21/10/2013 Newsnight

Chapters four and five of the most charged story in politics right now,

the cost of keeping the lights ablaze. It is with pride that I now

open Calder Hall, Britain's first atomic power station. The Queen

moved a lever, releasing atom power producing electricity into the

National Grid. Once upon time we built nuclear power plants for

ourselves, now we ask competitors do it for us. It may be necessary, but

is it wise? What happened when the hacker met the tracker who got him

convicted. FRMTHS what was the most interesting thing you found on my

hard drive. I found lots of interesting things on your hard

drive! He was behind the Conservative Party's most famous

election poster, why doss Morris Saatchi now think marks may have

been right afterall. He's here to tell us. Glory be to China and

France, out of the goodness of their hearts, and with the promise of

massive guarantees from the British Government, and tax-payers, they are

generously restarting Britain's nuclear energy programme. The Prime

Minister said the Government was securing the country's energy

future. Now there was a time when Britain led the world in this sort

of technology. No longer. None the less, building the Hinkley C Power

Station may create 25,000 jobs. To say that Britain has lost its

lead in nuclear power doesn't adequately describe the decline in

the UK civilian nuclear programme. Today announcing the building of a

new Hinkley C power station, the Prime Minister talked about a

rebirth. It is going to give another kick-start to our nuclear industry,

I think many people will see it is going to provide good, long-term,

well-paid, high-tech jobs for our future. It is also going to provide

low-carbon, reliable, safe, secure energy supplies long into the

future. All of us here know that we are present at the making of

history. But some may regard this as more of a national humiliation.

Britain once led the world in civilian nuclear power. Britain's

first atomic power station. When Her Majesty opened the first one, in the

world at Calder Hall, nobody would think that the new generation of

nuclear power plants would be built and owned by the Chinese and French

Governments. Here is the rise and decline in graph, the decent upturn

is simply due to so unplanned shutdown stations coming on-line.

The trend is down and down fast. There are three reasons for this

decline, the first is technology. It is one of the country's first

generation of Magnox nuclear power stations. Because we got to go

first, we created our own generators, others went down the

safer and more efficient water-cooled route. They didn't want

our technology and we couldn't create the economies of scale that a

big export market would have brought us. We ended up with handful of

different types of reactors that no-one wanted to know about. The

advantage of water-cooled technology, such as the plant

planned for Hinkley Point C, is it is more efficiently, water carries

the heat to make electricity better than carbon dioxide gas, which was

the British approach. The fact that the rest of the world didn't follow

gas-cooled technology left us in deadent. We couldn't export any of

our reactors, our second generation stations. It took a long time to get

them working well. The next problem our nuclear industry has faced is

the market. When Conservative ministers hit the button on energy

privatisation, the nuclear industry was packaged up into British Energy.

Whilst other companies bought up domestic suppliers, ensuring they

always had a market, British Energy didn't. When the energy market

crashed, they had nothing to cushion the fall, they went bust. Sorting

out the mess meant a decade was wasted. Plans to build an earlier

version of Hinkley C was scrapped at this time, when it was deemed

uneconomic. The other problem we had, in the UK, certainly didn't

look like a problem at the time, plentiful North Sea oil and gas.

Just when we needed to be replacing our nuclear power station, it looked

like we didn't need to. FRMTHS in 1973 the French were dependant on

imported oil for two thirds of their energy in their economy. They were

massively hit by the oil price hike and problems of 1973 and OPEC. So

they switched an awful lot of their electricity from oil to nuclear. In

the UK we had oil Gas in the North Sea. Not directly used for

electricity, but certainly great cushion in terms of our overall

energy picture. We still had home mined coal. The case for nuclear

looked weaker than it did in a number of other countries like

France. Then there is the politics, building nuclear power stations are

hugely expensive, huge upfront costs and a long life. So the politicians

who commissioned them just get to take the flack and pay the bills

they probably won't cut the ribbon. What has changed? Well George

Osborne visiting a new nuclear plant being built in China last week has a

sense of urgency that previous politicians just haven't had.

Because after years of underinvestment, there is a real

prospect now of Britain's lights going out within a few years. And

politicians who are blamed for power cuts don't tend to do well. Needing

nuclear power in a hurry, and cheaply, means foreign-owned and

foreign-operated was the only option.

With us now is Dr Sue Ian of the Royal Academy of Engineering, and a

former technology director she is at British Nuclear Fuels Ltd. David

Norris is chairman of Conservative Friends of Nuclear Energy.

Is this a humiliation? No, I see it as good news for the engineering

sector in the UK. Although the current designs about to be built

are overseas-designed, our engineers in the UK have been involved in some

of these designs on the international stage for some years.

It is UK engineers that will help to build the plant and operate it

ultimately. It may be overseas-owned, but there are plenty

of British engineers involved now and in the future. How do you feel

about it? I'm elated we are getting the nuclear power stations finally

built. Doesn't it matter who builds them? Not to me, as the good doctor

was saying before, we have the home-grown effect in my

constituency. Explain your constituency and what the

Aberdeen-effect is? It is lots of expertise going overseas to work in

an industry that you have been brought up, in Aberdeen it is the

oil industry. In my area it is the nuclear power industry. We have lots

of youngsters with good jobs at the moment, with go skills they can

export. The North West dose is st coast is a good breeding ground for

that to happen. We are always told that the future of the economy is in

knowledge, if the key parts of this project is foreign-innovated,

doesn't it make you worry about future of this country? One of the

good things done is to invest in the nuclear manufacturing advance

research centre. A joint venture between the University of Manchester

and Sheffield. This is designed to bring 21st century techniques to the

designs to be built. Although the designs are overseas, the

manufacturing and tools and techniques may well have UK IP

associated with them, as we go through the decades. When you hear

somebody prominent in the project talking about it being muck-shifting

what do you think? They might one day regret their choice of words in

that. Even the British construction industry is a world-class

construction industry with a world-class safety record, as

evidenced by the Olympic Games and the Channel Tunnel. British

engineers are involved in the nuke clear power -- nuclear power

programme, and with the new investment that is about to be made

that will grow. The other thing is we have fantastic university base

here in the UK. Our nuclear courses in our universities like ones here

in Manchester and at Imperial College in London, they are

fantastic international low- renowned courses attracting a lot of

students. There is another element which is Government industrial

policy, doesn't it look at an occasion like this as if the French

got it right and the British got it wrong. I have always advocated that

we should have gone straight into nuclear instead of going into wind

farms. I'm bound to that say, that' the chairman of the Conservative

Friends of Nuclear Energy. I do believe the way ahead is nuclear.

But ?90 as a strike price seems high at the moment. It is ?150 for on

shore wind farms as strike price. EDF is what 80% or so owned by the

French taxpayer. Right? We just flog all these things off? We have not

got at the moment with austerity measures the actual finance to build

these things outright. It is good to have foreign investment coming into

our country to do this. At the end of the day we will be keeping the

lights on and that is really what we are in it to do. You don't wore, you

don't worry? I do worry, I joke in parliament all the time that I could

be the man that signs off the next generation of nuclear power

stations. I really want public subsidy into nuclear power stations

because we are going to have a shortage of energy. We can't be

reliant on gas forever and a day. 2013 looks like we are going to be

80% reliant on gas. We can't have, that we must have nuclear power

built sooner rather than later. We all know what we expect a soldier

to look like right? Pale, spotty, rarely seen outside a darkened room,

tracksuit bottoms and lots of pizza cartoons lying around. That is an

artist's impression of what the defence of this country may hang.

The defence committee is not just committed to cyberprotection, but

cybercounter-attack. The people who can mastermind that campaign won't

be found on the playgrounds of Eton. We're barely ware of it any more,

but our lives are dependant on a digital world that operates unseen.

In parallel to the one all around us. Being wired has changed the way

we do everything, but also means new VUNabilities. So what kind of people

seek to disrupt it? And what motivates those who try to protect

it. There is often little difference between the hackers and those who

track them. Is it time to include hackers in our plans to protect the

nation from emerging cyber-threats? The same people who make very good

malicious hackers can also be very good at non-malicious hacking. I

prefer to look at the skills these people may be bringing rather than

putting labels on the skills. It will be highly beneficial to recruit

hackers, especially at a corporate level. They are scared to do it.

There is wealth of talent underground. Not the place that

industry and the military would orderly look for new recruit, but

they may just have the skills we are going to need. Perhaps the most

notorious of recent hacking groups sprang out of the Anonymous

Movement. A jokey offshoot called Lulsec, that came to worldwide

attention, at first they targeted for laughs. Jake Davies went by the

name of Topiary, he was their quirky spokesman and shaped the on-line

Presence. The youngest was 16. When they turned their hacking skills

against law enforcement, most of the members were eventually tracked down

and sent to prison. Some are now free and thinking about what to do

next with their lives. Those who have been immersed in the world of

hacking talk about it being exciting, even thrilling, about an

intellectual stimulus that's hard to beat. So is it ever possible for a

malicious hacker to turn their skills for good. Is there such a

thing as hacker reHAB! This hacker MustaffaAl-Bassam was convicted with

a sended sentence earlier this year, and is studying computer science.

The computer forensic expert whose evidence helped convict him was

David Day. We brought hacker and tracker together. This is the first

time they have met. What was the most interesting thing you found on

my hard drive! I found lots of interesting things on your hard

drive, maybe some of the more interesting things I'm not sure I

want to talk about now. But I found pretty much every website you looked

at. I found loads and loads of files which you probably thought had been

deleted. I found them in system information folders in place they

were hidden away. Was it thrilling for you to look at someone's almost

life? Honestly? A little bit. He was looking for evidence that he and the

Anonymous hacker T-Flow were one in the same. He doesn't condone

anything he did but can't admire his programming -- ANT help but admire

his programming skills. I don't know if you are aware that you are more

skilled at doing shows things than other people. What is the motivation

DPOR doing it? Being a teenager at the time, the motivation was the

ability to use basic technology to embarrass major corporations and

people in authority. That was a thrill as a teenager. In simple

terms it was just for fun, for kicks? Pretty much. It is like

solving a puzzle or problem solving. If when you complete the problem at

the end you do get quite a sense of achievement. Do you know that's

exactly the same feeling that you get when you are doing forensic work

as well. I think what was more important for the group was showing

the world how these major corporations weren't following basic

security. One of the codefendants in the case was the PR man Jake Davies.

We last spoke to him before the case came to court. I don't feel like a

criminal, I feel like a kid that put the creativity in the wrong place at

the wrong time. Jake sent 37 days in a youth offenders institution in

Feltham, now he said the time he spent off line had a bigger impact.

What changed me was the two years being banned from the Internet,

electronically tagged to my house. The 37 days in Feltham was

interesting. It gave me some good perspective on where our youth end

up when they have done what the state perceives as wrong. Has turned

away from -- he has turned away from hacking and leads a different life,

working in film distribution. The same parts are being stimulated in

the same way but they won't, you get paid at the end of the month rather

than being sent to Feltham. We are often told there is a short-terming

of people with skills in the industry, to protect the Government

systems from attack. The MoD is calling for cyber-reservist, a GEEK

version of the Territorial Army. Is anyone likely to sign up, should

former hackers bother to apply. At the Ministry of Defence's

multimillion pound communication centre, specialists from all three

force, army, Navy and air force, work together to keep the country's

military communications systems secure. Cameras are rarely allowed

in. Each screen we filmed had to be individually vetted. This is the key

centre that operates and defends the UK's military networks worldwide. It

is also where some of the new joint reserve unit will be based and

trained. And the hope is to employ people who are not only from

elsewhere in the military and defence, but also from industry and

people who are not necessarily traditional military material.

Lieutenant Colonel Michael White is the commanding officer of the new

reserve unit. He said the kind of people they are looking for are in

short supply, so they would have to be open-minded when recruiting. If

somebody had a quirky personality but very good at computing, you

might consider them? We will look the individuals in the round as they

apply, we are looking at the capability development rather than

setting hard and fast rules about individual personal traits. If

somebody came to you and they had a criminal record for hacking but all

the skills you were looking for, you wouldn't necessarily rule them out?

If they could get through that security process, then if they have

that capability that we would like, then if the vetting authority was

happy with that, then why not. Simply building cyber s is not

enough. We also have to decertificate. Britain will build a

dedicated capability to counter-attack, and if necessary to

strike in cyber-space. This was the first time that Britain's approach

to cyber s had been spelt out so clearly. That we will not only

defend against attacks but potentionally launch our own. But

the Government may find it hard to attract the talented individuals the

needs, if former hacker Mustafa is typical. If you had the opportunity

to take up a role or assist in trying to prevent threats to the

nation's security, would that be something you would be interested in

using your skills for? For me that would be important, I can understand

the need for a Government to protect itself, but when you go ahead and

stamp on everybody's civil liberties, which we have seen on the

massive surveillance stories broken this year, you will repel talented

people. A stereotypical hacker mentality, often anti-establishment,

may not fit neatly into Government institutions. There is heightened

sensitivity after high-profile leak, such as those by insider Edward

Snowdon, who revealed details of secret masseur veilence by UK and US

groups. So -- mass Surveillance by UK and US Government groups. As a

hacker you have an inset belief, the people who would hire that are

afraid, there could be another Snowdon situation, they don't want

discrepancies in anything. It would be highly beneficial to recruit

hackers, especially at a corporate level, but they are scared to do it.

Are they right to do it? It depends on the hacker. It can be

particularly difficult to get a job in industry after you have been

convicted of malicious hacking. Which in certain situations for

certain individuals is a terrible shame, if they have those abilities

and those skills, some of the best talent and we can't use it. Would

you employ a former hacker? That is tricky. That is very tricky. I think

it would have to be every case on its merits. You have met Mustafa

today, would you employ him? He seems like a really nice lad, and

obviously clearly very talented. I might. A surprise, perhaps, that

there is a growing appetite for hiring ex-hackers, even within the

military, but those prepared to take the risk may find it harder than

they think to win over the GEEKs as defenders of our on-line security,

or as part of a cyberarmy. I spokes to the Defence Secretary Neil

Hamilton and I asked him whether the armed services would employ someone

with a criminal conviction for hacking? The Armed Forces don't

necessarily exclude people with criminal convictions. Each

individual case would be looked at on its MER sits. The conviction

would be examined in terms of how long ago it was, how serious it was,

what sort -- its merit, the convictions and how serious it was,

I couldn't rule it out. In the cyber-world, is there any way to

know how someone has gone from a black hat hacker to white hat

hacker? There are many professional people out there with the skills you

might traditionally associate with the hacker's skills set, who have

never done anything illegal and who scruplously maintain their

activities on the right side of the law. This will be a matter of

judgment in individual cases. But the Armed Forces overall do not have

an absolute bar on people with criminal convictions becoming

members of them. Would a hacker recruited to your cybersecurity

force have to wear a uniform and pass standards of physical fitness?

Well the cyberreserve that we are recruiting will have considerable

flexibility in terms of recruitment criteria around areas like fitness.

Clearly it is not necessarily for somebody who is going to spend their

serving time doing cyber-work, not necessarily necessary for them to

have the same level of fitness as someone who was joining a royal

marine or an infantry reserve unit to do. Will they wear a uniform? The

routine would be that they would wear uniform, but again service

personnel when they are doing and performing roles that are not in

public, don't necessarily need the wearing of uniform, they may not

always need do so. Would they have to have a haircut? The regulations

around The Verves will still apply, but there will be some flexibility

where we're talking about members of the cyber-reservists. What we are

trying to do is recruit the very brightest and the best from across

the IT industry. And use the skills sets that they have got in the

national interest to enhance our cyberdefences, and to help us build

an offensive cybercapability. Can you tell us what a cyber-attack is

please? There are two types, there are cyber-attacks seeking to take

information from the victims' systems and there are cyber-attacks

seeking to deny service to the victims' system, shut them down. The

United States has identified China as the source of the greatest threat

at a Government level. Who is our enemy? We don't, it is not about a

specific enemy, it is about being aware that both our traditional

perceived potential adversaries and also some non-traditional smaller

states do have this capability. There are a number of countries

around the world who have recognised that this is an asymmetric

capability. It is an area whereby building a niche capability, a

relatively small country could have a disproportionate effect. That they

could never hope to do by building up traditional conventional military

forces. Can you tell us what these countries are? I'm not going to name

individual countries. How many are there? There are a number of major

players around the world who are already known to have

cyber-capabilities. There are other smaller countries who are known to

be seeking to develop them. What would a British cyber-attack be

like? I should start by emphasising that this is very naisent

early-emerging technology. But it is possible in time there will be

capabilities to interfere with an enemy's ability to control its

weapons systems. You might be able to deny an enemy the use of certain

weapons systems. You might be able to interfere with the way they

worked. You might be able to do by cyber-intervention, something that

today would be done by a kinetic strike. By bombing or missile

attacks. Would such an take have to be authorised by the Prime Minister?

Well any, we're very clear that the law of armed conflict applies to the

cyber-domain, there is an interesting debate going on

internationally at the moment and quite openly about how the law of

armed conflict should properly be applied in the cyber-domain. We are

very clear that any cyber-activities will have to be lawful and have to

meet the same standards as we require for conventional attacks.

That is to say they will have to be proportionate to the threat that we

were dealing with or the attack that we had suffered.

Another energy company waded into politic today, NPower is going, wait

for it, to put up its prices by an average 10%, just like the other two

that have already announced their hikes. The Government advice to all

those squirming with anxiety or boiling with anger is we should shop

around. Labour, by contrast, promises to cap energy prices for a

while at least. The voters like that idea, which has given the Tories a

bit of a problem. In the Mail on Sunday, the former Conservative

Party chairman, Lord Saatchi pointed out, it is now 21 years since the

Conservatives won an election. The corrosive question for people

like him is whether they can ever do so again. I will be talking to him

in a moment or two. First we report. With his conference speech, Ed Mill

band set the political weather, and is a said this autumn energy prices

would go up and so they have. The number of Labour voters

satisfied with their leader is up by 22 points since the Labour Party

Conference. The party's overall lead on the Tories hasn't extended. Some

Tories are delayeded with the energy price freeze. They believe that he

resusitated Markism, and it is no longer a plaque on the wall. There

are two camps with how to deal with the energy freeze from Ed Miliband.

Some believe they don't have to do anything and figures say that it

shows the purring purring along. Then there is the tax camp,

believing to give people more money back. The third camp is competition.

That Ed Miliband is right the energy companies need to be cracked down

on, but the Tory answer is competition.

Vast sections of the country favour action on the utilities companies.

In one recent poll only 12% trust gene companies to treat their --

energy companies to treat their customers fairly. 3% don't. 3%

support plan to freeze energy prices for 20 months. But the Labour

leader, pollsters say, has to convince voters a little more if

he's to capitalise on this. David Cameron is a veteran of

election campaign, but one colleague of his from this, a 1992 campaign,

none the less urging him to realise the new threat posed by Ed Miliband,

one-time Tory chairman, Lord Saatchi said unfettered capitalism will help

Labour into power, Ed Miliband has set the weather and the Tories need

to dress for it. Lord Saatchi is here. You think that

Marx might have been right? I really would like it, I would like him not

to be proved right. The particular aspect of his prophesis, which

worries me, which is why I wrote the article in the Mail on Sunday is he

forecast that after years of warfare amongst capitalists, there would be

fewer and fewer capitalists controlling vaster and vaster

empires, that seems an accurate prediction. I would be alarmed if

that was allowed to take hold and what it says behind me, "capitalism

isn't working "became what people believe. Then they might turn to

state socialism, and state control as a free market system that they

don't regard as being effective. The energy, as you have been dealing

with in the programme, this is a key test for public opinion. Absolutely,

it is clear where public opinion resides in this, it is also quite

clear that when David Cameron says that people should shop around, he's

talking nonsense really isn't he? He's expressing what is the true

faith of Conservatism. That is at the root of Conservatism is free

market competition. This is what we believe in. It strikes at the heart

of Conservative belief to find a situation in which there isn't real

competition. I think the Prime Minister is expressing the view

that's what he wants. That's what Conservatives want. But it isn't

what we have got, we have cartel? That is true. So now here you have a

serious problem. That's why I wrote what I wrote. How did the

Conservatives find themselves on the wrong side of the fence on this? I

think the solution that Labour proposes is a solution that we don't

want. Because what is the solution? The solution would be some kind of

state control. Our solution more in keeping with free market views would

be that the market should operate. That is what the Prime Minister is

saying. But the market isn't operating? People should be able to

shop around. This the market isn't working? If globalisation has, as an

unintended consequence of globalisation is the creation of

global cartels, that is a major problem. As you are seeing with

energy will come to many other categories, people will come to the

conclusion that the free market competition is not working, because

there is not enough competition. That is what I'm trying to suggest,

this is something we must watch out for very carefully, which Labour

could exploit if we don't. We must make sure they can't. If the

consequence, you believe in the market because you believe it makes

people free isn't that right? If you asked me what is the actual

fundamental belief of Conservatism, I would say in one word it is

freedom, independent, individuality, self-determination. It hasn't led to

freedom has it? Energy is a classic case, it hasn't led to freedom, if

you can't afford to pay the bill it is an interesting and philosophical

idea but that is all? Let me go on with basic Conservative belief, will

that help? Yeah. Let's say the fundamental Conservative belief is

freedom. Now let me ask you this, is there a connection between freedom

and money? I would say that there is. To deny that would be

hypocritical. I take as my case Professor JK Galbraith, he said, I

think it is very memorable, he said "the greatest restriction on the

liberty of the citizen is a complete absence of money". Therefore what

Conservatism should aim at is that people will have more money. How

will that, in order that they can be more free, you take my point. In

other words there is a moral purpose to Conservatism which it is very

important important to express, it could lead people to the view that

Conservatism is only interested in money. We are interested in money,

but the root is to the highest thing of all, freedom. What do you think

the Tories should do? I am the chairman of a fine body called the

Centre for Policy Study, created by Margaret Thatcher some years ago. It

was responsible for iconic policies that allowed the Conservative Party

to win many elections, including of course you can own your own home,

the sale of council houses. We are going to have to develop and we

will. A policy, just one, more than one is already too complicated,

before the next election that has the iconic status in terms of appeal

and simplicity of "you can own your own home". That is our aim in the

Centre for Policy Studies. And we will do it, this will have a big

impact. Do you know what that policy will be about? Yes. Go on? It is

going to be about freedom. It is going to be about freedom and the

connection between freedom and money. We are not going to shy away

away from the fact that to speak about freedom and money is

hypocrisy. The Conservative Party is often accused, are we not, condemned

for being money obsessed. Therefore having a heart of stone. But at the

root of Conservatism is a very high moral purpose. Which is the pursuit

of freedom and independent. When the Centre for Policy Studies produces

this policy, you will see that it connects the aim of freedom with the

need for money. And it will be DRAM Maastricht Treaty, will be dramatic,

culture changing. As someone who has been finding somewhere to live will

be know, the cost of property in the capital has conbeserk. Asking prices

have gone up 10% between September and October. The British obsession

with homeownership is part of the reason. So too perhaps is the

Government's help to buy scheme. But it is also quite clear that many

foreigners are frantic to buy property in London, and in so doing

the city is being made unaffordable to many. Before we talk about it we

have this report. Whose housing boom is it? For four years the rest of

the UK has watched as prime property in central London behaved like it

was part of a different country. Price booms started in London in the

past and went out to the UK. In the capital they have risen 60% since

2009, the rest of the country has some catching up to do. If you look

at the stamp duty take from the two central London borough, Kensington

and Chelsea and City and Westminster, in 2012/13 it was ?7208

million, that is ?78 million more than Northern Ireland, Scotland,

Wales and the north-east and the North West and Yorkshire and Humber

put together. Who are the buyers who can afford prime central London

property? The latest research shows 49% of them aren't British

nationals. The biggest chunk are from other European countries,

followed by buyers from Russia in the former Soviet Union countries,

close behind are buyers from the Middle East, followed by Americans,

Asians, and the rest of the world. To rich international investors,

London property means financial safety. Initially it was an exchange

rate thing, people cashing in at the bottom of the market and weak

sterling. A lot is driven by safe haven places, uncertainty in the

eurozone looking for alternative investments driving wealth into

London. We have also a lot of wealth being generated in immature markets,

they are keen to put their money into a safe, secure and well known

asset. And prime central London ticks those boxing. Buyers are going

off central London, prices rose 8% last year. Central London is so

awash with money looking for a home that it has pushed prices up to the

point where you can't really make money. If you bought one of these

modest sized flats for probably ?1 million, you might get a rent of

?30,000 a year, a 3% return, not much better than savings. Don't

forget you are taking a risk with money. Now those international

buyers are copying an old British habit, they are searching for better

value for money. Welcome to London's latest house price hot spot. A

stone's throw from West Ham's football ground, it may not always

have been a magnet for buyers, foreign or domestic, but it is one

of the few places in London where you might get a house for less than

a quarter of a million pounds. To use a local expression, I'm not

taking the mickey, if you judge an economy by house price, Plaistow is

booming, prices up 15% by January, agents say they are accelerating. On

the weekend more than 30 people were booked into see this three-bed

terrace, on offer at ?240,000. In a sellers' market like this, there is

no need to tidy up. Buyers are looking for what is known as

"potential. This couple are among those hoping to take advantage of

cheap Help To Buy mortgages before prices take off. This isn't for

them. The rooms are really small, for us wanting to start family as

well. They are too small for us. Is that your plan at the moment? In the

next few months, yeah. Is it your plan too Chris? In the next few

years! Ten years ago, if you worked in Dubai and got an ?80,000 job in

Canary Wharf, you would look in the City, for this City high flyer

Plaistow is the best he can get. You are in corporate finance, should be

able to afford stuff? It still means having, if you are buying a ?1

million property you need ?200,000 in the bank. What is the answer?

Bank of mum and dad. Not all buyers are well-healed, born in Vietnam and

brought up in Australia, this man has come to Plaistow because Help To

Buy has priced him out of Leytonstone? It is too hot. I think

it might get worse because they were tightening the lending, now they are

starting releasing it, so everybody can get the loan. It pushed the

price up. So even as an of a -- earner ?40,000, I don't think you

can afford that sort of property in London. Behind London's boom is a

chronic shortage of property for sale and some of the cheapest

mortgages ever offered. If the market is this heated here, buyers

looking for better value for money are going to have to travel even

further out of town. With us now is Michael Goldfrab an American

journalist observing London since 1985 and Isabel Harding, editor of

the Spectator's Coffee House blog. What has gone wrong in your view?

Trends have been going on for quite a long time. The accel RANT in all

of this has been Help To Buy in the last month. What has happened in

2008 we had the crash, it didn't reform the financial services

industry. Money has been thrown at the financial services industry.

Rather than in investing in things that create jobs and business, if

you want a quick return get into bricks and mortar and in London. And

so what's happened is London property is no longer, it is no

longer an investment and shelter for a family to make over a 25-year

mortgage term, it is something for people who want to turn a quick

buck. Just this weekend Jeremy in Hong Kong they launched, there is a

little three storey block of flats in E 15, they are launching it in

Hong Kong to buy it off plan. The people who buy it will never see the

building. That is not healthy is it? It is not very helpful, I think it

is only 28% of foreign investors who are nonresident in the UK. But the

fact is that they are distorting the UK housing market and distorting the

London housing market. And their activity has been increasing since

200 #. In -- 2007. In 2011 the investment in the housing market

alone was more than the Government investment in affordable housing in

the whole of the UK. A good or a bad thing? Not a good thing for people

in London not PRATH at that level. There is another problem which is

supply. The number of households will far outstrip supply in London.

The communities and local Government department estimates I think it is

525,000 new households in the next decade. There is nowhere near enough

homes being built to match that. You are absolutely right, when I was

talking long-term, supply and demand, there has never been enough

supply. One of the interesting things is you hear people, I mean

Conservative politicians saying the Government needs to build house, the

Government doesn't build house, Barrett builds house, what hasn't

been done... The Government has build houses. I know I live very

near some greater London council 190 -- 1900 thousands and they survived

and lovely. It is true that the planning laws are old and should be

revived, what Governments successively have not done is create

an infrastructure that allows the free market to work. I don't want to

sound like Lord Saatchi here. The free market is working, people are

buying property. The market is not working, the market should be about

shelter for people who live in Britain. Why should it be. That is

not the market. There is a limited supply of this commodity and

increasing demand,ering geothe price goes up? Is it a demand for shelter

or a demand for the equivalent of that. One of the really important

things that politicians can do, rather than penalising those at the

top who can afford to move into the high-value properties is protect

those at the bottom. I'm not so worry -- worried that I can't afford

a nice property in London, it is those cleaning offices in London who

can't afford the train fares or the housing. Does that matter? It does,

London has a mixed capital heritage, unlike Paris, you can walk past a

council estate in the middle of Westminster. We have a heritage

where the founder of the olders and largest housing association was an

American bank e Joseph Peabody, that has to be safeguarded by politicians

like Boris Johnson who can create that sort of protection for the

people who keep the city moving and feed the city as well. One of the

things that could be done is for Boris to use his bully pulpit. We

know he doesn't have that much power, but he's good on the bully

pulpit. He says he doesn't care? He was writing today about stop beating

up on foreigners. I'm not, I'm saying let's make the housing market

be about housing and not about some new form of global reserve currency.

There is another thing in London and let's be clear about it, councils

are sitting on a lot of properties, many of them are rotting away. I

come from New York, and in New York in the 80s when I left, the city was

in very bad shape. There were a lot of houses that had been repossessed

by the city. What they did is they started selling them back to people

who couldn't possibly raise a mortgage, like a dollar down, and

you put sweat equity in it, they took these houses that were off the

market and turned them into SDWELings, it would be useful if

councils like Hackney and tower hamlets started putting their houses

back on the market. Southwark Council has been looking out to

Limehouse and Popular, they are thinking about how to increase the

overall housing supply. Boris says don't beat up foreigners but he has

ambitious targets on affordable housing, we can have an argument

about how affordable it is, it is still 80% of market rent. He has the

aim to protect those who can't afford the sky high prices.

Tesco revealed today massive quantities of food and fresh fruit

and vegtables simply thrown away by the supermarket and its customer,

four out of ten apples they sell end up in the tip. Most of those nice

bags of salad decompose, as we say good night, we have been reminded in

2001 decomposition can be quite beautiful.