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If NATO escalates with Russia and starts shooting down her planes it has to be ready to fight a full war. It may well be that Putin  the bully backs off, but it is a risk.  I’ve little doubt NATO would in the end win such a war, but there is also no doubt there would  be massive loss of life and damage before victory was secured. I am certainly against the UK on her own shooting down a stray Russian plane provoking NATO somewhere over NATO’s eastern border. There is no need for us  to take such a risk.

Given the structure of NATO any NATO member would be ill advised to take the risk without being  sure the US would commit her forces to any resulting fight. If Putin thought the US would not turn up he might well call European NATO’s bluff. In the end the European powers could defeat Russia, but it would take time to get the economies onto a war footing and to get anything like the scale of army and weaponry Russia has already committed to Ukraine. If the US backed the shooting down then there is much reason to suppose Putin would back away.

The immediate response to Russia should be as it always has been to provocative intrusion into our waters and airspace. Put force alongside them and make clear they could be destroyed if they showed more evidence of ill intent.

The UK should concentrate on defending its own airspace and the seas around our islands. History taught us in 1914 and 1939-41 that we could not rely on the US to come to our aid on the battlefield. The US only entered the second world war after much reluctance by US voters because Japan stupidly attacked the US fleet forcing the US into the war. In the post war world of NATO the US and other allies did not come to our military assistance to defeat the illegal invasion of the Falkland islands by Argentina. It was outside the NATO area but that need not have stopped them helping us. We needed our own forces, and just had enough to do the job thanks to their skill and bravery.

The priorities for our increased defence spending must be an Iron Dome over the UK islands to protect us from incoming drones, missiles and planes. It must include enhanced cyber capabilities and much larger and more diverse drone squadrons. It should  include enough submarines and support vessels for our two carriers to be able to police our home waters and have expeditionary capability beyond. It also needs a larger army.

There is much misunderstanding on this side of the Atlantic about the nature of NATO membership. NATO fully respects the sovereignty of each member. Unlike the EU it does not require members to do anything they do not wish to do, and has no legal powers to enforce its policies. Many Europeans think that because the Treaty says an attack on any one is also an attack on the rest the US would automatically come to their aid and fight their war for them. This faux pas has led  many European countries to  provide insufficiently for their own defence whilst sheltering under the US umbrella.

Article 1 favours NATO members finding peaceful means to settle disputes and warns against them using any threat of collective force in international relations that the UN would not approve. The crucial Article 3, much forgotten, urges each member to build up their own individual defence capacity.

Article 3

“In order more effectively to achieve the objectives of this Treaty, the Parties, separately and jointly, by means of continuous and effective self-help and mutual aid, will maintain and develop their individual and collective capacity to resist armed attack.”

The better known Article 5 does indeed says an attack on one is an attack on all, but it goes on to make clear that does not require all to respond by declaring war on the aggressor and joining the battles.

Article 5

“The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all and consequently they agree that, if such an armed attack occurs, each of them, in exercise of the right of individual or collective self-defence recognised by Article 51 of the Charter of the United Nations, will assist the Party or Parties so attacked by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area.

Any such armed attack and all measures taken as a result thereof shall immediately be reported to the Security Council. Such measures shall be terminated when the Security Council has taken the measures necessary to restore and maintain international peace and security .”

In other words whilst NATO can ask each nation to join in a war, each state can decide instead to simply issue a condemnatory statement, impose sanctions, or seek diplomatic redress as it sees fit.

With the US spending around two thirds  of NATO’s  budget and supplying a higher proportion  of the fighting resources the other members are right to be concerned about committing NATO to any action where the US may decide to exercise its right not to contribute. The European members are now increasing their spend .  President Trump has been insisting that European members of NATO make a much enlarged contribution to their own defence, as he wishes the US to be less committed to the defence of Europe. So far most of the countries have not made much increase in their capabilities and are very dependent on US heavy lift, air cover, missile protection and the rest. President Trump thinks they need to be spending 5% of the their GDP on defence whilst most have only just got to 2%.

I will consider tomorrow whether the UK  should be willing to shoot down a Russian plane. The context for the decision should be a cautious approach as Poland, Germany and the other eastern members of NATO are much better placed to respond to daily testing of the eastern borders of NATO adjacent to Russia. It would be more normal to intercept and  conduct the Russian plane out of the area. The UK should concentrate on using its current resources to respond to any Russian drone/missile or aircraft intrusion into our airspace which we are much better placed to do from our own airfields and installations. Our usual practice is to intercept and conduct Russian planes out of our airspace promptly, which is a measured response.

 

 

Time was when in Opposition Labour went to town on Conservative economic policy if the IMF, OECD, World Bank or OBR made a bad forecast for the UK. They treated it as if it were the outcome and blamed the government. Sometimes the forecasts were obviously wrong but it  was lese majeste  to claim to know better than a world body.

Scroll on to yesterday. The OECD said UK inflation will remain high by G20 standards- probably right. UK growth will be disappointing this year and next but a bit higher in 2027- could be optimistic about  2027. What was the Chancellor’s response? The UK was doing better because of a small upward revision for growth this year. .She ignored the  worse forecasts for inflation and growth next year. She did not announce any reduction in her targets which on OECD forecasts she will miss.

I have no problem with her disagreeing with the OECD but only if there is good reason to find them wrong. When I look at all the policies she is pursuing, as I explained before and when they were introduced, the policies are bound  to increase costs and prices and to reduce output and growth. So why expect a better outcome?

Higher taxes on business and jobs  destroy work and growth. Large public sector pay awards with no productivity clauses raise costs and increase state borrowing . Selling bonds at a loss and sending the taxpayer the bill contracts credit and private sector activity. Stopping grants to farmers and taxing family farms means less UK food production. Buying renewable electricity at high guaranteed prices with subsidies keeps energy prices high and closes factories.Bans on new oil and gas an on petrol car manufacture literally destroy potential output. And the rest I have set out many times.

How does she think she will get extra growth?  1 From a housebuilding boom with a 50% increase in output. So far with a quarter of this Parliament gone despite her planning changes housing starts are down, making it all but impossible  to hit the 5 year target. We were not short of permissions but short of builders and buyers. 2 From increased public investment which is now constrained by fiscal rules and a shortage of oven ready good projects.  3  From green jobs which turn out to be mainly in China as we import their  solar panels, batteries and turbines.

There is no workable growth plan. If she goes for another budget of more spending in an overmanned public  sector and yet higher taxes on wealth creators, property and business it could be the OECD are wrong again by being too optimistic.

 

The government says it will smash the gangs, stop the small boats. It says it understands the public expects it to carry out this promise. They say they get it that taxpayers are fed up with having to pay more and more taxes to house illegal migrants in hotels. So why do they not do whatever it takes to end this vile trade?

Why did the government repeal the important change to the law the last government passed belatedly, to prevent any illegal migrant from claiming asylum in this country? If they had got on and implemented that Act of Parliament  the main reason for many coming here by small boat would have been removed.  Will they reinstate it?

Will they take up the Conservative amendments to the government’s   recent Immigration  legislation which would remove European Human Rights and UN Convention considerations from any court case people tried to bring about an immigration matter? We should rely on fair UK law that should be geared to stopping the gangs, not encouraging them.

Why does the government not require the authorities to arrest and interview every illegal arrival, asking them to say who they paid for their journey, how they found out about their trip, which was the boat driver for their passage? That would speed smashing the gangs. The boat drivers should all be prosecuted.

Why does the government not require the confiscation of all mobile phones of the illegal arrivals, so they can be examined to find evidence against the people traffickers?

Why does the government carry on paying large sums to France when they fail to stop small boats leaving their beaches and rivers? It must be easiest to stop the small boats before they are in deep water away from shore. We should not  pay for French  failure to police these crimes.

Why does the government pay France to facilitate the French sending escort vessels out to help the small boats undertake dangerous crossing instead of stopping them leaving safer coastal waters?

Why does the government let it be known that illegals will be given a place in a good hotel or will be given priority for housing in  the community if they arrive here? People are not just cross about the use of hotels as the government admits, but about illegals taking scarce subsidised  housing we need for people already legally settled here.

Why does the state order Border Force vessels to meet all the illegal boats  mid channel and undertake the dangerous task of transferring their passengers to a Border Force vessel? If we know that much about these journeys why not use the information to help prevent them proceeding with  their hazardous crossing?

The country is at boiling point over this failure of the UK state. Labour exploited the issue to get into power. They knew how unpopular the small boats were and  promised to smash the gangs. Instead illegal migration has increased rapidly and the changes they have made so far make it less likely they will carry out their promise. They removed the Rwanda scheme to provide a safe place to send people where they should have  reinforced the law to make it work. They claimed  credit for volunteer returnees, largely possible from the previous government’s agreements with other  countries.

 

In 2014 a weak West watched as Russia took over Crimea. It was  part of Russia’s  aggressive policy of expansion in Eastern Europe. Russia responded to the West which had  helped undermine an elected President of Ukraine  because he  was blocking closer ties to the EU  leading to EU membership.

The UK like the EU it belonged to made its foreign policy the return of Crimea to Ukraine. More sensibly the UK stated  it would not send in troops to try to evict the  Russians. Russia made clear it was keeping Crimea and held a referendum which the West did not accept which showed big support for Crimea being Russian.

So what is the reality of our policy to return Crimea to Ukraine? Fighting to do that would kill too many of the people in the Crimea the EU/UK claims to want to liberate. Declaring war on Russia would entail huge loss of life and damage. So the UK pretends there is some diplomatic way of restoring Crimea to a Ukraine that wants to become part of the EU. As this is all about Russian aggression meeting EU expansion we should  leave  the problem to the EU. It is absurd to suggest the UK can find a diplomatic means to return Crimea.

Now the PM is doing the same stupid thing over Palestine. Hamas and Israel are at war. Hamas does not want a two state solution because it wishes to remove  the state of Israel from the Middle East. Israel does not want a two state solution  as it regards Hamas as a terrorist organisation which will never live peacefully as a neighbour alongside it. All the time Hamas keep the hostages and fight for every building and street in  Gaza, often operating from  hospitals and blocks of flats, offering to recognise a Palestinian state helps them and impedes negotiations for peace.

Facing fierce attacks from the Conservatives and Reform on this policy, the PM has now issued a clarification to explain he does not want the Palestine State he “recognises” to contain any influence or power for Hamas. This is just ludicrous. Gaza would be an important part of a Palestinian state and it is currently being controlled by Hamas who fight on and refuse the give up the hostages. They started the war with their terrorist murders of Israeli civilians. He has to deal with the fragmented pattern of Palestinian settlement and government as it currently  is.

I share his grave concern about the loss of life and the destruction in  Gaza and like most people want to see peace. What is clear is the UK has no influence over either Hamas or Israel to help bring about that peace. We need to let Qatar, Egypt, the USA and the others who do have some influence  work on  peace negotiations. Hamas will continue to claim Israel’s  response is disproportionate whilst Israel will claim Hamas as a terrorist organisation should not be running Gaza policy. What is the UK’s answer to that fundamental disagreement, which stands in the way of peace? Recognising a state that does not exist, and stating one of the two combatants should not be involved in its future government is fantasy politics.

It is good news that the UK government welcomes US digital companies here to invest, create jobs and provide the technology all our businesses and households need to live an on line life. Most commentators have welcomed it.

Few news outlets have read what was agreed or provided much commentary on what it means. The formal Agreement signed by the President and Prime Minister is  a Memorandum of Understanding  between the two governments. It is non binding. It contains no pledges of money. It is a statement of good intent for the leading departments and institutions of the state on both sides of the Atlantic to co-operate more fully in the named fields of quantum computing, nuclear energy, AI, 6G  and digital development. It is an important statement from the top of both governments, but it now needs a lot of detailed work by the institutions and departments to identify the projects, the research areas and the procurement where common working will help both sides. It could lead to some good developments, as both sides have technology advances that the other would like to share and develop together.

There was then the press statements that the two had agreed £250bn of investment passing both ways across the Atlantic, suggesting £150 bn would come from the US to the UK. £150 bn is a significant sum for a £3 tn economy. £100 bn is useful even for a £23 bn economy. The £150 bn however, is not all new money and is not one year money. Microsoft accounting for £22 bn is a multi year programme, much of it already committed. The bulk of it is a £100 bn commitment by Blackstone to be spread over ten years. Google’s £5b includes a data centre already well advanced.

It’s a well know government technique to ask the private sector what it is going to spend, to gross it up by taking estimates of future years and announcing one large number. That can be good for morale and gives the businesses their day of extra publicity for what they are doing. This was one of the bigger and better lists, and no doubt the focus of President and Prime Minister on technology helped to direct more efforts to this crucial area of strengthening what the UK does and what it buys in this sector where the US dominates. It was notable that the projects mentioned for investment in the pharma sector were ones where UK based groups will invest more in  the US, reflecting the US attraction of this investment and the damage the NHS procurement has done to keeping and expanding investment here despite the government wanting to boost the sector.

The whole event was a timely reminder for those who thought about it of the dominance of Nvidia, Alphabet, Apple, Microsoft, Meta, Amazon and the other US tech giants. The UK will continue to be very dependent on these great US companies, with every business and home needing their systems, their chips, their cloud storage, their apps to run their daily lives. The EU is even further behind the US than the UK is in these crucial areas of the digital revolution. The UK should ask itself why it has not done better, why some of its best ideas and companies have been sold early to the US and why now we depend on the US ability to turn billion dollar companies into trillion dollar companies. 9 of the 10 largest companies in the world by capitalisation are now US, with the tenth being Taiwan Semiconductor that has substantial  capacity in the US and supplies the US industry. Nvidia alone has a larger market value than all  the London stock market companies added together.

 

I have been warning for months that state spending is too high, that taxes are at such high levels some are losing the Treasury income, that state productivity has fallen too far, that the Bank of England is losing too much money and that net zero policies are de industrialising us at an accelerating pace. The latest news reinforces these views. The August figures showed state spending up 9.2% on the year, borrowing at £18bn for the month well above budget forecasts, a new round of industrial plant closures, and in August CGT, Inheritance tax and self employed income tax receipts were  down on last year.

There was one hint of better news. The Bank of England has at last seen some of the damage its bond sales are doing and announced a cut back in sales from £100 bn a year to £70 bn a year. More importantly they sneaked out that they would be selling far fewer long dated bonds where the losses are much greater than on the shorter dated bonds. Slowly they turn their policy without apologising for all the losses so far. They do now accept their sales can have a negative effect on the market, forcing the government to pay a higher rate for new borrowings.

The remedies for these obvious problems are not difficult. It does not requite the government to cut pensioner fuel allowances, remove payments from the disabled or cancel the triple lock on the pension. These policies anger the public and split the governing party in Parliament. Let’s take taxes. If the government avoided more increases and got the rates down on the ones that have done most damage to more jobs, more investment, and to business success they would have more revenue, not less. Everyone apart from a few egalitarians who do want to drive rich people out of the country would be happy. The better off would pay more tax as the economy grew faster.

When it comes to spending the key to the whole precarious economic policy framework is productivity. The latest figures show public sector productivity is still well below 2019 levels, with an 8.8% fall since then for the biggest public service, the NHS. The first year of this government saw Ministers award many groups in the public sector big pay awards without asking for any smarter working. Bonus schemes often pay out despite productivity falling or failing to rise. Many of the complaints leading to strikes in the state sector relate to conditions and terms of employment rather than pay, which better management could tackle by working with the Unions. The state sector usually records higher sickness rates than the private sector, which implies low morale and bad management as it is unlikely the public sector is permanently prone to more sickness. It requires some strong Ministerial leadership, by the PM, by the Cabinet Office and by each departmental Minister to improve this.

I am preparing a guide to show how Ministers and CEOs within the public sector can lift productivity substantially. AI may well in the future give us greater wins, but the immediate task must be to get back up to 2019 levels of efficiency and quality which was done with no AI at all.

Roughly half the country earns too little, does not own a home, has little or no savings and lacks access to a good pension scheme. The better off half pays most of the Income tax and all the wealth taxes on capital gains, buying homes and shares, inheritance legacies and dividend income.

People with conservative views want to create an opportunity society where more by effort and work can increase their earnings, accumulate savings, buy assets. Those who cannot do this through disability or other impediment should get benefits and state provision to a decent standard.

Labour offers redistribution. Why they say should the rich get away with owning homes and  shares, and earning more. They must be taxed. As there are not enough super rich to tax to cover all the bills, the higher income and wealth taxes have to be imposed on the better off half of the country.

There are two big problems with this approach. The first is many who are on lower incomes are not jealous and want to be upwardly mobile. Many low income people think it right that great footballers or successful entrepreneurs earn fabulous salaries.

The second is all those who have worked hard and saved do not wish to pay  higher taxes or have their wealth confiscated. In the 1970 s when Labour imposed a 98% tax rate on so called unearned income many left the country to avoid the expropriation of their savings.

Labour today has pushed income and wealth taxes too high. August figures for receipts show Capital Gains tax, Inheritance tax and self employed Income tax down on the previous year following the tax rises put through by the Chancellor. This is a warning sign.

I have always  argued that the rich have to pay most of the tax, but you need to set rates and taxes that they will stay to pay. Lower rates do bring in more revenue. Today the rich are leaving in large numbers. The better off not so rich have plenty of ways of legally avoiding tax. They are refusing to sell shares and second homes sitting on big gains. They turn down opportunities to do more work. They decline to set up new businesses, create new jobs or make higher risk investments.

If the government carries on looking for more ways to tax the better off half they will find the taxpayers strike can get worse whilst all abide by tax law. I have avoided the high Congestion charge in London since it went up by never driving on CC streets during the controlled hours. There are plenty of other things that entail paying  tax for people to stop doing.

Prior to the Brexit referendum the great and the not so good thundered that the UK would lose influence and be isolated if it dared to leave the EU. The grown ups told us it would be cold outside with no-one interested in who we are or what we thought. It was yet another of their false forecasts.

In  the 2025 survey of countries with the most soft power the UK comes in third place after the superpowers USA and China. It is two places ahead of Germany, the best placed EU country. When we were in the EU prior to 2016 Germany was ahead of us in the rankings. It always seemed likely to me that the UK would have more influence if it wishes to exercise it once out. For example, we could not  have our own trade policy whilst in the EU and had to stand down from our place around the table of the World Trade Organisation for the EU to represent us. They did so in a protectionist way, wishing to keep high tariff barriers in a number of areas. Now we are out of the EU we can be a good influence for freer trade with our own voice at the meetings. This is even more important now the US has gone protectionist in retaliation against China and the EU.

As the second biggest member of NATO we have good influence over defence matters. As a leading member of the Five Eyes grouping of the US, Canada, Australia and New Zealand we have access to the best intelligence in the free world. Our language and cultural reach is wide ranging. President Trump understood this well when he drew attention to UK achievements alongside the USA, now the leader of the democratic  world. There is a vital partnership of the English speaking nations, led by the US and UK, including our friends in the Commonwealth and the US’s allies.

It is possible however, to undermine this soft power success. The present government is coming across as a soft touch government. The EU re set negotiations are humiliating, with the UK giving more and more away with still no sign of anything positive we might want. Giving away the fish for some alleged improvements to access for farm products was a very expensive bad deal, but to add freedom of movement to it as well would be a disaster.  Giving both the Chagos islands and a huge wad of money over 99 years to Mauritius when the international courts have no authority to make us inflict such self harm is craven. Setting out to establish a coalition of the willing for Ukraine was ill judged without US backing, but it became feeble when it appeared that President Macron had taken on the leadership of  the UK’s  bad idea. Announcing with a fanfare we will smash the gangs and then showing the government just lets many more illegals in looks weak.

Soft power  requires us to be good  at diplomacy as well as having a great back story of past achievements and a modern cultural flowering. If we go on like this we will get a reputation as being a big soft touch. That  will prove to be a good way to undermine our reputation for soft power. It will weaken our economy and make it difficult to do good deals.

 

This article is also being published by Facts4eu today.

It was good yesterday to see UK ceremonial at its best. It was good to hear King and President united in speaking of the common heritage and shared destiny of two great nations of the English speaking world. The UK and the US have done much to promote democracy, freedom, technology and prosperity.