it happens, but in the meantime all those currently occupying the Ministerial jobs they might get are going to have a miserable time.

           I often read that there are two Conservative parties, the 2010 intake and the rest. It does not feel like that inside Parliament. The 2010 intake is a large one, with plenty of talent . It also has a very wide range of views, and  some strong campaigners.  It is interesting that members of the 2010 intake have led all the large rebellions in this Parliament, tabling the proposals on an EU referendum, Lords reform, cutting the EU budget and writing the letter on intervention in Syria. Far from being the loyal inner group having to fend off difficult colleagues from earlier intakes as some of the stories imply, they have often been the fire brands for change.

              A more united party needs to read in the press that the leadership likes the MPs and followers, and is happy working with them in the national interest. Stories about divisions can help create the very divisions we do not need or want. It is not a good idea to divide up MPs into modernisers versus traditionalists, or 2010 ers versus the rest. In Parliament all MPs are meant to be equal, each having one vote on every measure, and each having the same duty to represent their constituents.

          It is interesting that the party is very united in its enthusiasm to vote for a Conservative Bill to hold a referendum in due course. The party is also keen on many of the  measures to bring down the deficit by curbing the growth in public spending, and  keen on the Schools reforms as well as other government measures.

          According to the BBC there are six conservative candidates in the Iranian election, with one of them dubbed a “moderate conservative”  to imply he is the favoured one. Is this the best the BBC can do to describe and explain an election in a very different culture and political system? It seems designed to lead people to think they are like “Conservatives” in the UK. I doubt there are many policy and philosophical similarities between UK Conservatives and Iranian “conservatives”. If a single label describes all the competing candidates it is not a very helpful label to distinguish between them.

            MPs who have argued with Mr Hague against the UK arming the rebels have been told the purpose of arming the rebels is to provide the leverage on the Syrian government and its supporters and opponents to bring them to a Peace Conference.  This has not impressed the MPs who have heard  this argument.

             Now the USA has decided to arm the rebels we will find out if it does bring all to the negotiating table. Now the US intends to arm the rebels there is no obvious need for the Uk to do so as well. Let’s see if it works. Most MPs do think the answer to the Syrian war is a negotiated peace and wish all involved every success in bringing this about.

There is still intense debate in Whitehall and Westminster about how to reduce the growth in public spending in 2015-16. Groups of Conservative MPs are bubbling with ideas on how to do it.

The most popular ideas remain cutting Overseas aid, cancelling HS2, reducing subsidies to expensive ways of generating electricity, and cutting the overhead of government.

Some are saying the government should cut the number of departments merging Overseas Aid with the Foreign Office and DCMS with a mixture of Business and Education to save Ministerial and official salaries.

The Green Investment Bank proved to be very unpopular on this site. Maybe they should be  asked to raise the money they wish to invest in their fund from the private sector to save the taxpayer the costs.

Conservative MPs are also keen to put welfare onto a contributory basis so recent arrivals in the UK do not receive any taxpayer financed benefits, and to ensure the NHS charges all people for treatment who are not UK citizens or people with an established right of residence here.  They are also keen to send criminals back to their home country for trial or for imprisonment after trial.

It will be interesting to see how many of these more popular cuts get into the final policy. Many Conservative MPs will also vote against sending free weapons and other military assistance to people in Syria.

          I support the Board and Mr Hester’s decision to seek a new CEO now who can see the bank through privatisation. The Labour party is making heavy weather of this development, ignoring the fact that Mr Hester is not seeking to keep the job, and failing to understand the need for continuity of management from a new CEO over what might be several years of privatisation and its aftermath.

 Yesterday I met the Leader of the new anti Euro German party, Professor Bernd Lucke. We had discussions in a small group, followed by a public lecture which he gave at Westminster.

He told us that as a German economics professor he went along with the consensus in the 1990s and argued that the Euro was a good idea. They thought the discipline of the Euro would force other EU nations in the currency to control their budgets and to become more competitive, so they could live side by side with Germany at a fixed exchange rate settled and enforced by the  Euro. He took comfort from the No Bail Out clause, which he thought offered a guarantee that member states in the Euro would have to accpet the fiscal and trade discipline, as they would be unable to resort to excess borrowing.

In 2010 Greece succeeded in establishing the principle that a struggling Euro member could indeed borrow more money from the EU and the IMF. Greece also went on to demonstrate that a Euro member could  renege on parts of its debts.  This changed Bernd Lucke into an opponent of the current Euro scheme. He apologised for misreading it in the 1990s, when some of us were warning what a disaster it could be for countries that had not brought their economies and budgets into line with Germany as required by convergence programmes.

He now thinks the troubled southern members of the Euro area should leave the currency union and devalue, to try to sort themselves out. Thereafter he thinks it may be necessary for Germany to leave the remaining currency union, as he thinks it is also a strain on France and the other members.

 He said that most people in Germany still support both the Euro and wider EU integration. Support for the EU is stronger than support for the Euro, and more Germans are now starting to worry about the social and economic strains the Euro scheme is imposing on some members. In particular many Germans agreee with Professor Lucke that there should be no more  bail outs.

His party currently has just 3% of the vote. If it is to make it to 5% to get representation in Parliament under their PR system, he is going to need to get acrosss vividly and frequently the points that the Euro scheme is miscarrying, and that Germany will be expected to pay more of the bills. German audiences should understand this, as after all they paid huge bills to try to get their own ostmark-DM currency union to work in the 1990s. In that case the area joining was much smaller, and they shared a common language and culture. The same cannot be said of Greece, Spain and Portugal. Professor Lucke is a fan of the approach adopted with Cyprus, making depositors and  bondholders pay more of the losses. This has in effect created two different currencies, the standard Euro and the Cyprus Euro. The Cyprus Euro is not freeely convertible if you hold too much of it in the wrong banks, and may be devalued by the authorities when you try to draw it out of the bank.

 We learn that Labour is to be told to abstain on the Referendum Bill when it comes before the House. It just shows how little Labour cares about whether we have a UK democracy or not. They do not have the decisiveness  to come and try to vote it down, but nor do they have the wisdom to come and support it. The party that denied us a referendum on Nice, Amsterdam and Lisbon when in office, now does not want to help to give us a referendum on a future attempt to sort out  the totally unacceptable relationship we currently have with the EU as a result of their federalising policies.