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Posted by Richard Sunday, May 01, 2005

Buried almost completely by the publication of the Attorney General's advice about the Iraq War, last week Tony Blair attempted to launch his manifesto for business, boasting in a full-page advertisement in The Times that that Labour was now "the party of entrepreneurs".

This is taken as the starting point for Booker's first story in the column, in which he reports that scores of successful British firms, many world leaders in their market, fear that in five months time they will be forced out of business, thanks to the chaos which has followed the handing over of air safety regulation from the UK's Civil Aviation Authority (CAA) to the new European Aviation Safety Agency (EASA).

The crisis, he writes, has arisen thanks to an EU regulation laying down new rules whereby all firms engaged in aviation construction must qualify for Design Organisation Approval (DOA): rules which many smaller firms explain are unworkable. But unless they can meet these requirements by September 28, they will have to cease trading.

Again at the centre of this crisis is a familiar figure, Per Lindstrand, about which Booker has written before. He is, of course, the Swedish balloonist, whose Shropshire firm until 2003 led the world market in aerostats, huge balloons tethered to a wire, featured at many of the world’s top tourist sites.

When the EASA took over in 2003, Dr Lindstrand was forbidden to sell his products anywhere in the EU, thanks to a bureaucratic anomaly relating to the certification of the winch which hauls his balloons up and down. This gave his French rival a monopoly of the market, although its own winch has a dubious safety record.

Dr Lindstrand's case was taken up by his MP, Owen Paterson. But for 18 months he was put through a Kafka-esque obstacle course by CAA who, despite charging him £48,000, failed to resolve the problem, costing him millions of pounds in lost orders.

Last month Booker was able to report that, following a meeting with EASA, it seemed Lindstrand’s problem had been miraculously resolved. Dr Norbert Lohl, EASA’s certification director, signed the airworthiness certificate for his aerostats, including the winch, and he could now re-enter the market. But no sooner had he been let off the hook than the CAA came up with a new problem. Under the new rules, he had to get DOA approval for the makers of the winch and the software which controls it.

In other words, it was now necessary to show that the two firms responsible for the winch were competent to build a safe product, even though they had already demonstrated this, by contributing to a product itself certified as safe. The problem is there is no way a company which makes huge, 14-ton general purpose winches can qualify as a specialist aviation design company, as the rules require. The same applies to the computer firm which designed the software.

It emerges that the new rules have placed as many as 85 specialist UK firms in a similar predicament. Peter Smith, whose Berkshire firm designs entertainment systems for many of the world’s most expensive private jets, can see no way to comply with rules which require all the companies he deals with to obtain DOA approval, many of which are not prepared to submit to all the costs and bureaucratic hassle involved.

Mr Smith, who is in contact with many firms in the same boat, at least praises the CAA for trying to resolve a problem he sees as created by the EASA. Padraic Kelleher, the head of design standards at the CAA, last week admitted the new rules had created problems, but explained that the CAA is working overtime to solve them, and is confident that by September 28 most firms will have found a way to comply.

But most cannot see how this can be done. Mr Paterson, if he is re-elected, plans to raise this directly with Dr Lohl of EASA, who said in March that all UK companies having problems with their design status should apply directly to him for authorisation under the new regulations.

But unless this crisis is fast resolved, it seems scores of British firms will soon be driven out of business, by a classic example of "EU red tape lunacy". Labour's claim to be "the party of entrepreneurs" will look even more self-deceiving than it does already.

See also Tim Worstall who offers his view on the bureaucracy.

For Booker's second story, he returns to the controversy, dealt with in last week’s column, which arose over the failure of Jose Manuel Barroso, the President of the European Commission, to declare as an interest the fact that last summer he enjoyed the hospitality of Spiro Latsis, the billionaire head of a group of companies in Greece.

Defending Mr Barroso's decision that his holiday with Mr Latsis did not require a declaration of interest, a Commission spokesman said that, as far as she knew, the Latsis group had not benefited from any EU funding and had no business ties with the EU.

However, under heavy pressure from the Latsis lawyers, of which we warned in this Blog, Booker is obliged to "correct" references in the column to the ongoing controversy surrounding the contract awarded to a German company, Hochtief, for the construction and management of Athens International Airport, substantially funded with EU money.

He thus writes that:

In case a complex article should have given rise to any misunderstanding, I would like to make clear that in no way was it intended to suggest any connection between the Latsis group and the controversy surrounding the airport. Mr Latsis’s companies have never have had any connection with the main airport contract.

Through Hellenic Petroleum, in which Latsis has a shareholding, they have an interest in the part-EU funded airport pipeline, but this was constructed under an entirely separate contract and before Latsis bought their share in Hellenic. I also overstated the Latsis group's interest in the ground-handling management of the airport, since the company in which it holds a 50 percent share is one of three holding ground-handling contracts. Latsis has no connection whatever with the airport's overall management.

The Latsis group's only direct involvement with Hochtief is that its development arm Lamda Developments is part of a five-company consortium, including Hochtief and other substantial companies, preparing to bid for an EU-funded motorway and road project in Greece. The Latsis Group's only business link to date with the EU was the contract, awarded after competitive tender, to EFG Eurobank Ergasias to handle all EU structural funds coming to Greece between 1999 to 2004.

There is not the slightest suggestion that the Latsis group's connections with the EU have been anything but above board. Mr Barroso should thus have been readier to explain his holiday last year with Mr Latsis, who is an old friend of 30 years standing.

In the interest of accuracy and clarification I am very happy to make these points. The Commission's refusal to answer questions about the Athens airport contract is an entirely separate issue, and one to which Mr Barroso might usefully address his attention.
Interestingly, it seems that one thing the Latsis lawyers were particularly anxious to deal with was the mention that a Latsis company is currently bidding, with Hochtief, for a huge, lucrative motorway project in Greece, financed with generous portions of EU structural funds.

You may draw your own conclusions from this as to whether Barroso thus had any reason to declare a possible conflict of interest when he indulged in his freebie holiday as a guest of Dr Latsis on his luxury yacht.

For Booker's final story, takes a line rehearsed on this Blog, that "so remote from the concerns of this election campaign have been the issues I regularly cover in this column that I have viewed it with some detachment."

During the past two elections he was "delighted to take part in many serious election meetings, of the kind which has generally vanished from British politics, often speaking to audiences of several hundred (even, at one Referendum Party rally, 10,000)." This time he had agreed to address only one meeting, for a friend who is a Tory front-bench spokesman. But after Flight's de-selection, we agreed my presence was a risk not worth taking with the leadership, and it was cancelled.

I am fortunate, writes Booker, to be in that small minority of voters who can vote personally for a candidate rather than a party: in my case David Heathcoat-Amory, Tory candidate for Wells, who, as a delegate to the convention drafting the "Constitution for Europe", has become a powerful champion of our democracy in the battle I see as overriding all others. Equally fortunate is anyone who can vote for one of the few MPs and candidates who have shown conviction and courage in thinking for themselves, such as Labour's Ann Clwyd and Kate Hoey, or those Tories who have defied party managers by putting "Europe" high on their agenda.

He concludes: "As one of the 2.6 million who last summer voted for the UK Independence Party, I would still vote selectively for some of their candidates this time: not least, in Falmouth and Camborne, the bearded fisherman Mick Mahon who, 16 years ago in a letter to The Times, first alerted me to the scandal of the Common Fisheries Policy. Considering how long I have since had to spend reporting on that disaster, Mick has a lot to answer for."