25/10/2013 Daily Politics

Afternoon, folks, welcome to the Daily Politics. The top story:

Britain's economy grew by 0.8% in the three months to September, the

third consecutive quarter of growth. The Chancellor says that the country

is on the path to prosperity. A dealer struck to save the

petrochemical plant at Grangemouth in Scotland, but only at the cost of

the Unite union agreeing to total capitulation.

European leaders demand talks with the US and spying after claims that

American agencies tapped Angela Merkel's mobile phone!

And John Prescott, for it is he, will be here to debate whether

public money is being wasted on northern cities like Hull!

So all that coming up in the next hour or so, and with us for the next

half-hour is Bronwyn Curtis, currently head of global research at

a small boutique bank called HSBC, which, unusually, it is not owned by

the UK taxpayer, welcome to the programme. Let's start with the

latest on the industrial dispute at Grangemouth oil refinery, the

petrochemical plant in Scotland. On Wednesday, the owners, INEOS,

announced that they would close the petrochemical part of the planned

after workers refused to accept a proposal for cuts in their pay and

conditions. That meant 800 jobs were at risk. This morning it announced

that the unions have backed down almost entirely and accepted the

management proposals. This is what the chairman of the Grangemouth

petrochemicals company said just over an hour ago. Very happy to

announce that, following a meeting with the shareholders yesterday,

Grangemouth petrochemicals will remain open, so that decision has

been reversed, and INEOS have confirmed that the ?300 million that

they are going to put into it will be available and we will start

immediately with those projects again. We have also confirmed that,

with immediate effect, with due respect to all the safety and

timing, that all the assets will start as of today.

Well, that is the bass up in Grangemouth, and in the past of our

Alex Salmond, following this industrial dispute very closely, has

been talking about the details of the deal. The deal is that the

survival plan is now back on. That involves substantial investment in

the chemical facility and petrochemical facility at

Grangemouth. It means not only is the facility not closing, but that

investment means there is a prospect of a bright future for the next 25

years. So it is a very significant announcement in terms of saving a

major part of Scotland's industrial infrastructure. The jobs of the

people who depend on the chemical plant, but also, significantly,

security over the medium-term, because of the investment plan which

is at the heart of the announcement today.

Watching the boss of Grangemouth there, he has had the biggest

victory over a British union since Mrs Thatcher beat Arthur Scargill,

and he looks miserable. Is there the possibility that INEOS did not

really want the union to capitulate, they just did not want to do the

investment? There were suddenly claims beforehand that maybe all of

this had been trumped up, that INEOS wanted to get out of it, and clearly

what they have got is ?125 million of loan guarantees from the

Treasury. Not actual money but a guarantee. Indeed, and about ?9

million from the Scottish government to do this, and they have had a huge

amount of political pressure, obviously, to try to change their

minds. But they have also had, as you said, the union capitulating.

Not a good day for the union, good for the workers, but the union comes

out of this looking particularly bad, and the workers have had to

take quite a cut in pay and inventions and had to say that they

will not strike for the next three years. They have taken a cut in pay,

not just pension contributions? Yes, part of the deal will be that their

yearly salaries will be reduced, that they will reduce some of their

pensions, and it will not strike for the next three years. To all intents

and purposes, this is a nonunion plant, a no strike deal, a cut in

pay, you have just told us, a cut in pensions as well. I'm even told that

the union convenor is not going to be allowed in the plant as well.

Clearly, it has had a huge impact on industrial relations there, and the

fact that the plant is going to remain open is not going to make

those industrial relations much better in the short term, and

clearly in the refinery as well. So the plan is that the oil refinery

will reopen at some stage, that was not closed down. The petrochemicals

plant reopens now, and they proceed with about ?300 million worth of

investment to allow them to bring natural gas from the United States

in tankers to a new harbour, in Newport at Grangemouth, and the

petrochemical plant will keep going. That is the planned Umax absolutely

right, and they say it has got a good life span of 15 to 20 years.

That will come as good news for the workers and for Grangemouth as a

whole. Some 2000 of the subcontractors have already been

laid off, so clearly good news for the whole area, good news for the

Scottish Government and the UK Government, which put a huge amount

of pressure on the company. Because it was all happening within the

context of the independence referendum. Here is the rub, the

deal seems to have been done, but there is a worldwide glut of simple

petrochemicals like ethylene, which is what this plant is going to make,

and Dow Chemical Company ethylene at about a third of the price that

Grangemouth can. Where does this go? This is Dow Chemical in Texas,

compared to Grangemouth. When you talk about 15 or 20 years, I heard

Alex Salmond talking about 25 years, what are the market

realities? A lot more gas is coming out through fracking. The economic

South changed so much and these European based plans have the

company canonical. -- the economic have changed. The pressure is going

forward are going to come back again, so we might be in the same

position in three years' time. Dow Chemical told me they are moving out

of Europe, out of Japan, and they are about to board $30 billion of

new capacity into taxes to use the cheap natural gas. -- Texas. You do

not have to be an expert to know that these plans will be state of

the art, unit costs low, and Grangemouth will look a dinosaur.

Not just Grangemouth, but a lot of Europe. Of course, Europe is not

growing either, so already we have seen energy by passing Europe and

going straight from the US to the Middle East, to Asia, to the growing

parts of the world, and once they get this high-tech factory and so

on, it will put more and more pressure on that. I do not see it

getting better, I see it getting worse, and I think this is good for

the moment, but going forward we might be seeing more cost-cutting.

On the politics of this, very briefly, did anybody win in the

sense that there was a battle between Holyrood in Edinburgh,

Westminster in London, did anybody come out on this? I think both

governments will take away from the fact that they have managed to get

the decision reversed, and it was clearly very important for them that

it did not shut down, for different reasons clearly, the only oil

refinery in Scotland, that would have been a catastrophe for the

Scottish Government, and for UK Government, it would have been a

catastrophe for them to lose the indirect jobs.

Time now for the daily quiz, and the question is who is threatening to go

on strike in France next month? They always go on strike in France, you

might say! Les boulangers, les pompiers, Gerard Depardieu, les

footballeurs? I think Gerard Depardieu lives in Russia now. A bit

later in the show Bronwen, of course, will tell us if she has any

idea what we are talking about. Right, come close, close! Listen

carefully, and you might be able to hear the sound of champagne corks

popping in Whitehall. Not that the champion of austerity, George

Osborne, would indulge in such an extravagance, not since the

Bullingdon Club days, but he might have afforded himself an extra

rasher of bacon following the new growth figures. Third-quarter growth

for this year is up 0.8%, a wee bit up on the 0.7 figure from April to

June. It means the UK economy is due to grow by around 1.5%, maybe more,

this year. Growth continues to be driven by a strong service sector,

now 0.6% higher than its peak before the 2008 crash. Manufacturing and

construction also grew strongly. Unemployment continues to fall, with

the number of people out of work down 18,000 in the three months to

August. The total number of people currently in work is at a record

high. House prices are rising again. The Halifax survey said

average property prices have risen by 5.4% in the year to August,

pushing the cost of the average house price to its highest level for

five years. Of course, that is boosted by London and the South. And

UK car production is also up to levels not seen since 2008, with

more than 140,000 cars rolling off the production line last year. That

is up 10% on one year ago, and, here is a change, because actually work!

But wages continue to be squeezed, with average pay rises of 0.8% in

the last year, a lot less than inflation, which remains stubbornly

high at 2.7%. And that means that, unlike the economy, living standards

are not growing. This is what the Chancellor had to

say this morning. I think Britain's hard work is paying off, and we are

on the path to prosperity. Lots of risks remain, but I think there is

real momentum in the economy and in all sectors of the economy,

manufacturing and construction as well as services, so that is good

news for Britain and for British families, because it will eat to an

increase in loving standards. Conservative MP Charlie Elphicke and

Labour's Chris Leslie join us now, welcome to both of you. Charlie

Elphicke, any chance that you will get the economy back to the size

that it was in 2008? I think these figures are really good news, and

Britain's hard work is clearly paying off, we are on the path back

to prosperity, but as you say there is a lot to do. The Governor of the

Bank of England says the recovery lacks traction and is currently too

focused on the south-east. I think the figures today are really

positive, particularly construction up 2.5%, and the manufacture in

figures are particularly welcome. But what's point, too focused on the

south-east? The Chancellor has been working hard to ensure we have more

prosperity in the North and across the whole country, and it is

important that it is spread across the nation. Chris Leslie, you must

be overjoyed that the economy is growing at a rate of 3%! It is

overdue. We should have had this level of growth several years ago by

now, but for most people they are still paying the price for that

lag, that delay, in getting growth moving. We have had three years,

virtual stagnation, so while we should be out of the blocks, a lot

of our competitors internationally have zoomed ahead. Oh, really? Tell

me a major economy in Europe that is growing faster than Britain! Well,

in terms of the quarterly rate, you know, they do vary... Well, take the

annual rate, tell me a major economy that has grown faster than Britain

this year. The question is, when did those economies turn the corner and

get out of recession, and most of those economies, Germany, France and

the USA, were moving out of their recovery years ago. We are only just

getting out of the blocks. The reason that matters is because it

has fed into depressed wages, purchasing power of take-home income

has not been able to keep pace with prices, and that is where we really

have to focus on cost of living. You have answered your question, could

you answer mine? Tommy a major economy in Europe that is growing

faster than Britain in 2013. -- tell me. You are right to say that when

we start, of course we should be motoring on fairly quickly. So there

isn't! There isn't! The key question is, at what point do you get out of

the blocks. Those economies have been motoring on a lot longer...

What, France, Italy, Spain? It will be interesting to see whether this

level of growth can be sustained. All right, let me put... There are

concerns about whether we are seeing a lopsided recovery, with the Help

To Buy scheme looking at people is adding to question whether there is

a bubble in London and the south-east, so there is a lot of

anxiety is now about sustainability. There is always a bubble in London

and the south-east when it comes to higher prices. It is all well and

good for us to sit in the studios and talk about GDP growth figures,

which are frankly of no relevance to most people directly. What matters

are the prices in the shops and the pay in people's pay pockets at the

end of the week or the month. And people are still suffering. This

growth makes no difference to them. The difficulty you have is that

every recession, you have a fall in earnings, it happens every time. We

had the first recession --worst recession in 100 years. But you get

much quicker bounce backs than we have had. Peoples wages start to

rise quickly again, this is abnormal. Under your Government,

living standards have not risen. It is an abnormal recession, because we

had the massive debt crisis that came with it, so it has been a

struggle to get the nation back on the path to prosperity. Labour's

idea was more borrowing, spending and debt which will only drive up

mortgage rates. You are doubling the amount of money the country will

borrow in the five years you will be in power. But Ed Balls is calling

for more borrowing and spending. Whether it is 1.5 trillion or 1.6

trillion, it is irrelevant, it is trillions. We're working hard to

make the nation's finances come back into order as quickly as possible

and support the markets, helping to keep mortgage rates low. Chris, over

to you. You might forget this, but you lost the triple-A rating this

country used to have and the borrowing levels have been so high

without the deficit coming down significantly in the last couple of

years, because of the costs of economic failure. You can't expect

people to just have collective amnesia about the past three years.

The fact that we haven't been getting out of recovery really

matters. That is the reason why there has been so much weight on

people's take-home pay and people are not able to feel this recovery.

So when you and the Chancellor talk about prosperity returning, it shows

how out of touch you are when the most people, life is getting harder.

You have no answers on the cost of living, certainly when it comes to

energy bills and other issues. You have to focus on helping ordinary

working people and doing it urgently. We have heard from the

politicians. What say you? I think we need to look forward. Everyone is

more confident than they were. We have got a recovery. And if it lacks

traction, as Mark Carney says, it probably does and what he is saying

is we are going to keep rates as low for as long as we can to make sure

this economy gets some traction. Can I just say, first of all, he is

going to have do up his forecast, because he's underestimating, but if

it does grow by 3% next year, if it continues its current growth rate,

can he keep interest rates low? No, but you are not going to have 3%

next year. It would be great... Speaker at Big Apple, the city has

got this wrong before. Yes, and I think you are being optimistic. --be

careful, the city has got this wrong before. Investment intentions are

rub, but investment is still down. If you look at the period in real

terms, we are down so you need firms to invest to keep it going. Chris

Leslie, does Labour still have a plan B? I think our plan, we want

the Government to pursue the plan B, which is focused on British

investments, make sure you look at house-buying and of course, most

important of all, help people with bad cost of living. That is our plan

B. So this is a new plan because you mark a plan C? We have been

advocating a different course for a long time, we have been banging on

about the need for growth for a long time and we haven't had it for three

years. Of course it is overdue but let's focus on making sure it is

sustained and strong, it is the only way to help people with the cost of

living. When you come back down here, you can talk about plan C. Why

is business not investing in this country? That is the next thing to

follow. We are moving from rescue to recovery and then to prosperity.

There will be bumps in the road. Why is it not investing? Business should

weigh in, thinking the recovery is logging in, and then... It is more

likely now that businesses will invest. We are more optimistic

manner that business will start to invest and living standards will

turn. You better come back and see me as well, see if businesses are

investing and see if plan B is really plan C. Thanks to both of

you. Let's talk about the allegations

that United States spying agencies have been listening to the private

mobile phone conversations of world leaders, including the German

Chancellor Angela Merkel. Yesterday, she spoke to Barack Obama about the

claims. He told that America was not and would not tap her phone, but it

does open the possibility that the US has been doing exactly that. The

issue has dominated a meeting of EU leaders in Brussels. Let's get the

latest from Ian. So we have the eurozone crisis, 60% youth

unemployment in Spain, is this really what they are talking about?

It is, they are talking about red tape, the digital economy, when they

introduce data protection rules, the Prime Minister actually wants then

delayed until 2015, but the official agenda didn't have it, if the two

major powers want it on the table it will turn upon the menu, and they

talked about this extensively last night. After the session was wound

up in the middle of the night, Herman Van Rompuy, the president of

the European Council, issued what seemed to be an implicit threat to

the United States, saying we need mutual respect and trust and if not,

it could prejudice intelligence gathering and sharing when it comes

to countering terrorism. Angela Merkel spoke of the night and we

expect her to speak against it. If you are reading between the lines,

her lines are written in green ink! She said very clearly that in the

new relationship, trust has been breached. The Americans have not

denied they have tapped her phone, so obviously they have. She said

they need radical change by the end of the year. France and Germany are

joining together to try and forge that union with America, but perhaps

less than extensively reported, some of the European leaders said that

everyone should share what they knew about this, what has been called

Datagate, David Cameron remained very silent indeed! Interestingly,

Herman Van Rompuy was saying we had to rebuild trust not just with

America but with other European nations. If I was the President of

France or Chancellor of Germany and I am sure both nations are glad I am

not, I would be thinking that if that is what big Satan has been too

to, Little Satan in the shape of GCHQ, must have been up to the same

thing. Is David Cameron a little bit sheepish about this? I think

sheepish is a good word. When he arrives, he usually stops after

talk, this time it would have been about red tape but yesterday he

drove straight past me and refused to answer a question about things

being overshadowed by this spying scandal. So when he speaks in the

next ten minutes or so at his press conference, it will be the first

words he has uttered publicly since he got beer, almost the last

European leader to do so. There was an accusation from Italy that GCHQ

may have been doing the same thing. You go and get them. Should we be in

any way surprised that America or Britain or anybody actually

eavesdrops on their allies? No! I am surprised that people are surprised.

Look, investment banks, four years and years, for as long as I

remember, have recorded all of their telephone calls that go through

their dealing desks and so on. We know we had a bit of a scandal with

Bluebird, every keystroke is recorded, so you know all of this.

We know that mobile phones have been hacked. We do, a lot. Speaking why

would you be surprised this happen? Now, over the past two decades,

Ingrid's big industrial cities have developed strong service sector

economy is, but some of the smaller industrial towns, still quite large

but smaller than Manchester or Liverpool or Newcastle, mainly in

the north, have been listed as decaying by an article in the

Economist. The article says that their decline should be managed by

supporting the people who live there, to help them commute to

places where there are jobs, rather than rescuing them like Michael

Heseltine did with Liverpool in the 1980s and the Blair-Brown

governments did in the last decade or so. There has been an outcry in

Hull, one of the city is named by the Economist article, so Tim

Iredale went off to investigate. With its waterfront, dogs and

industrial heritage, Liverpool has much in common with Hull, its fellow

maritime city --Docs. Many people in Hull will look at Liverpool with

some envy. In recent years, it has had one of the fastest-growing

economies in the UK, so it is hard to imagine that just over 30 years

ago, there was talk in Government of abandoning this city. Archive

documents reveal that following riots in Liverpool in 1981, the then

Chancellor Geoffrey Howe suggested a programme of managed decline. There

was an echo of that era in a recent edition of the Economist, entitled

Britain's Decaying Towns, which suggested the Government should turn

up the spending taps in so-called failing towns and cities such as

Hull, Burnley and Middlesbrough. The argument is about where jobs are

created. For a long time, the Government has put effort into

trying to move people to where the jobs are and it hasn't really

worked. We still see these persistent statistics, like in

Hull, where 27% of working age households have nobody in work.

Former Liverpool MP and Labour Minister Peter Kilfoyle says he has

heard that argument before and it has been proved wrong. We had it a

few years ago saying that places in the North should be abandoned and

everybody should move to London and Oxford, the growth areas. This is

nonsense. Any forward-looking Government, any forward-looking

society that wants to invest in people should invest. Have we got a

point where we say we cannot invest in a city if there are no results?

Any Government who says that has to ask why they have not got the

results they set out to obtain. Part of the reason in this country is

that everything is concentrated in the south-east. The country as a

cannot continue with everything being emphasised in the south-east

at the cost of the rest of the country. Know the man who was

credited with turning Liverpool's fortunes around in the 1980s has

entered the debate. Lord has time has been commissioned by the present

Government to look at of boosting economic growth in places like Hull

-- Lord Heseltine. He says the present solution is devolving powers

away from places like London. Speaking at what I am trying to show

is that over the decades, you would be much better trying to show what

you would do if you originated the idea is. You actually know what

Leeds needs. What Bradford needs, what Hull needs, so let's start the

other way. The best way to start is to find out who is in charge. That

is why I believe indirectly elected mayors -- in directly elected. Speak

that ministers have dismissed talks of struggling Northern cities being

abandoned by Government, a move that is sure to make waves from the

Humber to the Mersey -- ministers have dismissed talks.

We are joined by Daniel Knowles, he is from the Economist, who wrote the

piece, and by former deputy prime is to John Prescott, MP for Hull for 30

years. What is your reaction to this proposal? I don't know what it

means, it says that cities have grown in the report and smaller

cities like Hull have not, but when we came into power after 18 years,

this two speed economy was there through the boom and bust policies,

housing down and investment down. They came in and they scrapped the

RDAs, which Heseltine agrees with, we have these bodies that deal at

the local level without resources or powers, so the two speed economy

comes from the same policies they had then. Why have cities like

Manchester or Newcastle or Leeds seen a revival, and recreated

themselves for the 21st century? Because we give them the power and

resources. Because of the size of the cities. There was a report which

said that the ten cities that had grown considerably over that time

was due to the development and planning of the RDAs and the extra

resources given to them. The smaller ones are outside. This is why I

think I disagree, the Economist would disagree with you. The

regional development agencies, I think, were not a particular

success. The reason big cities grew was sadly nothing to do with them. I

was in Manchester recently and I asked if the cutting of the RDA

affected them and they said no. Never mind that. What you want are

the what you might call second-tier revival of the industrial cities,

the Middlesbrough, Hull, Sheffield, they are part of that. Are you just

saying we cannot save the city is the way we have Manchester or

Newcastle, so the last person to leave should switch off the lights?

What we are saying is what we shouldn't do, what we failed to do

is spending money on a lot of things like the Pathfinder scheme, a lot of

money on trying to prettify towns. We didn't spend anywhere near enough

money on schools, we didn't do enough to reform the schools. You

didn't do enough to turn around schools. Schools turned around in

central London, they didn't... I'm not sure if you are right but how

would that affect Hull? The main problem with Hull is that, the main

problems are its weak skills and high-level of people without proper

qualifications, and its weak transport links. The transportation

industries, fishing industries, they have been going over time. Now we

have major energy coming into the area, new industrialisation. You

didn't even notice it. It hasn't even been confirmed. Why didn't you

write about that? It is not going to be enough. What should we do? This

is the point, the main thing in keeping young people and places like

Middlesbrough, Hartlepool, Hull and Wolverhampton, unfortunately, partly

to poor schooling. In the Guardian yesterday they were teenagers in

West Bromwich saying that they wanted to move to Birmingham. Where

the jobs are! Exactly. Is it workers to work... This has been the

argument, you can have a judgment whether to intervene, build the

local economy or tell them to come down to London. The same Guardian

report was saying that they were having problems here, as commuters,

getting very anxious, they had no time... You were deputy prime

Minster for ten years, shouldn't you have done more for Hull? I will not

go into all the details, but we did. I was of there filming, you kindly

arranged it, and it is a very depressed city. You could not have

been there for long. You need the new base change, the major

structural changes that take place in Hull. Siemens, it is all right

saying, they have not settled it, but they settled the first part.

That will transform Hull. All I am saying, yes, right about the

difficulties, but have a look at how people are trying to deal with it,

lifting up the ambitions of people. In terms of attracting investors

like Siemens, a faster transport link, faster trains from Hull two

leads... It is near to the water with Siemens, you are getting it all

wrong. They want to build them out at sea. If you had closer links to

not just London, but to York, to Leeds, to the other cities. These

are weak transport links. Siemens is the biggest thing that will happen

to Humberside, and energy concentration were 20% of our energy

is coming in. It used to be cold, that has gone, now it is new

energy. Why don't you report in a more optimistic we? Is Siemens, in

your view, in enough to turn around Hull? I do not think it is, and I am

sceptical of the idea of a huge energy revolution that will be

enough. I think if Hull had... There is some hope, we have never said

that Hull should disappear off the map. What we are saying is that it

needs to focus itself, and it needs to... You should focus the

arguments! He is an idea, why don't you go back up to Hull with John

Prescott... It is a good idea! We might even send a camera. It is a

good idea, I would be happy to do that.

Thank you very much to both of you, time to get the answer to the quiz,

who is threatening to go on strike in France next month? Not bakers,

not firemen, not even Gerard Depardieu. Is it the footballers? It

is the footballers. That is the correct answer, they will get a lot

of sympathy! Will I feel sorry for them? Anyway, it has gone half past

12, coming up in a moment, our regular look at what has been going

on in European politics. For now, it is time to say goodbye to all our

guests, particularly Bronwen... Don't forget the rugby league World

Cup this weekend! We are going to be focusing on Europe, and we will be

looking at David Cameron's attack on European red tape, the rise of

anti-EU parties across the continent, allegations that American

spies have been eavesdropping on Angela Merkel's mobile phone. First,

the latest from Europe in just 60 seconds.

National leaders gathered in Brussels this week to talk about

growth, immigration and red tape for business. The EU agreed to restart

taxation talks with Turkey, negotiations had been put on hold

after the government crackdown on protests. MEPs voted for tougher

scrutiny procedures for medical devices used in the human body, like

breast or hip implants. In the wake of the Edward Snowden revelations,

new laws have been proposed by the European Parliament's civil

liberties committee, forcing companies to destroy an

individual's personal data if requested.

And have the Americans been tapping the German Chancellor, Angela

Merkel's mobile phone. The US says it is not listening to her cause but

left open the question of whether it has done in the past.

-- calls. With us for the next 30 minutes, I

am joined by two British members of the European Parliament, Claude

Moraes and Jacqueline Foster. Welcome to you both. Let's kicked

off with the spying row and allegations that American spies have

been listening to private conversations of European leaders on

their mobile phones, and at a press conference at the EU summit

Chancellor Angela Merkel said that once seeds of mistrust had been

sown, cooperation on intelligence matters would be made more

difficult. Words that are probably true, but I'm not quite sure whether

the European leaders are right to be outraged, or whether they are just

being naive, what say you? I have always believed that spies normally

spy. Even on their own side? I think they probably do, and I understand

that they are pretty perturbed about this, and I am sure they will make

up this little spat with the Americans. But you have also got to

look at how all of this started, and of course this now comes down to

Edward Snowden, this looks at the 58,000 pieces of information... Not

how it started, how we found out! We need to be concentrating on that

much more than the situation that we have arrived in, not least because

when we have people who work for our security services, be it in America,

Germany, France, or the UK, I think we have a right to be able to trust

them. I think the German people will think they have a right to know

whether the Americans are spying on their Chancellor or not. I am

astonished that they do not know what is going on with their own

security people, to be frank! You would think the German security

would have quite a good bloc on Chancellor Merkel's phone, are they

being naive? Everyone is talking about the economy, and migration

should have been at this summit. The issue is stale and proportionality.

What Snowden did was reveal something, the sheer scale of what

the NSA is doing. What you'll find in more revelations is that the

Asian countries are... If the European leaders are right to be

outraged, at the revelation that America is by Don? Yes, because of

the sheer scale of it. Spying goes on, it has always go on, and you

will have former NSA people saying that you are being naive. Of course

it has gone on. But it is the sheer scale of it, the depth of it. Never

mind the scale, are they right to be outraged that Angela Merkel's mobile

phone has been spied on? Yes. So why did the last Labour government spy

on the G20 leaders? If they did, it was wrong. But why did they do it?

Is it the case that friendly governments to spy on each other? As

this government spied on the French throughout our negotiations to join

what was then the Common market? The key point in looking at this, and we

have got a European Parliamentary inquiry into that, the key point is

scale and proportionality. We have to fight terrorism through spying,

and spying on the South Koreans, you have to do that, that is part of

realpolitik. But if you do it is disproportionately and you do it not

for security reasons, there's going to be a problem. The president of

the European Parliament are so outraged that he says Europe should

call off its free-trade talks with America. He's been completely

ridiculous, and all of this is naive, quite frankly. If anyone

thinks for a moment that we, as people in this country or any other

country that our intelligence and security forces, who spend their

entire lives trying to keep us all in one piece are going to

literally, you know, be doing things... They are doing things we

don't really want to do, and I think most of the time we do not really

know what they want to do what they need to do. So I think they need to

all get over this. We will not get over it, but we are out of time. As

we have been hearing, the EU summit in Brussels is in full swing, but

rather than discussing how to consolidate the economic recovery,

the gathering so far has been commented by the spying row. It is

all a far cry from what David Cameron was hoping to discuss, red

tape! He went to the summit arguing that UK firms were being throttled,

his word, by European Union red tape. He wants a one in, one out

rule, where every regulation and directive created should see another

one being removed. Conservative sources say he wants to see 1500

regulations reviewed, and he seems to have won some support from an

unlikely area. Jose Manuel Barroso, the outgoing president of the

European Commission, has conceded that many people suspect Europe,

quote, generates too much red tape and interferes when it doesn't have

to. He points out that since 2005 the commission has repealed almost

5600 laws, so just how big a problem is this? More than 100 business

leaders have written to the European Council, calling on them to cut red

tape. Critics have suggested that David Cameron is trying to avoid

tackling the tricky issue of renegotiating EU treaties, something

he promised to do. So is Mr Cameron right, or is he making too much of

this? He is absolutely right, and this is not just a recent agenda of

the Conservative Party. When I was elected in 1999, one of the key

points in the manifesto was that we would cut red tape. Now, it maybe

they have got to a point, where the commissioner said, they have

abolished 5000 regulations... They have not told us how many they have

introduced since then! If I a pound for every politician that promise to

cut red tape, I would not need to city, I would be on the beach in the

Caribbean. Gordon Brown once promised a bonfire of the quangos!

Alex Salmond promised a bonfire of the quangos! Let me start with that

admission, we said it key 00, it is motherhood and apple pie. David

Cameron has got some substantial people to say it, cutting red tape

is a good thing, we want that to happen. Is it going to happen? This

one in, one out rule needs to have credibility, and the issue is that

some regulation, some of it is a good thing, so for example new

patient rights, new health labelling, that is good

bureaucracy, unfortunately. Let her come into that. I really have to

come in here. You can! Thank you very much, Andrew! The whole point

on this is that we know we are bogged down with red tape, and when

I went into the Parliament in 1999, unfortunately, we had a Labour

government in place, so for the entire time, most of the time, until

the last three years, your colleagues and you, and others, the

left love red tape. They made more regulations than have ever been made

in its history. Though I am very sorry, but you need to look at what

happened. That is simply not true. No, let him reply. The problem with

these fake statements is that they do need to be tested, and this is a

problem with what David Cameron is doing. We need to cut red tape, we

need to be on the side of wealth creation, but if you do an exercise

like this, trumpeting to Europe and the world, and then you end up with

a situation where you say you want a single market at the same time, more

bureaucracy, or you do not tell business that there is one trademark

for the whole of the EU, one paid and for the whole of the EU, which

businesses in London actually want. -- patent. That is a good thing,

Andrew, that is a good thing. We can... I can give you one example, a

ease of regulation which came through, I was working in a high-end

aerospace sector, and this particular regulation, now it

impacts on all of our manufacturing. What is it? It is the chemicals

regulation, it is impacting on building cars, the aerospace sector,

the space sector, any thing with high-end engineering, whether it is

shipbuilding, Kamel led doing what they are doing... Why is that a bad

thing? It is overregulation. What it does is it tries to ban substances

which we could not actually build things without, in actual fact, and

what it could result in, what it could result in is that we import

goods from other parts of the world where they do not have

overregulation, but we cannot make the goods which we need to export

ourselves. that is a very interesting example but we have to

move on. I bet you both a fiver that nothing comes out of this. That the

-- good UKIP find themselves with more allies in the anti-Europe camp

at the next year's European elections?

Here in Strasbourg, there was a time when EU scepticism was seen as the

founders of the project is heresy -- Bova finders.

But even those true believers know that by May, there will be many

MEPs who will across what many consider to be the dark side. In

this room are a handful of the Europe and freedom chrissie group,

or EST, which contains many of the UKIP members, among others, who

desire to see the EU radically changed. They expect to see their

numbers swell next year. We believe in Europe but in a different Europe

and that Europeans can be unified without most of our nation's

sovereignty being abandoned. Not every Euro-sceptic MP once their

country to leave the EU, but there is a dynamic going on within Euro

scepticism and they arrive here with debts that will certainly hard and

while they are here. Even when the economic situation finally changes,

I hope soon, even then I don't see the EU going back to what it was

before. So many eyes have been opened by the crisis, so many

opinions have changed and it has become mainstream to be critical

towards Europe. That prospect has their pro-European MEPs to suggest

that Euro-sceptics will try and clog up and wreck the functions of the

existing EU. They do not have opposite ideas but they want to

frustrate the process and that is the best result they believe they

can get, and of course it has an impact. We are out chamber of

different voices and everybody has the ability to change the outcome.

People tend to say you are not part of the parliament, but at least we

are filling seats. But Euro-sceptics may not make the full impact their

numbers might suggest. The far right parties both expect to do well and

would like to lead and harness a Euro-sceptic surge. UKIP, who Le Pen

says are immature, have indicated they want nothing to do with the far

right. We're not the only ones who would want to see them split. So you

have the radical ones left on the far right and then you have a bigger

group, and there will be a split, because nobody would like to be

associated with the far right in Hungary or Poland. I want to work

with other Euro-sceptic parties, nobody with any far right

connections. That is the most important thing. But if, as expected

by all sides, Euro-sceptic MPs do win more seats in May, politicians

like Daniel may not have do. That was Giles Dilnot reporting. We

have been led accurately to join by Paul Nuttall, the deputy leader of

UKIP -- we have been joined by Paul Nuttall. Marine Le Pen, the leader

of the National front in France, she told BBC Newsnight that her National

front party and UKIP share similar values. What are they? Non-, really.

I have never met Le Pen in my life. European history is different to

ours and the fact that Marine Le Pen is growing in France and we are

growing in Britain highlights that. We have no basis of fascism in this

country. The only fascist party in this country is doing badly. This is

a kind of protest from a UKIP, it is moderate and liberal and we have

nothing in common with the far right. Is it your view that Marie Le

Pen's National Front is a fascist party? My view is that it was borne

out of fascism and we are not. But is it still a fascist party? It

looks to me that is if, if the father is still involved, Holocaust

denial and all that, it looks pretty fascist. I have never met Marie Le

Pen and we would not be joining this grouping. I don't think she is a

Holocaust denier, but her father certainly was. That is what I said.

Does this mean that under no circumstances, would you join a

grouping in the European Parliament after the next elections which

included the French National Front. No, absolutely 100%. We are

moderate, we Euro-sceptics and the majority of this country want a

referendum, want to leave the European Union and people in this

country are moderate and we are representing their views and I

suspect, as a result, we will go on and Windows European elections and

after that, we will not be a grouping in the European Parliament

with the French National Front. Lets take full sake of argument the

description of yourself and UKIP. Mind you face a problem that most of

your potential Euro-sceptic allies, and I think we will see a growth of

Euro-sceptic parties in the European Parliament, they will nearly all

tend to come from what you might call the hard right. Not all of

them. There are others, you interviewed the Finns, they are not

from a hard drive. There will be a grouping of people who are from the

moderate right, they want to come out of Europe. The rise of extremism

in Europe, and I had a debate about this in the European Parliament, is

caused by the European Union itself and its policies. You just have to

take the example of Greece, where they are forcing posterity upon the

Greek people and not allowing them to do what needs to be done, which

is leave the EU row. The European Union is driving extremism in

Europe. -- the euro. Just stay with us. Euro scepticism seem to be a

British dish but is now being served all over the continent. It is worse

than that. Paul is desperately trying to keep him and his party

apart from Marie Le Pen and I don't blame him. Marie Le Pen and her

voters have stated very clearly that they want to create a kind of tea

party. Rightly or wrongly, you will have more of these people at the

next May. It is predicted 30, 30 5%. In the European Parliament? Yes.

Now, it creates laws, as we have discussed. They want to become that

kind of Tea Party, abstract things. Most of them do not attend, they

don't do any work there. But if they go around obstructing things, that

is one of the many reasons people shouldn't vote for them. What is

your reaction? My reaction is I am not surprised at all and the Le

Pens have had a very good results recently in France. They are now the

largest party in France and have won a key by-election in the south. So

the question really is whatever Paul Nuttall and UKIP want to do is the

concern about the rise across the entire European Union, and the

reason we have this is because for so long, we have not been able to

have a frank debate about the concerns that ordinary people have,

the man and woman in the street, about how we are dealing with

immigration issues. When we have tried to do it in the past, not

going back that many years, we had all sorts of accusations and here we

are down the line with other pressures that are going to take

place at the beginning of next year and so we need to have these

debates. Paul Nuttall, are you still claiming to be on track to be the

largest party at the European elections in Britain? I think we

will be. Jacqueline Foster can talk about immigration control but last

year, it was 176,000 net, and David Cameron is talking about bringing

Turkey into the European Union, which will open the door to 72

million Turks. You cannot have your cake and eat it. We have no cake and

we are not eating at all. Thank you for joining us, no doubt we will

have a chance to go into these arguments is the European elections

loom next year. And here, we like to give you the lowdown on how the EU

operates. We have told you have a council functions, had the single

market came about -- how the council functions, how the single market

came about. Where can you go to learn every single detail about the

EU? Adam Fleming knows. He has been to the College of Europe in Bruges.

Cobbles, dreaming spires, students on bikes. It is Bruges, where you

will find the EU 's very own Oxbridge, the College of Europe. At

two o'clock, it is professor does Susan's lecture -- professor

D'Souza's. At 4pm, it is a law class with professor Tiradimas. And then

more law with profession and has lead professor Jacquet. This time in

French. This academic hothouse is a university with is 40% funding with

Brussels, and it students tend to get very good careers indeed. Nick

Clegg studied here and it is where he met his wife who is now a top

lawyer. The Danish Prime Minister is an alumnus and the EU ambassador to

the UN, along with countless other people in high places. I can of

course understand it sometimes the impression is created of a Bruges

Mafia, as it is sometimes referred to. This is an unduly negative view

because there is a lot of... So who are these bright young

things? The country with the biggest number of students is France, with

57, closely followed by Italy. There are 25 from the UK, which is less

than the number from Poland and about the same as the number from

Turkey. Food, lodging and tuition cost 22,000 euros a year, but many

students are sponsored by their country's Government. Although the

British Foreign Office funds just one place these days. So what it

like being British here? We have discussion classes where we talk

about methods of European integration and it is interesting to

hear how it looks from the Dutch point of view from the French point

of view. From a Turkish point of view. And it has become networking

Nirvana for students from further afield, like Josh, who is

Australian. Everybody has to eat their meals together, we are all

living in residence. You are stuck with everyone, forced to get along.

This is the Hall of Fame. Every year, a big-name addresses the

student body. In 1989, it was Margaret Thatcher, with her speech

one of her most famous. We have not successfully rolled back

the frontiers of the state in Britain only to see them reimposed

at European level, with a European superstate exercising a new

dominance from Brussels. I don't think there is a conspiracy. thank

you to my guests, bye-bye!