Category: Blog

I have been a pessimist about UK commercial and residential property.

Values of commercial property have been falling for months. Commercial rents are weak. There is a substantial overhang of space. Retailers have gone bankrupt, leaving empty shops. Considerable new space is being completed in the City when tenant demand is weak. Businesses under pressure find it difficult to meet rising rent demands, and are often looking to reduce their floorspace as an economy measure. There are some brighter spots, and there are some buyers about seeking to find bargains now there has been a sharp fall.

Residential prices have also fallen, though less dramatically than commercial prices. Some estate agents now say there is a shortage of supply, and think prices might now stabilise or even rise from here. Normally it takes rising real incomes, stronger mortgage provision and an end to rising unemployment to provide good upward momentum to house prices, but these are unusual times.

There are two arguments the bulls put forward that are worth examining. The first applies mainly to central London. The apparent fall in sterling prices can be doubled for a an investor coming in with one of the stronger foreign currencies. To the overseas buyer London property looks a lot cheaper than it does to sterling based buyers who live here. There are cash buyers around who have always fancied smart London base who think now is a good time to take advantage of the apparently cheap prices in their currencies.

The second consideration applies more widely. The supply of homes onto the market is very limited. Many people do not think they could sell their property for a decent price, expecting the market to be poor. Trading up is being delayed by people worried about their job prospects or expecting lower prices for the bigger home if they leave it for a bit. You might expect more distressed sales. With interest rates very low more people can mange the mortgage. More institutions so far are seeing through customers with temporary difficulties. This could change for the worse as unemployment climbs.

We have probably seen the biggest part of the falls in both commercial and residential property. There will be some who buy at a discount to current prices where there are distressed sellers or properties with potential and take advantage of current lower levels to find longer term value. We need to remember, however, that the existence of some foreign buyers for London property and the existence of some hotter spots within commercial property does not overnight solve the difficult credit conditions, the falling rents and the poor outlook for tenant demand. If the economy grows more slowly this decade as we fear, and if there is less credit around, we have to adjust to a different level of property values overall relative to incomes.

I hear mixed reports about the banks. Some people and businesses report great difficulty in getting a bank loan for a good purpose, high fees and charges, even difficulty in keeping what banking facility they do enjoy. Others tell me things are more normal, and there is money to borrow for those who have a good reason.

I do not detect any better service or especially different credit policy at the banks where the public is a large an forced shareholder, than I do in the remaining private sector banks. It seems to be business as usual, as attenuated by the Credit Crunch.

There is a lack of decisive action at the semi nationalised banks, to cut their losses, cut their costs, sell off their overseas and investment banking arms, and concentrate what resource they do have on the UK domestic and commercial banking activities. Yet that is why I thought the government stepped in, to try to ensure a better flow of credit to families and companies.

I would like to hear from you about how your banks are behaving. Is there credit available? Have your banks been cutting staff and cutting costs? What has been happening to fees and charges?

In current conditions banks ought to be able to make good money on new business they undertake. The gap between their borrowing costs and their lending rates is high. They still have a lot of past business to sort out, with more write offs possible, so they are going to need to improve their service, write better business and reduce their costs if taxpayers arte to be soared big new losses.

The PM’s sudden interest in a different way of voting looks like the action of a man who is worried that Labour cannot carry on winning under the tried and tested system of first past the post.

Proportional systems have many drawbacks. They lead to more extreme parties with more chance of them securing elected representation. They break the link between some or all Members of Parliament and a constituency. They are more likely to produce weak governments, without majorities. They can give parties more power and people less power over who the elected representatives are. List MPs need to be obedient to party, and are less likely to stand up for the interests of those they represent.They can transfer the decision about who governs from electors, to parties negotiating with each other after an inconclusive election.

The alternative vote system which some favour is not a proportional system. It is a system which allows in any given constituency the backers of the least popular parties the effective right to vote twice, whilst supporters of the more popular parties only vote once. What’s fair about that? Why should the backers of the joke or single subject parties have the right to decide who ends up winning, when that may be someone different from the person who got most first votes?

What we need from the government is action to control the deficit, to get some value out of public spending, to scrap ID cards and regional government, to get powers and money back from Brussels and to cut the bossiness and waste that abounds in Labour’s governing machine. There is a rumour they might at last scrap ID cards – bring on the day. If they do want to get into constitutional reform, they should start with a referendum on the Lisbon Treaty as they promised, so we can all tell them what we think about the huge transfers of power they are making to the EU.

For the time being the cyber coup is over. The PM’s spinners took to the airwaves after the Parliamentary Labour Party meeting last night to report his victory. The few plotters that have gone public appeared defeated for the time being. There are veiled threats about the autumn. It is difficult to see they will have better circumstances then than they have now.

If they had the numbers to bring him down, they would have done so this week-end. If they had kept the Ministerial resignations rolling, and if each resigning Minister had criticised Mr Brown as a few did, it could have brought him down. If the backbenchers had been able to raise a significant number of names, and then started to announce new names every day, they might have forced a contest. Instead, both groups failed to work together, some appeared to be following their own personal agendas, and they were outspun by the centre. The rebels so far have lacked leadership, lacked planning and lacked resolve.Lots of Labour MPs do not like Mr Brown, and do not rate the party’s chances highly under him, but they have not yet been persuaded there is a better option that would save them.

Mr Brown has promised to listen more and to take his backbenchers more seriously. That will mean a tack to the left. The best thing he could do is abandon the Post office plans. Selling a minority stake for not very much, and leaving the taxpayer with the mighty pension deficit, was never a good deal. That could be the best bone to toss to the half starved backbenchers. It would mean the task of changing the Post Office would be left to the next government, who would then have a freer hand to do a decent deal that made sense for taxpayers and the business. I would want it to include a substantial employee shareholding.

People are writing to this site complaining that I have reported the true figures for the European election results. You cannot get away from the fact that the main party established to propose immediate withdrawal from the EU only polled 17% of the votes. We know it has never won a seat and is unlikely to ever win a seat in a first past the post election to Westminster, so we know it can never deliver its promise of withdrawal. That requires the votes of at least 323 MPs. Now, two elections on, we know it cannot command anything like half of those voting in a PR election where people are meant to vote as they think and feel. Without overwhelming numbers it is not going to get its way.

Some write in to complain about my viewpoint. Often they are people who voted Yes in 1975, the last time the British people were offered a referendum on Europe. I voted “No” on that occasion. I voted “No” because I did not believe all those politicians and business leaders who told us we were voting for trade and friendship – things I do want. I read the Treaty. It seemed to me we were voting for a journey towards political union, inviting too much legislation, bossiness and expenditure along the way. I have not been surprised by what has happened next.

As a democract, I have felt obliged to accept the verdict of the British people in that referendum. I have also demanded referenda on Nice, Amsterdam and Lisbon, all Treaties which the Conservatives have opposed. I have interpreted the vote in 1975 as a vote for a “common market”, and have always since spoken in favour of remaining part of some such arrangement, whilst condemning the many moves to federal government and centralised power in other fields.

The Eurosceptic movement needs to unite to fight the European leviathan. Treating each European election as another opportunity to send a mesage to other Eurosceptics gives great comfort to the federalists. They are in a minority in the country, but they have enjoyed solid majorities in Westminster for the last twelve years. Are Eurosceptics ready to do anything about this yet? Or do they wish to remain fragmented and without the numbers to start to change things for the better?

With most of the votes counted, four parties emerge with gains of more than 1% – Greens ( plus 2.5%), BNP (plus 1.4%), Conservatives (plus 1.2%) and English Democrats (plus 1.1%). Two parties have losses of more than 1% – Labour losing 7% and Lib Dems losing 1.1%.

UKIP added little to last time. 21 parties failed to score more than 0.5%. Yes2Europe polled 0% or 3,000 votes.

So what can we make of all this?

It proves that PR drives more people to extremes.It shows that it leads to a huge fragmentation of parties, as more and people set up parties to express their view but fail to get their message acrosss, or fail to adopt a popular message. It leads to laziness by traditional party campaigners – local homes in my area were only contacted by the Conservatives and UKIP, with nothing from Labour or the Lib Dems.

The Lib Dems came out of their preferred voting system particularly badly, despite help from the BBC to boost their chances. Although we were told they were less affected by the expenses saga, that is not how it came across in the Telegraph. They always suffer in Euro elections from their enthusiasm for all laws European and their wish to transfer ever more power to Europe and to bogus regions.

Those who want to pull out of the EU immediately had another bad night. Parties espousing that cause could only marshall about one fifth of the popular vote. They did manage to keep the Eurosceptic vote split. Those who want more Europe had an even worse night, as the majority opinion was Eurosceptic.

The commentators are concentrating on what it means for Mr Brown. It looks as if it means he staggers on, because his critics can wound but cannot kill him politically. As one said this morning, the results are so bad few Labour MPs will want an election any time soon.

The headline for the EU as a whole is a big win by the centre right. I take no joy from that. The so called centre right, the continental winners, are all parties that want more European laws, regulations and centralised power. They all want to do things that will make Europe less prosperous and less free. I am just glad my party today is fully detached from them. At last we have a full complement of Conservative MEPs all elected on a ticket which expressly rejects their federalism. What we need is a European Parliament that slashes the power and spending of the great bureaucracy, repeals laws and gives powers back to member states. Instead What we have outside the UK is more of the same, business as usual for the political class of Europe.

Did I miss something Caroline Flint said or did?

She was on the threshold of the Cabinet, in the important job of Europe Minister. Her goverment’s policy is to join the Euro in due course, to ratify Lisbon and to increase the powers and common purposes of the Union. I never recall her hinting she disagreed with any of this onward march to federalism. She never one hinted she wanted a change of policy.

In which case, where were the important and influential speeches to try to persuade a Eurosceptic UK that we needed this rash of extra Euro governent and centalisation? Where were the attempts to shift public opinion in her direction?Why did more and more people decide to vote Eurosceptic during her time as Europe Minister?

And when it came to standing up for the UK’s interests, by blocking unwanted laws and amending or repealing undesirable ones, when did she ever change anything for the better?

I accept that competence is often not a requirement for office in this government, but I do not see that she ever made a case for a more senior post by anything she did or said.

Much of the interest of the commentators looking at the European election results in the UK will be directed to the poor showing of Labour, and the implications that has for Gordon Brown. Some saw the election as a chance to express their general displeasure about the government. We will probably see the poorest ever result for an incumbent government. We then await Labour MPs responses, to see if any more want to join the ragged rebellion. It looks as if the PM is persuading would be rebels that a new leader means the General Election they fear. His message of delay seems to bring him reluctant support.

As some one who sees our current immersion in an intrusive and badly run European federation as part of our problem of overgovernment and wasteful public spending, I will be looking at the balance of votes between the federalist parties – largely Labour and the Lib Dems – and the Eurosceptic parties – the Conservatives and the range of pull out and democrat parties congregating on the Eurosceptic side. We cannot deal with overcentralised bossy government and excessive public spending without tackling the impact of Brussels on us too. For too long the Eurosceptic majority in the UK has been thwarted by its own splits, and by the willingness of too many Eurosceptics to vote for federalist parties at Westminster. My biggest frustration in the last decade has been the overwhelming federalist majority in the Commons, which has never reflected the mood on Europe in the country. Conservatives were alone in voting against Nice, Amsterdam and Lisbon.

If you ask the public in opinion polls if they want the Euro they tell you by a 4 to 1 margin they do not. Yet more than half of the public typically vote for Euro supporting parties in a General Election. If you ask them if they want Lisbon, again 4 to 1 are against, yet more than half vote for Lisbon supporting parties at a General Election.

In a PR Euro election people can show their displeasure with Labour by voting for a different federalist party ( e.g Lib Dems), or a Eurosceptic party (Conservative) or a pull out party. For me, the choices made will be important for the impact it might have on the future conduct of European policy. Let us hope that a majority this time have voted Eurosceptic. I suspect this time we will at last see a majority overall voting Eurosceptic, split between those who want substantial powers back with a new single market based relationship, and those who want to pull out altogether. In presenting the results we need to concentrate less on the obvious splits in the Eurosceptic movement, and more on the fact that a majority want less Brussels government. Surely this time the British people will have spoken, and told the politicians they want less Brussels power, less Brussels waste, less Brussels lawmaking and less Brussels spending?

A constrained PM had to keep many of the old faces. I doubt if we will see an invigorated government suddenly putting right the wrongs of past years, suddenly gripping the agenda and pointing the country in a new direction.

The new Home Secretary could cancel the ID computer, saving us loads of money. He could tell us he will dismantle the worst features of the surveillance society, removing cameras, prying powers and meddlesome rules. To protect us he could instead put in proper border controls. Don’t hold your breath.

The not so new Chancellor could tell us when and how he is going to get out of quantitative easing, and when he will normalise interest rates and give savers a better deal. He could start to control costs and spending properly.

The new Communities Secretary could save us the money and hassle of unelected regional government by abolishing it. He could devolve some power to people and Councils away from the centre.

The new Europe Minister along with the old Foreign Secretary could hold the promised referendum on Lisbon, and try and explain to us why they have given so much of our power and money away – even better they could start to get some of it back, as a contribution to cutting the costs of the public sector and curbing the powers of big government.

The trouble is, the idea that this is a new government is just spin. It will be more of the same. Tacky sound bites, family squabbles, more wasted money and ever more power to the centre.

The PM was wise to keep Mr Darling and his accountant tied to the mast, and to keep Mr Miliband close by. It was sensible to promote the potentially dangerous Alan Johnson. Mr Mandelson seems to be calling the shots, and has the Hesletine slot as Deputy PM as reward.

He may now be able to cling on. It all depends on how many junior Ministers now resign in anger, and how many Labour MPs demand change. My guess is the ship remains becalmed and holed but stays afloat a little longer.