08/02/2013 Daily Politics

Afternoon, folks, this is the Daily Politics. David Cameron has been

eating German sweets and lots of biscuits all night to help stay

awake during the EU budget talks. It is a diet that appears to have

worked wonders for his negotiating skills. He and his European chums

have been brokering a new EU budget and for the first time in the EU's

56 year history, they may actually cut, I repeat, cut the budget. Mr

Cameron will like that. But will the final settlement actually save

Britain any money? Taking risks with our money. Fixing

interest rates. Paying for failure. Still trousering a shed load of

money. We will be asking if anything can be done to improve the

culture of banking. Should the British National Party

and other far-right groups in Europe get EU funding? Lots of MEPs

don't think so, and the issue is cooking up a bit of a political

storm. And our Adam is in a bit of a spin

over the rotating presidency. So we sent him on a European merry-go-

round. All that in the next hour. And with

us for the first half, Banking Editor of the Times, Sam Coates and

by the blogger and occasional columnist Rowena Davis, who is also

a Peckham Labour councillor. Welcome to you both. So, horse-

trading in Brussels, and at Findus, the latest food company to have a

long face. The food agency has been told to carry out urgent tests on

all beef products after some Findus lasagnes were found to contain up

to 100 per cent horsemeat. Findus withdrew the meals from sale after

its French supplier raised concerns. The Food Standards Agency has

called the situation appalling. Last month, frozen beef burgers

were taken off the shelves of many supermarkets after tests revealed

the presence of horse DNA. Well, this is what the shadow environment

secretary Mary Creagh had to say about it all this morning.

problem with the horsemeat scandal is the more tests that are carried

out, the wider the scandal spreads and the more horsemeat that is

found. My concern is that if these processed meats are present in

schools, hospitals and prisons that these tests are not being carried

out and they will not be carried out until March or April. That is

not good enough. So, has the Government been too

slow to react? I think it is hard to ask the government to test every

little bit of food. They are meant to regulate things. They are, but

over the last 20 years Britain has benefited from extraordinarily

cheap food costs. What is striking is that a lot of the products taken

off the shelves are at the economy and of the market. I think a lot of

us have had a suspicion about what on earth is in them. When did you

last have a Findus lasagne? More recently than I would like to admit.

You just know that there is a lot of dodgy practice going on in the

food industry. You see with bacon and other products, the bulking it

up with sugar and water. If they are doing that at a higher end of

the market, what on earth they doing at the low end? It is not

surprising. This is not really on a par with the BSE scare and things

like that, is it? No, but I think it is one of the risks of having a

globalised food industry. As you were saying, we have become

completely divorced from the production of our food that we eat

in this country. It goes through many different continents, it goes

through different stages and has different products added to it. The

ownership is left -- less. This has involved the Irish and the French.

What is interesting is the lower income groups are generally buying

products which are the processed meat products. Those food products

which had the least stages in the chain are often the organic produce

and local produce and their assets which are more expensive, not less.

Have you got a decent butchers in Peckham? There is one that has

opened. Now to the banks because if you are

a banking editor, like Sam Coates here, it has been a busy week and

he has probably earned his keep at the Times. It started off on Monday

when George Osborne, the Chancellor of the Exchequer, delivered a

speech setting out what he will do to prevent banks from using the

money of ordinary savers to subsidise risky investment banking.

New rules are being implemented to put up a so-called ring fence

around high street retail banks. The Chancellor insisted the

mistakes of the past would not be repeated.

I can tell you that your high street bank will have different

bosses from the Investment Bank. Your high-street bank will manage

its own risks and not the risks of the Investment Bank. And the

Investment Bank will not be able to use your savings to fund their

inherently risky investigations. My message is clear, if a bank flout

the rules, the regulator and the Treasury will have the power to

break it up altogether. Full separation. Not just a ring fence.

We are not going to repeat the mistakes of the past. In America

and elsewhere, banks found ways to undermine and get around the rules.

Greed overcame good governance. We could see that again so we are

going to arm ourselves in advance. In the jargon, we will electrify a

ring fence. So, don't touch it.

The Chancellor's speech was on Monday, but on Wednesday we had a

reminder of another banking scandal when the state-owned RBS, the Royal

Bank of Scotland, was fined �390 million by regulators in Britain

and the United States over the fixing of what is known as the

LIBOR rate. Traders at the bank had deliberately manipulated the

interest rate, which is used to set the cost of mortgages and loans, in

order to make a profit. Or to avoid losses. RBS said it had uncovered

wrongdoing by 21 employees, and its chief executive, Stephen Hester,

admitted their greed was part of a wider problem.

What these 21 people did is wrong. There can be no place in RBS or in

the banking industry for wrongdoing of this nature. I think in some

ways worse than that wrongdoing is the fact that it is an extreme

example of a selfish and self- serving culture, of which there are

too many other milder examples across the banking industry for the

Prix financial crisis period. another banking apology there from

a banker in sackcloth and ashes. Yesterday, it was the turn of Mark

Carney to have his say. He is the Canadian who is going to take over

as the Governor of the Bank of England in July. He was in front of

the Treasury Select Committee where he was setting out how he would

handle the job. He suggested allowing a degree of flexibility in

the bank's inflation target, but he also expressed sympathy with the

view that bankers had not suffered enough for their role in the 2008

financial crisis. It was not just that the financial

crisis triggered a very sharp recession, here and in the United

States, but that the senior most officials in those financial

institutions appeared to escape unscathed, not pay the price, in

fact in many of the institutions that failed, some of the C E Os

received large payout prior to their demise.

You will be hearing a lot more from him in the months to come.

With us now is the Conservative MP for the cities of London and

Westminster. So he knows a thing or two about the banking industry.

Welcome, Mark Field. Will the Chancellor's electric fence work?

Time will tell. I am sceptical about ring-fencing, electric or

otherwise. We are looking ahead to what the next crisis may be. The

vicar's Commission and the whole idea of ring-fencing is very much

George Osborne's baby. I think he has been quite pragmatic in what he

has done this week. If it was such a marvellous idea, why has no other

organisation or big jurisdiction following this route? There are

variations on ring-fencing. The big worry is we get another layer of

uncertainty that surrounds this financial services business which

is so crucial to the economy. think it is interesting that a

Member of Parliament is not convinced these proposals will work.

These firewalls may turn out to be China waltz when you think the

shareholders of the Bank will remain the same, when you think the

banks will not be broken up, it is just a threat. And when they have

been no criminal prosecutions at all despite the revelations we have

heard. Will the banks take seriously the threat that they

could be broken up or will they think that his political spin, you

will never dare? Talking to them this week, they did not think

George Osborne's speech amounted to that much. What has happened as the

government decided not to break apart the whisky arm from the High

Street counterparts -- of the whisky on, the investment bank from

its how it -- high street counterparts. Can these investment

arms use our money? Can they access our savings and current accounts

for their risky ventures or not? Under the ring-fence plan, no. You

cannot use retail money to fund activities in the Investment Bank.

But I think what we are missing here is the bigger problem with the

UK banking sector which nobody is tackling, which is broadly that we

have two -- four big banks and that is it. There a couple nibbling

around the edges. If they topple over they could bring down the

financial system. That is the boldness that a lot of people on

the political side are now asking. It is also so difficult to move

your banking camp. My bank is the Royal Bank of Scotland. I have been

with it since 1973. In the past couple of weeks, dealing with it is

a nightmare. Getting a simple money transfers done takes that 20 emails

and three phone calls and they are never there when you call them.

When you think I will just move it and then you look at all the direct

debits and a new cheque book, can something be done to make it

easier? In fairness, George Osborne has got this in mind, the need for

more competitive banking sector. The difficulty is, the more you are

regulated, the more you put more ring-fencing in place. That is a

direct threat to new competitors. The barriers for entry become

higher. I am simply saying that somebody wants to move their bank

account, it should be incumbent on the bank you are leaving it to hand

over all the direct debits and other details to the bank you have

chosen to go to. I agree. To be fair, this is very much in George

Osborne's eye is now. With all due respect, there is another bigger

question. There are two issues going on, the first is how the

banks -- how you ensure that banks do not make the same risky mistakes

as they did in 2008, the second is how banks can play a role in the

recovery of our economy. We heard the former Chancellor of the

Exchequer, Nigel Lawson, saying he wants to nationalised RBS and turn

it into an investment bank. Whether we like it or not, we need the

banks more than ever. If we are going to get an economic recovery

and getting small businesses being lent to. The problem I have over

LIBOR is, LIBOR was clearly wrong and there was fraud going on, but

will almost looking with a 2020 hindsight, any novel product is

accused of being mis-sold. If we are going to have a constant diet

of class actions and legal actions... Here is the thing, I'm

not convinced that many of the interest rate swaps products were

mis-sold. There are some people... Its some people were sold things

they did not need or want. Perhaps. The FSA found last week that 90 %

of the swaps they look that had been mis-sold. But now we are

looking at almost any novel financial product which will be

susceptible. Date can con the customer. For the high street arm

to generate large profits. To a certain extent, the banks created

the problem. Whether or not making them shell out of pay back money

they did is hobbling them for the future, it is a very difficult

policy dilemma. Pa to the problem is politicians want banks to face

You want them to lend a lot more. By stocking up their balance sheets,

they are not able to lend more. You cannot do both. There is a tension.

Politicians are not honest about Ted. We should have that discussion

openly. -- about it. A lot of businesses have very sound business

plans, are ready to go, but they cannot get the lending. This relies

on every business proposal being too risky to take a chance on. We

know there are very good and sound business plans up and down the

country that are not getting the money. They have a funding for

lending scheme. Most of the money has gone into mortgages. Most of

them say, confidence is at such a low level Cammack unique two sides

for any transaction. -- at a low level, you need. If you are a hard-

working person commits you get up early, go to a job that is not that

interesting, get paid the average earnings - �26,000 or so on. These

traders making tons of money. It is amazing how these traders can make

that money. People are right to be furious at this sort of nonsense.

Not one of these traders has been charged. Not red. Quite a lot has

been fired and they Rupp ongoing disciplinary actions. -- not yet.

The LIBOR activity was not on. has been completely destroyed.

was very bad. We need the banks more than ever to get the economy

moving again. It just depends which bank. Now, believe it or not, it

has only been a month and a day since David Cameron and Nick Clegg

announced their midterm review, with both leaders saying they were

in it for the long haul. But no sooner had they set out on the

journey for the next two and a half years than it was first stop Europe,

when Cameron promised an in/out EU referendum which Nick Clegg

described as not in the national interest. Next, it was the Liberal

Democrats turn to reach for the stop button when they voted to

delay changes to constituency boundaries and, in the process,

give themselves a fighting chance at the next election. Earlier this

week former Energy Minister and Lib Dem MP Chris Huhne felt decidedly

travel sick after admitting it was him speeding on the M11 in March

2003 after all - forcing him to resign his seat and trigger a by-

election that will pit both sides of the coalition against each other

for the first time. And then, on Thursday, English Baccalaureate

Certificates failed to get into first gear after Michael Gove

decided he actually really rather liked GCSEs - a hand-brake turn

thought to be popular with Nick Clegg and his chums who were

worried about a two-tier system. So, all in all, it has been a pretty

damaging month for the coalition government but, with more than two

years to go, are they going to get to the finishing line or could

there be an obstacle in the road that proves too big to overcome?

And we are joined now by Tim Montgomerie from Conservative Home

and from Liberal Democrat Voice, Mark Pack. How to categorise the

state of the coalition? It is a business arrangement. -- how do you

categorise? We had the two leaders in the rose garden in Downing

Street and it was put across as a loving relationship. It is not that.

Everyone knows that. It is still a great that it is incredibly

important principle projects. -- it is still agreed. I think it will

last. The Lib Dems have very little enthusiasm for welfare and

education forms -- reforms. The deficit has stopped going down.

lot of Liberal Democrats have a lot of support for the reforms.

would you categorise the state of your coalition? It is a functioning

business relationship. David Cameron and Nick Clegg add a

personal level can get on with each other. They disagree but they get

on with each other. They understand that a huge part of how the public

use them is the state of the economy. The longer time they have,

the better for both parties. That is why we will see a lot of

rumbustious stuff but the Eastleigh by-election. Both parties will be

in coalition until the next election. Can they knock the spots

off each other and still have a pint down the road? The Liberal

Democrats are we talking about had just under 4000 people in Eastleigh

had been taken out of paying tax altogether. The Tories will take

credit for that as well. Who should get the credit for it? The Liberal

Democrats? Are the Tories going to win the by-election? Is Mr Cameron

going to win? That is the trouble. There is only one winner. It is one

of the most interesting by- elections for us political anoraks.

The media and the political anoraks and the pollsters. If he wins, he

will enormous to strengthen his position in the Conservative Party.

The strategy is based on the fact we can win seats like Beasley. It

is hard because the Liberal Democrats control all of the

councils. That is not fertile territory. -- like Eastleigh.

there be a local candidate? It is very likely. What does it mean for

Nick Clegg? Certainly come up almost the reverse of the point

about David Cameron and their conservative strategy. It is just

the sort of seat the party can hold. It is easy to up the stakes in

terms of a knife hold edge. The poll we saw published by Lord

Ashcroft this morning shows the Labour Party in a distant third. Ed

Miliband is not getting any traction in places like that.

Neither for UKIP. Nigel Farage has not gone for this. He is supposed

to be super-confident and yet he has not. Labour are a distant third

was that they were a distant third at the election. What will happen

to the Labour vote in your view? Willett vote tactically? Willett

vote for the Lib Dems? -- will it boat? The timetable was finalised

last night to choose a candidate for Labour. There is a lot of

energy than the neighbouring constituencies to go and flex

muscles. You have Alan Whitehead's constituencies. Also the seat of

Lord Denham. They need to go out there and chase the vote. If you

take votes from the Lib Dems can make you will secure a Conservative

victory. It could be pushed to a point where they live Dems win but

after seven recounts! You want to keep us up all night. -- where the

Lib Dems win. I think, time together all the things that have

happened this week of what a lot of people will be looking at is the

sheer dysfunction that the entire political system looks like. It is

dysfunction with the GCSE announcements and with Chris Huhne

and Vicky Pryce. I think the public bar just irritated with the whole

machinery of politics. They could end up being a reverse disinterest

among so people of Eastleigh in that by-election. Is the

Conservative Party moving more than a direction you have been calling

for? It looks like he has done the decent enough deal in Brussels. I

do not know all the details but it looks like it is going his way a

bit. Now he has a by-election test which, if he wins, it almost

certainly make his position unassailable. I do nothing be can

make any long-term predictions on any one result. He has certainly

made in the direction a lot of Conservatives wanted. That is not

just about Conservatives. Some proposals have been proposed by

backbenchers - a rate of 10p for the low-paid. Not just issues about

immigration and crime. It is about gay marriage and tax for the low-

paid to ensure we have are barn as suffering for every voter. If the

Prime Minister is watching, he did not think the position is

necessarily unsustainable. implied, would there be a debate?

did not imply that at all? Let me be absolutely clear... Of when

people said that to me, I know a fog is coming in. That means it is

just about to get very muddy. Will this coalition go down to the wire?

Will it go down to the start of the election campaign in 2015? Will the

Lib Dems crisis think we should pull out not in acrimony, but we

should get out to distance ourself - refined our bearings sometimes

after the summer of 20 14th - will they win the day? It is very

unlikely. -- 2014. The public does not always pay huge amounts of

attention to politics. The public does have a memory. You cannot pull

out of the coalition a few months before polling day. Both parties

will be judged predominantly a have they have done in coalition. It

makes sense to make the most out of that right up until polling day.

Now they are meant to work smarter, do more for less and, of course,

think creatively about tapping in to their revenue-generating

potential. No, I am not talking about contestants in Alan Sugar's

Apprentice but local councils. And, do you know what? Some are. Liz

The medieval market town of Shrewsbury. Famous for its historic

buildings career its flower show and for being the birthplace of

Charles Darwin. His book On the Origin of species fast established

the theory of evolution. Nasha is Prix is witnessing the emergence of

a new breed of local council. the first time in a generation,

striving councils now have licence to go full steam ahead. Grab a

share of wealth for their local areas. To stand tall, and seize the

opportunity of enterprise, growth and prosperity. That was not

Charles Darwin but a modern-day exponent of the evolutionary theory.

The Secretary of State for local government, Eric Pickles. His

message to local councils, adapt to survive. It is lunchtime at this

high school in Shrewsbury. There are hundreds of hungry mouths to

feed. They are so good at cooking school dinners in Shropshire, they

are already selling them to other council areas. We had to come up

with a plan on how to deal with future cuts. Our plan is to trade

in the marketplace across the public sector. We note a lot of

councils will have huge Kurds again and they will be looking to make

savings. -- cuts. They are asking how we can help. Shropshire council

hopes to move the majority of its 6000 staff into the new company.

The Local Government Association says the scale of the plans is

unprecedented. The idea of making a profit from a council service is

not necessarily new. In Stoke on Trent, the city council joined

forces with the construction and engineering firm backing 2008. The

core business instead was the maintenance of 19,000 council

houses. Its plan to grow the business and makes the money has

not been easy. It was almost to the point of dissolving the partnership.

But, we reduced waste and the response time went down. Tenants

are much happier with the way things were working. It has settled

into quite a nice working relationship. It is a cautionary

tale. Do not gamble public money without a large slice of commercial

know-how. If you are going to do it could enter into it knowing you

have an escape route. The second key issue is, where are the

opportunities to trade services? Local thirties are being encouraged

to use their own methods of survival. -- local authorities.

Will the fittest be able to embrace radical change and the rest pays

How bad is the situation? It is pretty bad. The welfare budget is

growing sharply. That is driven by demand. If you put that to one side,

you have to cut everything else more. It is reducing spending in

cash as well as in real terms. kind of approach as we saw on our

film to raise revenues and make a profit, should we take that

seriously in the sense that it makes a serious contribution to the

finances or is it just marginal? think it is marginal in the great

scheme of things. If you look at a whole cost of providing services

for the elderly and children and so on, these things can help. In the

year where government spending is falling by two of 3%, clearly a

council can squeeze its spending a bit. If you asked cannot reduce

spending by 20 of 30 %, no, it can't. It can squeeze it a bit but

it cannot rescue councils from the scale of the cuts. And looking at

the cuts, I'm told here that there will be a 33 % cut in real terms to

the money councils receive from central government across the

current spending review period which has 2011 to 2014 / 15. That

kind of thing. This is expanding -- extending it. This is because the

government has chosen to concentrate the cuts on some parts

of public expenditure. Capital expenditure has been cut sharply.

Some central departments like the Home Office and justice is being

cut very sharply. Local government is being cut most sharply. Partly

because politically that spreads the blame. It forces people other

than the government to defend cuts at the local level. What is your

area, Peckham or so that? Peckham is in Southwark. Southwark Council,

to pick up on the sharing services. We are looking at talking to

Lambeth to say can we manage your library services for you and that

would help us bring in some money but it is an absolute drop in the

ocean compared to the fact that at the end of the next financial year,

we would have taken at �249 for every man, woman and child in our

borough. When you have cuts of that kind of scale, any kind of

outsourcing we can do is very limited. Sam, it is made worse

getting less funding because there is effectively a council tax freeze

on. They cannot raise their own taxes? Exactly. What worries me is

they involve degrees of risk. One thing councils cannot dig is a fail.

That is not an option. Or put money in Icelandic banking accounts?

could be some councils trying really risky schemes to make up the

shortfall which then and up costing their residents more. The final

point, Tony, we always told there's a lot of waste in town halls, will

this force them to get lean and mean? I think they are always

pretty lean and mean. Local government, despite a reputation to

the contrary, is well managed. It does not run deficits. It is

efficient. Interestingly, it is the most important part of the public

sector being driven to make even greater efficiency is. I would much

ask the question whether some parts of the public sector that are not

being cut could perhaps be put under little pressure in the future.

I think cabinet ministers are beginning to ask that as well.

Travers, thanks for being with us. And thank you to Sam and Arena.

So, nearly 2000 years after the event, the European Union has

decided to give Pompeii and facelift. And not just any old

facelift, a 105 million euros facelift. Scientists have been

looking for dark matter in a big mountain in Italy. A ban on women

wearing trousers in Paris dating back to 1799 has finally been axed

and a wolf hunt in Sweden came to an abrupt end. It has been a busy

of week in Europe. But what have members of the European Parliament

been up to? Here is our guide in French President Francois Hollande

addressed the European Parliament where he warned the EU could be

heading for a split and took a swipe at David Cameron's our carte

approach to Europe. MEPs have been sounding off about noisy traffic.

They have backed a draft law that would make vehicle noise reduced

but they want electric cars to make more noise so pedestrians can hear

them coming. Europol, that is the EU Law Enforcement Agency says it

has uncovered match-fixing on an unprecedented scale and it could

include a European and World Cup qualifiers. And MEPs have backed

big reforms to the EU's Fisheries Policy. It is the first time they

have shared power over fishing with member states. It will end the

practice of throwing unwanted dead fish back into the sea. We want to

see an end to the discarding of fish which is indefensible.

And with us for the next 30 minutes, I have been joined by the

Conservative MEP, Sajjad Karim, and by the Liberal Democrat MEP, Sarah

Ludford. Welcome to you both. We used to have wine lakes in the

old days, we used to have beef mountains, we still have fish being

thrown back into the sea, these reforms, do you think they will

really make a difference? They certainly will. I'm delighted that

it is the first time the European Parliament has had leverage on a

policy and this is the first time we have real reform. In the bad old

days, the institutions had a short- term approach with vested interests

which meant keeping the quotas above what scientific advice said.

I am delighted that my colleague Chris Davies MEP, working with a

big campaign like Hugh Fearnley- Whittingstall, has achieved real

reform, banning discards, throwing dead fish back in, with long term

management and regional decision- making. Not micro managing from

Brussels. It shows you can get reform. A dig Britain get its way

on this? I think a strong yes. A strong British input. Is it all

over? I see there will be more negotiations with the 27 fisheries

ministers before it becomes EU law. That is right. It has got to go

through the Council of Ministers. Keep the champagne on ice? I really

think we will get there. Political will has been demonstrated by the

parliament. We will push this through.

Let's move on to the big story today which is the budget. Soon

after 6am this morning, the shape of the EU's budget began to emerge

from Brussels. The European leaders have been up for most of the night

negotiating, occasionally snubbing each other. Francois Harland said

Mr Cameron captains of their with coffee, biscuits and sweets.

Leaders calling for a straight seemed to have got it. We do not

know yet. It is not over. The fat lady has not sung. He looks like a

cut of 34 billion euros on the Budget which is coming to an end.

UKIP's Nigel Farage is in Brussels where it is all happening. Would

you like to be the first to congratulate the Prime Minister in

getting the first cut in the EU budget for 56 years? Well, I think

the British and Germans and other northern Europeans have said we

cannot have Anne budget that expanse in size, we cannot sell

that people. -- Anne budget. We have the best deal we could

possibly have got under the circumstances. When we buy products

from the European Union, we have to be careful what the label on the

tin says because the contents can be disappointing. The weakness of

sterling against the euro at the moment means there is no prospect

of British contributions falling below �50 million a day. That is

the bigger issue. Five years ago a Prime Minister that came back with

a tiny cut in the Budget could have said a success and people believed

it but I think the whole debate has moved on from that. Isn't he in

danger of stealing your thunder now? He is offering voters a new

relationship with Europe and a referendum. He shows he has got

friends in Europe. He can negotiate with them and make an impact on EU

spending, he has thwarted the demands of France. Francois

Hollande would not even speak to him. In that circumstance, what is

the point of UKIP? Quite. Cameron can say to the public we were

paying �56 million a day to Brussels, we are now paying �52

million. May be some voters will be impressed by that. From my part,

our argument is we should not be paying any money at all. We want a

relationship based on trade and co- operation, not being part of this

political union. Really, in terms of the big European debate in

Britain this does not change anything. The one person who says

that better than anybody, he says it succinctly and with authority is

your good self. So it why have you missed the opportunity to tell the

British people all this by bottling out of fighting Eastleigh?

please! I am here in Brussels at the summit today. I am one of seven

group leaders at the European Parliament. We have a big vote

coming up on this budget. I have plenty to do over here. I lead a

party which is growing rapidly in size and is aiming to put 2000

candidates into the field, into the local county council elections this

year. I have promised I will tour around the country and support

those people. I cannot do everything. We are not a one-man

band. There are plenty of capable people who can fight the Eastleigh

by-election. The suspicion is you prefer the good life in Brussels,

rather than fighting in Eastleigh. Is it is a good life! Listen,

Andrew, in the 1980s, I was a trader in the city. That was the

high life. This is not, believe me. You did not manipulate LIBOR when

you were there, did you? Know, I did not. I will not hold my hands

up to that or anything else but I did live a good life. What is your

overall attitude to, just as a working assumption, seeing that

what we know is broadly what will be determined. What is your overall

view? The Liberal Democrats have consistently voted for a straight

on the budget. If you cannot have austerity at home and big increases

as summer in the European Parliament wanted. We are

overwrought OK with the outcome on the size of the budget. What we are

very disappointed about is the shape and distribution of the money.

Agricultural spending is going up. It is a bit rich for President

Hollande to talk about how we need nemesis on growth but what is being

cut his development on transport and so on. It is not as much as it

should be for a 21st century budget. Foreign spending will come down

overall. Not as much as it should. It is coming down a bit. We will

look at the fine print. You are broadly in favour? We are in favour

of the size but we need more flexibility and future Oriented

spending. I assume you are broadly in favour so I will ask you about

that. This will go through the European Parliament? Can I just

start by saying what we have heard Nigel Farage say it is utter

nonsense. He talks about working hard in Brussels. He is in Brussels

today. The European Parliament is not meeting in Brussels today. We

have repeated debates in Parliament. We had a vital debate about

securing EU funds for small and media -- medium-sized enterprises.

Not a single UKIP member was in the chamber. If there is ever a case of

fraud for the British people then UKIP is it. Now you have done that

attack, in fairness I have to hand back to Mr Farid. The ball is in

your court, how do you respond? are having an in out debate. The

Conservative and Labour position is they will try and battle for better

legislation in Brussels and the UKIP position is we will divorce

ourselves from Brussels and Take That burden of regulation of

bristles -- of business. He said you are not there are enough.

is nonsense. We have members from UKIP who are extremely active over

here. I want to come back to this, the question I asked year was, I

saw the head of the European Parliament, the chairman up in arms

about the President. Is there a chance but the European Parliament

could vote is down? One of the things Martin Schultz is stranded

here is to give a secret vote to MEPs. Are I think it is outrageous.

There is a huge lack of democracy at an EU level as far as our

citizens are concerned. Wendover Cameron in his speech said only

national parties are democratic, I would like to thank the European

Parliament for the reform. To say that MEPs should have a secret vote

is disgraceful. I would just go back to Nigel Farage, I assume you

will have nothing to do with a secret vote in the European

Parliament? No, this will come before the Conference of Presidents.

Seven of us will vote on this. I will vote for them not to be a

secret ballot. I suspect that what people Britain do not understand is

those driving the European project over here are fanatics. They will

stop at nothing and I suspect Mr Schultz will get his way and there

We are making Nigel Farage work for his non money that he gets. How do

you feel about your taxes going to fund the BNP or the French National

Front? Well, it is happening and the Socialist, Liberal and Green

MEPs are trying to stop it. But is it democratic to treat some

political parties differently, just because you find their politics

unpleasant? It is a live debate among our representatives in

Strasbourg, as Jo Coburn found out this week. The face of political

extremism in Europe. They may be on the fringes but last year, in

France and Hungary, parties qualified for 300,000 euros because

of their representation in the European Parliament. This decision

has caused uproar amongst MEPs from mainstream parties and is being

challenged. We are on the fringe of society. The problem is what they

can develop. In former times, fascists and neo-Nazis and the Nazi

Party have been at the Fringe. Especially with high unemployment

and many social problems were they can gain a lot of influence and do

a lot of damage to society. MEPs have signed a petition. They are

using a parliamentary rule at state's money should only be given

to groups who uphold the values of European Union. Just months after

being awarded European Union cash, the alliance of extremist parties

could see it taken away. If the initial decision to fund them is

bound to break parliamentary rules prevent MEPs will be given a vote

on the issue. The prospect of losing the money has put the issue

into sharp focus for members of the alliance of European national

movements. Parties like the BNP are claiming they are being unfairly

discriminated against. We do not think any pan-European political

party should get any taxpayers' money at will. While it is being

handed out, it is monstrous that they should not get views

represented and funded while the socialist groups do for stoppages

fundamentally a question of all animals are equal but some animals

are more equal than others. -- groups do. There is a dilemma for

some Members of the European Parliament. They feel it is

undemocratic to use be ceded to make life difficult for them.

problem with state funding is that either you end up funding extreme

and peasant parties, or, which is worse, you give the opponents of

those parties the right to sit in judgment over who does and does not

get the money. That is a really dangerous precedent. Once some

parties get to disqualify opponents, where does it end? This is how

every dictatorship operates. parliament will vote to remove EU

funding, it is predicted. The amount of money is relatively small

and unlikely to silence them. We asked the BNP to come on and

discuss this but they refused. We still have three MEPs with us.

Nigel Farage is in Brussels. To get this money, the parties have to

read here to the rule 2010. In your opinion, do think the BNP, at the

National Front, that Hungarian party, the parties in Greece and so

on, do they have full respect for human rights and fundamental

respect of freedoms and liberty and the rule of law? The Greek example

is the one. This is why it is on increased - they really are a

genuine neo-Nazi party. They are at 12% of the polls and rising. People

are worried that people from a party will come here in 2014. If

you allow freely Parliament, when there -- whether they have the

right or left-wing views, to start to withdraw money from them because

you do nothing they conform to valleys is a huge mistake. -- do

not think they conform to your values. It is likely to make those

parties even more popular with the electorate. If we start with race,

where do we go next? One man intervened in Parliament and said

that my speech, whilst I have nothing against the people of

Romania and Bulgaria, I do not want to have an open door. He said I was

in contention -- contravention of human values. You cannot dole out

money to elected representatives as to whether you find their views

acceptable. I want someone to look at the rules - and independent. It

is not about the opponents deciding. What home calling for his, or we

have a rule. They should not be a dead letter. -- and calling for is,

we have a rule. One MP asked for singling out, putting on the list,

Jewish MPs has been a threat to national security. There is a

difference about campaigning for votes but should they be getting

taxpayers' money? I can perfectly understand it is your job as a

Liberal MEP, I think Ms people would be appalled at that proposal

for the Hungarian. -- most people. It is not about breaking the rules,

saying you were not go and get the money you are entitled to. I would

certainly compete with them and show them up for have nasty they

are. What we are calling for, as liberals, not on the same page as

socialists, is to say let's do what this will calls for - a review for

an independent panel to look. this rule. If you do not give out

the money... Bearers a query as to whether you should be getting his

money at all. -- there is a query. I am told that everything is 5p.

When you add it up, it comes to 5 billion. For everybody who wants to

spend 5p, if you do not dole out the money simply on the basis of

how many MEPs they have, which is a mechanistic approach, you become

subjected. I do not understand how that will work. In the first

instance, I do not support state funding of political parties on

groups or movement of any sort. We have not signed that particular

document that was referred to. The fact of the matter remains, we at

all times, just this week and I had to sit in the European Parliament

and listen to Nick Griffin speaking his language of hate and division.

It really was a hate speech. As much as I may disagree with what he

says, the fact of the matter is, he is democratically-elected from my

constituency. I will defend his right to come and say what he says

in a parliament. There are limits. Whether we should be funding

political activities being carried up by his party, as long as it is

within the rules and they applied equally to everybody, then yes we

should. A final question to you, Nigel Farage. Does this money make

much difference to you anyway? the money make any difference? Well,

not particularly. I have to say, the money going into European

political parties is relatively small. The money they European

parliamentary groups can access - particularly the announces MEPs can

access - is very considerable indeed. -- the allowances. The

principle must be all elected members must be treated the same.

Please do not demonise these people. The stock Nick Griffin is easy. The

timber, Question Time and there will be the end there. -- to stop

Nick Griffin is easy. Put him back on Question Time and that will be

the end of it. Now does the rotating presidency of the European

Council get you all in a spin? Well, worry not. Our Adam has been to

Brussels to find out more about it. Here's his handy A to Z guide. It

is the part of the EU that really does go round in circles. Every six

months, a different and she gets to take on the rotating presidency of

the EU. -- a different country. Here is the Irish ambassador doing

the main job. Generally working as an honest broker between the member

states. You have a huge infusion - a fresh energy and drive.

Enthusiasm at the start of every six months. It is very important.

The pace to work at, you could not keep it up. It keeps a lid on the

favourite pastime of Brussels - haggling. Politically, to reach

agreement, who should share this group or that group? We have seen

that recently stopped imagine the horse trading and bargaining and

complaining. Top of the Irish agenda is the promotion of jobs and

growth across Europe. Sometimes it means leaving the national

Then there is the softer side, there will be hundreds of Irish

cultural events, like this reading by an award-winning author. Each

country installs its own piece of art in the atrium of the council

building. It is about promoting Europe to Ireland. The EU is a

crash course into how the organisation works. Bearers a crash

course for citizens. They hear a lot more about it. -- there is a

crash course. Some of it has lost its lustre. Some wonder, what is

the point? You can have some presidencies not as strong as

others. Or individual chairs that will not be as good as others. You

can always be certain that they will be gone in six months.

Presidencies to come in threes. To give some continuity, trios of

countries work together. Ireland are co-operating with Lithuania and

Greece. Because the EU is about to have 28 members, Ireland were not

get another shot at presidency for another 14 years. -- will not get.

He loved it. He is still on it, going round in circles. Should we

move to something better than the six month presidency? It can be

relieved to wanting, particularly for some of smaller countries like

Ireland and Cyprus. -- really daunting. You can imagine the panic

that sets in. What should be done? We now have Herman van Rompuy

performing a slightly different function to what the presidency

does. The fact and the matter is, the need to keep a mechanism

whereby the nation states are actually involved in this

presidential system. Whether we work on the basis of threes -

countries coming together - one country coming along... Ones that

are coming along of following up and having a closer relationship

and those that are on the way out as well. We are living in

historical times. Today is a historical day. For the first time,

we have seen a reduction. Nobody likes the rotating presidency.

perfectly content with it. I will take away the word, nobody! What I

think it does is... It illustrates the EU is not trying to create a