17/01/2014 Daily Politics

Afternoon, folks - welcome to The Daily Politics. Our top story today

- Ed Miliband promises a day of reckoning for Britain's big five

banks, if Labour wins the next election. Speaking in the last hour,

Mr Miliband said they should be broken up. George Osborne says he

wants the minimum wage to rise to ?7 an hour after the next election.

That would take it back to the value it was in real terms in 2004.

William Hague travels to Glasgow to make the case against Scottish

independence. We'll talk to both sides of the referendum, after an

intensive week of campaigning on debt, tuition fees and childcare.

And as EU leaders lay into David Cameron's idea of capping migration

from other European countries, we'll bring you the latest news from the

European Parliament in Strasbourg. All that in the next hour. And with

us for the next half an hour is the deputy political editor of the

Financial Times, Beth Rigby. Welcome to The Daily Politics. Let's start

with George Osborne's announcement that he'd like to see the minimum

wage rise to ?7 an hour after the next election. It would be an above

inflation rise, which would take it back to its 2004 value. You get a

feeling that in terms of the politics of this, it is George

Osborne's energy price freeze, just as that was a political move by Mr

Miliband, this is a political move by the Chancellor? This is pure

politics. He took a swipe at Ed Miliband the night before he was to

give his big economy speech. He nicked a policy from the Lib Dems,

and effectively, Vince Cable announced this policy back in set

amber, that the Government wanted the Low Pay Commission to look at

above inflation rises in the minimum wage for several years. So it is not

essentially new. And then also, for full measure, he took a little swipe

at Iain Duncan Smith when he said that it would be revenue no,.

There's lots of people said the minimum wage rise would cut the

welfare bill. He said, it will not. So, he actually did three in one. It

is quite good politics. They are worried, though, behind-the-scenes,

that it sets a precedent, in that the minimum wage, since it was

introduced, has basically been set by the Low Pay Commission, without

political interference. And here you have the Labour government, which

invented the minimum wage, opposed by the Tories at the time, but a

Tory government not only interfering in the process, but indicating to

the Low Pay Commission, you should put it up a bit. The Chancellor,

although he grabbed the headlines today, he was very careful to say,

it has to be a matter for the Low Pay Commission. But he has left

everybody in no doubt what he wants. The reason for this is that

they know that they have a problem with blue-collar voters. They are

still seen as the party of the rich, and what better way to say, we

would really like an increase in the minimum wage? He can see that the

Low Pay Commission might find reasons to increase it, and then, if

that does happen, he can claim the plaudits. It is brilliant. But in

all seriousness, I was looking through some of the responses from

business, and the small business Federation said, look, somebody with

nine employees, this will add nine grand to their wage bill,

potentially, before tax. So businesses are saying, we do not

mind increasing wages, the locking with the employment market. That is

the job of the Low Pay Commission to decide that, so it is not a done

deal. It is not a problem for the big companies. Watch out for when he

gives out a national insurance cut. He is a very political Chancellor.

Now it's time for our Daily Quiz. David Cameron spoke at a new annual

dinner for Westminster journalists last night. He gave what was

described by one hack as a "gag-packed" speech. But what did he

say was his number one priority for the year ahead? Was it...? To knock

UKIP into last place at the European elections? To avoid being

photographed getting changed on the beach? To keep his bald spot hidden?

Or to be best friends with Ed Balls? And a bit later in the show, Beth

will give us the correct answer. Do you know the correct answer? I was

there, and I am struggling Dawn at was it a good night, was the speech

funny? It was very funny. It was a bit risky. Some of his advisers said

to me that he was a bit nervous that he might have gone over the edge.

But he was very funny. Banks in Britain will face a "day of

reckoning" after the next election - if Labour wins a majority. That's

the message from Ed Miliband, who in the last hour has been making a

heavily-trailed speech about the economy. Here's some of what he had

to say. I believe that committing now to

such an in-out referendum has big costs for Britain. Why is this not

the sensible judgment for Britain? It is a really important point. Lord

has a time putted really well. He said, we are committing to a

referendum on a negotiation which has not yet begun, on a timescale

which is uncertain, with an outcome which is unknown, and that is an

unnecessary gamble for our country. Although that was Ed Miliband, it

was not the clip about his banking speech. That was actually another

quiz, those of you who spotted that. Anyway, moving on. With us now is

Labour's Shadow Business Secretary, Chuka Umunna. A Labour government

would fix energy prices, confiscate land from developers and determine

how many branches a bank should have, so who says planned economies

do not work? These are a small number of sectors which have not

been operating in as competitive and fair a fashion as we would like. If

you are serious about reforming your economy, you have got to deal with

those. Today, we are talking about banking just the reason this matters

is because, yes, we have got the biggest cost of living crisis in a

generation, which has depressed people's wages, but also, in the

labour market, we do not have enough middle-income jobs. It is small and

medium-sized businesses which drive that, but they cannot get access to

the credit they need. That is why we want to ensure that the banking

system is more competitive. You say that as if we are the only ones

talking about the need for banking reform. I think there is a degree of

consensus that we have got to reform the banks and we need more

competition. The question is, how you do that? It is a massive U-turn

from Labour. You are having to undo all the work you did when you were

in power. It was the Labour government which was cheerleading

RBS to an ever greater size, giving its chief executive a knighthood,

and it was labour that force-fed the merger between Lloyds and HBOS. You

are now having to undo all of that. Well, what we have said... Is that

right? If you will let me finish. We did not get everything right on the

banks, we have been clear about that. But what Ed Miliband said

today, he was quite clear, this is not a problem which started in 2010,

it has gone back several decades. In respect of the HBOS-Lloyds merger,

that was done in an emergency to prevent collapse. Do you accept that

that was wrong? I would not say that if I was in Alistair Darling? Shoes

at the time, I would have made a different decision. He was the

Chancellor at the time. But it was not him that did it. If you read his

incredibly good autobiography, you will see... I have read it twice.

You are going on about the size of banks, but they got too big under

you. It was government action producing bigger banks under a

Labour government. Do you accept that that was the wrong thing to do,

and you are now having to undo that? I have already said, just a moment

ago, that we did not get everything right on the banks. There were

consolidation is which happened during our time but there were lots

which happened beforehand as well. The question is, what to do now? We

are seeking to ensure that we move away from a situation where we have

got basically, lending to almost 5 million businesses, dominated by

five banks. We have got one of the most concentrated banking systems in

the world. It is not more concentrated than the French banking

system, it is on a par with the Canadian banking system, with regard

to concentration, which is the most stable... I am talking about cars.

You just said we had one of the most concentrated banking systems in the

world. I did not say those systems were perfect. We want to have more

competition, so we can create the kind of jobs we need. One comment

you made in the opening to this was that this was just a speech about

banking. Actually, of course, that was the focus, but what we are

talking about here is how actually we renew our economy. Tanking is one

of those things, but over the next few months, you are going to see us

setting out how we intend to reform the economy. -- banking. I am just

dividing a bit of context. I understand that. Why do you think

that simply because government decrees that branches should be

digested and new branches set up, that that automatically happens?

Politicians have been trying this for years, after all. You and the

Tories wanted to sell off the Lloyds branches, they have not been able to

do that. They have had to put them into a subsidiary. RBS was told to

sell off some branches, they have not been able to do it. Just because

politicians say something does not make it happen. No, but we are

involving the Competition And Markets Authority in this. We are

asking them to provide a legal threshold for market share. You

mentioned, for example, you're right, the divestitures, now, ,

originally those failed. I think it is a really good thing that TSB will

be floated, but it has only got about 2% of the SME lending market,

for example. But the point is, it has been really difficult,

politicians have mandated these branches should be sold off, and you

lead it, with the Co-op, and that would not exactly work. It is not

easy the challenger banks, they are not queueing up to buy these

branches. We are not claiming that it is going to be easy. I have

worked on large transactions and restructurings before I was elected,

and these are context things. We have said we will ask the

Competition And Markets Authority, which is to be set up in April, to

look at this. You are asking me about the detail. We are asking them

to set out a timetable for the market share is to come into effect

by the end of the parliament. That will take some time. What will the

judgment of market share be? Whether or not it produces Morecambe

edition. But how you judge market share, will it be by number of

branches or number of customers? It will be by reference to the number

of personal current accounts, and also the small business market. So,

if I am successful in lending a lot to small business, and getting a lot

of current account customers, you will cut me down to size? The new

authority will determine how that will work. We are asking them to

report on that. By what possible means do you think the challenger

banks will lend more to SMEs? Actually, it will create more

competition in the marketplace. But why would they lend more? Please let

me finish my answer to your question. There is consensus among

the commissions and the Treasury select committee, or have said that

having alternative banks in the market will help make sure that we

get better service. But why? At the moment, if you are turned down for a

loan, there is very little choice for you to go elsewhere. At the

moment, we know that about a -- a third of loan obligations are turned

down. We know from many business organisations that you have got

profitable, responsible business is being turned down for loans. Get me

tell you something about challenger banks. By definition they have small

balance sheets. Lending to small and medium-sized enterprises is the

riskiest of all lending that banks can do, so how could challenger

banks lend substantial sums to small and medium businesses on small

balance sheets, against a very risky investments?

We know it is not just an issue of lending per se, it is also an issue

of the service they give and understanding they have. I'm sorry

to interrupt you. I was just about to start talking about a challenger

bank which also has a different way of working. The way that Handle's

Bank works, I have visited them. Their motto is the branch is the

bank, so they empower their local relationship managers to make

decisions and also, they are mandated to lend in a set area. They

understand it better. They actually visit the businesses in a which that

many other of the bigger banks don't o do and this is the kind of

cultural difference you get... It may be a cultural difference, but

frankly, can you give me any evidence that our existing

challenger banks are lending more to SMEs as a percentage of their

balance sheet, than the big banks? I can't. I can't give you that

percentage. But what I can say is if you like at banks like Handle's Bank

and metro Bank, they are growing the number of loans they are giving to

small businesses and making a difference. You might disagree with

that but actually I have talked to lots of businesses who have

benefited from what had those banks bring to the party. How much lending

does Metro Bank give to SMEs. You have said that's -- I can't give you

the figure. You said that's the future I have cited them as

examples. Am I saying they are a panacea, no. The whole reason we are

doing this is because we want them to have a greater share of the

market. I understand that but what I'm asking you is, if challenger

banks are the way forward, can you tell me how much Handle's Bank and

Metro Bank are currently lending to SMEs? I knted. But what I can say,

what we are looking at, we use the threshold set by the Independent

Commission on Banking. They think for challenger banks to have a

substantial difference they need 6% market share. The Governor of the

Bank of England says breaking up banks is not the way to get more

competition, partly for the reasons we have been talking about, it is

hard it sell branches off and it is hard for new entrants to come into

the market. We are being asked to believe that Ed Miliband knows more

about this than the jofrnor of the Bank of England? -- Governor of the

Bank of England No, people aren't. If you watch the Exchange as I did

of the Treasury Select Committee hearing he was at E he was asked a

leading question by a Conservative MP, that there were going to be

crude, arbitrary market caps. Actually this is asking for

commentary on a spech that hadn't even been delivered. And crude

arbitrary market caps is not what we are talking about and also we are

not saying that divestitures and challengers banks are not the

panacea to solve all the issues we have. What what do you make of it? I

think that the idea about bank portability for retail customers

Which is important a... Switching. I think you can reform the banking

system further. But I think that the Government have done tonnes of work

on this through Vicars. You also have the Business Bank that Vince

Cable set up. He has set up a business bank to try to help set up

- you talk about a British business bank and actually the fact is when

big banks try to make divestitures or, as we were talking about, they

are very hard to sell off. I think that this is an - it feels to me - I

mean we have to look more at the detail. But it feels like an

unnecessary step which I'm not sure you are making it because you are

developing this sort of catalogue of areas where you think that you can

be on the side of the consumer and the voter, against big business. And

I just wonder if it is a step too far. I don't think that this will

sort out small SME lending. As Andrew said, you need big balance

sheets to lend and that's partly why lending is concentrated in a few

banks because you have to have the balance sheet. Final word from you.

All I would say, is change isn't easy. This isn't about big verses

small. Many of those small businesses form a fundamental

important part of bigger businesses supply change. Since of beginning of

this Parliament, 85% of lending was concentrated out of the Big Five

banks. That's still the case now. It has not been changed. If we are

serious about building a more product I have, long-termed,

focussed economy, you have to make the changes and of course it'll

ruffle a few feathers but we cannot just give up. That's something we

refuse to do. Thank you very much. .

Now to the Scottish independence campaign. The referendum is a mere

eight months away you know. This morning William Hague entered the

fray, unveiling the latest in a series of UK Government papers

challenging the case for independence. The Foreign Secretary

argues that a new Scottish state may not be able to negotiate the same

terms of EU membership as the UK, and may be forced to adopt the Euro.

But Deputy SNP Leader Nicola Sturgeon's been making her own

speech this week. She said that as an independent EU member, Scotland

would get ?850 million more in agricultural funds, supporting

thousands of extra jobs. This week also saw the Treasury announcing

that the Government will assume full responsibility for Britain's ?1.4

trillion of debt should Scots vote to leave the UK. There would be a

negotiation to divvie it up. Alex Salmond said that would give

Scotland a strong negotiating position when it comes to dividing

up the debt. And there have been questions over plans for an

independent Scotland to continue to charge English students tuition

fees, while other EU students come for free. A former European

Commissioner for Education said that would be "illegal". Joining us now

from Glasgow, Blair Jenkins who leads the "yes" campaign, Blair

Mcdue a, campaign director for Better Together. You have to be

called Blair to be able to lead the campaign in Scotland or to be a

Labour Prime Minister. Blair Jenkins. When William Hague

says that an independent Scotland would have to reapply for member -

put aside his remarks about the euro - but would have to reapply for

membership of of the European Union, that is now the settled opinion of

those who know, isn't it? No, it is not the case, Andrew, not the case

at all. When we heard that David Cameron was despatching the Foreign

Secretary to Scotland today, we wondered if he'd already conceded

the referendum result but perhaps that will come later in the year. I

think it is accepted by lots of people who have looked at this, who

are expert that it is not - this is not something that he can settled

legally and it won't be settled legally. This is about political

process. Therefore, what you have to look at is the political reality of

the EU, what its priorities are, it's a naturally-democratically

human rights' based club. It is instinctively and institutionally

expansionist. Sure but you would have to renegotiate Scotland's

membership. From within. You wouldn't be within. You would. A

transition process that begins from the "yes" vote in September this

year and 18 months until Independence Day and the bulk of the

transition process could be accommodated within that time and

transition arrangements would kick in. There is no precedent. I'm sure

you have heard this before, there is no provision anywhere in the

European Treaty for territory people who have been in the EU for 40

years, remember, to be excluded. OK. Blair McDougall. It is a bit rich

for the unionists side to say, oh, well, if Scotland leaves you'll have

to renegotiate membership when the United Kingdom is heading for a

referendum. I mean, the sure way of Scots staying in the European Union

is to vote for independence. Well, I think the one thing that is clear,

as has been made perfectly clear by your questioning, is if we leave the

UK, we leave the European Union. All three parties within Better

Together. All three of the main UK political parties, want to remain

within the United European Union. But I think those arguments of UKIP,

that say that the UK should leave the European Union are as

wrong-headed as the argument we hear from the nationalists up here. What

would happen if Scotland stays within the UK? We have a referendum

European membership, Scotland votes to stay in England overall, England

votes to leaf and the weight of English votes means the whole of the

UK comes out That was the point I was making. Those arguments of UKIP

to leave the European Union are as bad as those arguments to leave

Scotland, that we hear from the nationalists. Scotland, yes, we sell

a lot to the European Union, but we sell four times as much to see rest

of the UK as we do to the European Union. Our best future is to remain

within the UK and through remaining in the United Kingdom and having a

more certain future within the European Union, than we would as

part of independence. Let me just say, Blair Jenkins has just said

that this is now a political matter. We remember, because it was your

interview a year ago, Andrew, that caught out the First Minister when

he said it was a legal matter. It turned out he had lied about the

legal advice we had on the European Union. He is not here. He is at it

again with tuition fees. He is not here to defend himself. Let me move

on to tuition fees, Blair Jenkins. At the moment Scottish universities

charge English students fees, indeed charge fees from anybody outside

Scotland within the United Kingdom but they don't charge, under

European law, they are not allowed to charge, French, German or Italian

students. Now if ask the land becomes independent, England will be

in exactly the same position as France or Germany. By what legal

basis could you charge English students tuition fees? Well, the

advice that the universities body, University Scotland, got, is that it

would be possible to continue with that policy on the basis that there

were exceptional circumstances. Scotland is aJayes ented to the

country that charges the -- adjacent. That charges the highest

level of tuition fees to anyone in Europe. That's a special

circumstance, the land border and shared language. Who gave the

advice? From a firm of solicitors. I should say, for people in the

Scotland, where we think the principle of free access to

education is important, the ability to learn not pay, our ideal solution

when Scotland becomes independent, is that the people of England elect

a Government that's committed to higher education and stops charging

?9,000 a year. All very well but if you go independent you will have no

say over who runs England. That's a price you pay for separation. My

point is, I cannot foresee on any legal challenge whatsoever, that you

could win, discriminating against English students, if Scotland is an

independent country that you could say that German students and French

students can come free, but English students, you are going to have to

pay. Well, as I say, there's very good information making the

exceptional circumstances argument. Has the Scottish Government had

advice on this? Well, so they say. Has the Scottish Government had

legal advice? I don't speech for the Scottish Government, Andrew but I am

quoting from University Scotland. I think, it is one of these

interesting areas, where, you know, the only way to get certainty with

some of these issues which involve the position that the European Union

or the European Commission would take, would be to directly ask the

European Commission, the European Union, what their view would be. The

onlientity that can do that is the UK Government but the UK Government

has an interest in maximum confusion and maximum uncertainty, which is

why they are not go to Europe and ask what the position will be for

Scotland in terms of transition to full membership. Well they are not

the ones trying to break up the United Kingdom. Blair McDougall. Why

are you, in the Better Together campaign, being accused of running a

comatose campaign Comatose? Well we are trying to ask difficult

questions. The nationalists don't like that and attack the campaign

for asking questions. This is a great example of that. Blair Jenkins

just said the only person that could ask the European Commission what

they thought about this tuition fees issue was the UKKer Government.

That's in the true. The Guardian newspaper asked the current

education Commissioner what they thought of this issue earlier on in

the week. It wasn't just the previous commissioner who said they

thought it was illegal. The current Commissioner said they thought it

was illegal. But, look, the SNP Government could clear up so much of

this tomorrow by releasing the legal advice on the European Union, by

releasing the legal advice on this specific issue of tuition fees,

which they won't even say whether they have or not As Blair Jenkins

say, he doesn't speech for the Scottish Government, he is running

the campaign. Blair oncoins, you are only eight months away from the

referendum and still the polls are not moving your way. What is going

wrong? Well, lots of things are happening. Any momentum is towards

"yes", an dru. I know you have followed this. We have now had a

sequence of public meetings and debates, schools, colleges,

universities. Ever are I time you have a public debate where a vote is

taken before and after, the momentum, the shift is towards

"yes". Our own research tells us, as people become more informed and

engage with the debate they move towards "yes". We are in no doubt

that, as the year progresses, the polls will catch up with the

campaign. Finally, it is interesting what you say there, but when do you

- when would you now expect to see that reflected in the polls? When

will you start to - do you think you will start to see the gap between

yes and no narrowing in your favour? Well, what we know for a fact

Andrew, and people have told us this, a lot of people will make

their mind up on their day which will put a strain on my nervous

system and others, but we have to live with that. Blair andably, come

back as a doubling act again. Thank you very much. It's the middle of

January, a month afflicted by too much rain, dark afternoons and

diets. So for our MPs, what better way to boost morale than a letter,

from a top surgeon, now sitting in the House of Lords, telling them all

to shape up and lose weight. Iain McColl says politicians need to set

an example to the rest of us. He'll join us in a moment. First, though,

here's a reminder of how some politicians at least try to stay

fit. And Ian McColl joins me now. So, our

MPs eating too much of the gross national product? Some of them are,

yes. It is the worst epidemic we have had in 90 years, it is killing

millions, costing millions, and the cure is free. And you want MPs to

set a better example? I think it would help, yes. There is no good as

telling other people what to do if we do not do it ourselves. That is

true, but you have seen the lifestyle across the road, is it not

mission impossible? No. I have been talking about this for many years in

Parliament, and when I walk along the corridor now, when they see me

coming, they tighten their belts, and they say, we are trying. You

have made them feel guilty? But there are eight or ten bars, dozens

of restaurants, it is a sedentary lifestyle, it is not healthy. No,

but all they have to do is eat less to reduce their weight. Exercise is

nothing much to do with it, really, which is good. You are obviously

naturally quite slim, aren't you? No, I do not tell anybody to lose

weight, I just tell them the facts. And also the consequences. One thing

which they could seriously do in the House of Commons is, in all of the

cafeterias, there is one healthy all of the other meals are pretty

fattening. Maybe you should have one unhealthy option instead? Exactly,

so that could be a good starting point. With me, it is all due to one

of my patience. I was on my way to a black-tie dinner, wearing a black

tie which was 50 years old, and I go up to the bedside in Barts Hospital,

and she says, that is very old. I said, it is 50 years old, and she

says, it looks it. She says, I am dying, I know there is no hope, but

I want you to take me to the theatre now. I shook her warmly by the

hand, she was operated on that night, and she survived seven years.

She was a tailor. During that time, she made me a new black-tie outfit.

So it is attributed to her. Quite right. Some politicians I am told

have taken your advice to heart. There is a Weight Watchers group in

Parliament now? Yes, they do good work, really. Lord Falconer, you

probably know, has reduced his weight very substantially. I have

not seen him for a while. There is a wider point, that we seem to be

faced with an obesity epidemic, and as yet, we do not know how to

reverse it. Well, the way to reverse it is to encourage people to eat

food that is chewy. The more you have to chew it, it sends impulses

to your brain, telling you you have had enough. So, we need food which

is not refined. We need porridge, wholemeal bread, a special kind of

pasta, which the Italian government tried to ban, because you cannot eat

so much of it, but it is very good. Time to get the answer to our quiz.

The question was, David Cameron told the Westminster correspondents

dinner his priority for 2014 would be what? Was it... Knocking UKIP

into last place at the European elections? To avoid being snapped

getting changed on the beach? To keep his bald spot hidden? Or to be

best friends with Ed Balls? So, Beth - what's the correct answer? I was

there, and I did not drink, but I think it was number three, the bald

patch. That is correct. Was the food healthy last night at this dinner?

No, it wasn't. It was delicious, though. It was lovely.

It's just gone half past 12. Coming up in a moment, it's our regular

look at what's been going on in European politics. For now, it's

time to say goodbye to my Guest of the Day, Elizabeth Rigby.

So for the next half an hour, we're going to be focusing on Europe.

We'll be discussing restrictions on EU migration and the European

elections, and asking what the EU budget is spent on. First though,

here's our guide to the latest from Europe in just 60 seconds.

Maltese plans to sell their passports to wealthy foreigners for

650,000 euros a time have made the EU cross. Under the skin, buyers

would be able to live in any of the 28 member states. Justice

Commissioner Viviane Reding led the assault. Greek Prime Minister set

out his country's stall as well. Jobs, growth and social cohesion

will top the agenda. Tough talking from George Osborne on the future of

the EU. There is a simple choice for Europe the focus on Francois

Hollande's private life was also on the front pages. Good news for honey

producers. MPs have decided pollen is a natural factor, and not an

ingredient. Sweet! And with us for the next 25 minutes, I've been

joined by the Conservative MEP Kay Swinburne, and Paul Nuttall from the

UK Independence Party. Let's take a look at one of those stories in more

detail - the Maltese government scheme to sell EU passports for

650,000 euros a pop. That is about half ?1 million. Should that be

legal? Well, what you have got to think about is that they are not

just selling Maltese passports, these people can then go across the

border to other countries. Ireland has done it, and Portugal as well.

Ireland has made over ?200 million from this. The Spanish have done it.

It is happening across the board. I think the bigger problem is not

selling passports to wealthy businessmen, who will then invest in

Malta, the bigger problem is countries like Bulgaria and Romania

handing out passports to people from Macedonia and other countries. Is

there evidence of that? Yes, there is. Also, with Spain, which has

given amnesties in the past two people from Morocco. The problem

there is that if you look at Spain, it has got nearly 60% youth

unemployment, these people will gradually drift west. Is Malta doing

different from what we do? As I understand it, we have a VISA

programme scheme for what is called a tier one investor, it is a point

space to system, you get the passport if you can contribute ?1

million to remain in the country? I think there are many countries

around the world, certainly the US and Canada and others have it,

scheme is in place in most countries just fundamentally, this is a case

where each country can decide what their rules are. Once they have

decided, they must abide by them. But the point is that you are not

just giving them a Maltese passport, they are then free to go

everywhere. So surely it must be a concern of the European Commission?

We need to make sure that the rules which are set out by Malta, they

need to adhere to them. At the moment, there is no evidence to

suggest that they are outside of those European rules.

Being able to travel freely to live and work in any country across the

European Union was one of the founding principles of the Treaty of

Rome. But with poorer countries like Romania and Bulgaria joining the EU

in recent years, David Cameron has suggested there should be limits to

the freedom of movement of European citizens. That has been met with a

hostile reaction in the European Parliament this week. Here's Jo.

As an EU citizen, with one of these, I can arrive in a French city like

Strasbourg and start working and even settle down here if I want,

just like workers from other member states, including Bulgaria and

Romania. But one man is trying to change that, by calling for tougher

controls on freedom of movement from poorer EU countries, even with talk

of it cap on the numbers able to come and work in Britain. That has

been met with derision by leading figures at the European Parliament,

who say the idea will not fly. If David Cameron wants to redefine the

relationship between the United Kingdom and the European Union, that

sounds for me is surprising. The relationship with a body to which

you belong defines a relationship with yourself. I would like to make

it very clear, it is a right which is not up for negotiation. It cannot

come as a surprise to anybody that the principle of free movement

exists, and that it is applicable throughout the union, without

discrimination, because we do not want first-class and second-class

citizens in Europe. The problem for David Cameron is that the principle

of freedom of movement is etched into the fabric of the European

Union. Many here at the Parliament say it is non-negotiable. To stop it

in principle or to describe late against workers from particular

countries, I think there can be a possibility of discrimination.

Therefore, this would be against European law, against treaty law,

and I think nearly everyone else will defend this question of free

movement. What is getting a better reception here in Strasbourg is the

debate around restricting EU migrant workers' access to benefits. The

Work and Pensions Secretary has suggested two years before welfare

can be claimed. The Labour Party agrees with the Government on reform

but does not like the tone of the debate. It is the way they have gone

about it. It is the way they have gone about it just you cannot work

with people who have similar views as you here if you have got one hand

on the exit all. You need to work with those people, not threaten them

and not lecture them. When it comes to Europe, the coalition partners

have always gone in different directions. But one Liberal Democrat

is in no doubt what is behind David Cameron's current tough talk on EU

migration. It is UKIP, I am afraid. I was a Conservative for many years

and fell out with David Cameron over his policy of aligning with some

rather strange people in the European Union. I think upcoming

elections will be about the difference between in and out. The

Liberal Democrats are the party of in, we want to see the benefits from

membership of the European Union in good times and bad. David Cameron's

promise of an in-out referendum on a reformed EU was meant to keep Tory

Eurosceptics on board, but it is clearly not enough for some

Conservatives who, like UKIP, believe it is time for Britain to

pack its bags and leave the EU altogether. She is always going

somewhere! Jo Coburn reporting. And we've been joined by Bulgaria's

Foreign Minister, Kristian Vigenin. Foreign Minister, thank you for

joining us. You have described the British attitude to free movement as

an intimidation campaign, that is pretty strong, is it not? That is

the way Bulgarian citizens have seen this campaign. That is why I had to

say it as we felt it. But of course, what is more important now that this

campaign has proved to be grounded is that we are ready to reset our

relations and start giving positive messages on both sides. This is a

country which over the past 12 years or so has taken in around 3 million,

a net increase of 3 million migrants, it is hardly an

unwelcoming country, in general? Definitely, that is why we were

surprised by the debate which was going on in the past year.

Bulgarians are not a nation which is ready to come in big numbers to the

United Kingdom. We have proved in past years that those Bulgarians

that are already here in the United Kingdom, they contribute, they are

good members of the communities where they live. That is why this

campaign was not understandable for us. Is it not an even bigger problem

for Bulgaria, though, that you are going to lose, or you are at risk of

losing, some of your best, your brightest, your hardest working,

best educated people, leaving Bulgaria and coming here, and we

will get the benefit of them? It is true. If we talk about the problem,

I would say that sometimes it is a bigger problem for us, because

highly educated people do not stay and work for our economy, but they

support the British economy. That is part of the rules within the

European Union. People are free to go where they like, where they will

feel welcome, and where they would like to continue their lives. So, we

are ready, and we do accept that. On our side, we also have to accept

some difficult rules, including, by the way, another transitional

period, which was in our accession treaty, which means that EU citizens

are allowed to come and buy agricultural land in Bulgaria. There

was a debate, but our government said really, it is part of our

commitments, it is not negotiable, and yes, from this month onward, we

are applying these rules. The evidence we have seen so far, very

early days, but there has not been an avalanche of Bulgarians or

Romanians coming to the country and those who have been coming have been

coming here to work. But do you have a view as to when it is appropriate

for people who come here, when they should qualify? How long should they

have to be here before they qualify for welfare? I wouldn't enter in a

debate about the possibly changes in the welfare system and Social

Security system of the United Kingdom. It is, of course, a

national responsibility and the national governments and parliaments

have wide possibilities to change their rules. Of course, within the

European rules - that is why experts of the European Commission will

follow closely what is being proposed and adopted in the United

Kingdom, will do it as well. What is important, is that any change is not

being done in a discriminatory way and this is the general agreement

and confirmation, as well, yesterday, in my meetings with

parliamentarians, leaders of committees and also with Mr Hague

and Mr Liddington, who confirmed, re-confirmed, I must say that any

change will have no discriminatory nature. That's very important. Thank

you very much for joining us. Forcing force Hasn't this turned out

to be a storm in a teacup? I think there are two things here. The first

one is that we do, in our country, have always welcomed people who want

to come here and work and likewise, a lot of British people choose to go

and work elsewhere within the European Union. That I think, is

without doubt a very positive thing and people generally are quite

welcoming of that. Particularly given that many of our doctors and

professionals and certainly the City of London benefits hugely from many

of those European traders working. But the real issue is about no

continuity or consistency in social and welfare benefits across Europe.

Some countries allow you to actually have access to welfare within three

months, some within six months, some within a year, there is no

consistency. The UK actually had open access to welfare from day one.

We have now changed that. I think once we start it put these changes

in place and start it make sure that people come here to work, people

come here and benefit our economy, then we can start it make a

difference but we need to get this on the table for debate. OK, hold

on. We have to let Paul Nuttal have a say. The big issue is that freedom

of movement of people might work when you are talking about similar

economies but when you open up to the whole of Eastern Europe. Take

gull gayia. The minimum wage -- Bulgaria. The minute yum wage is 150

euro a month. Traffic is only ever going to be one way. We have a

million of our own kids unemployed in this country. For every one that

comes in. That's not necessarily the fault of Romanians or Bulgarians?

Sno no, a fault of the systems. MPs at Westminster have got that wrong.

We should have a points-based system. If we need the skills you

have, come here and work but with you shouldn't have an open border.

But your party leader was predicting they would be pouring in. There is

no evidence of that yet? He will be quite disappointed, won't he? We are

only 17 days in. I understand. Many think-tanks, including Migration

Watch UK think there will be 250,000 over the next five years. Additional

to those already here? 250,000 Romanians and Bulgarians? Yes. Over

five years. The institute for democracy say it is going to be

380,000, that's a city not too dissimilar it bris to. As far as I'm

concerned it makes no sense to have an open border when we have 2. 4

million people unemployed in our country. If we stay in the European

Union, the issue of welfare payments, when you qualify, it is a

different matter but the principle in the Treaty of Rome of free

movement of peoples. It doesn't say free movement of workers or benefit

seekers. It says free movement of seekers T covers everybody. There is

no appetite in the European Union to change that cardinal principle. We

are asking for a debate. I think Vivien Reading as Commissioner

called it popularism. I call it dome crasscy. We need to have a grown-up

debate. You want to re-open this clause, clause 3 C of the Treaty of

Rome? I think we need it ensure as the EU enlarges and it will, we have

countries who are signed up to come and join, that we have sensible

rules. That they have to get to is enstandards before they are allowed

that right of free movement and free package. And if they get their way

we'll have Ukraine, Serbia and... Well it won't matter do you, if you

get your way. We will be out. We'll be able to control our borders. As

you may know already, 2014 is the year of fresh elections to the

European Parliament. The vote will take place in May. In Britain, polls

will open on Thursday the 22nd, but votes won't be counted until Sunday,

25th May because other European countries vote at the weekend. Up

for grabs, 751 seats across 28 nations. In the UK, 73 MEPs will be

returned, with seats allocated according to share of the vote. The

outcome of the election will determine the make up of the

European Parliament for the next five years. But the vote is also

important because, for the first time, national leaders will have to

take the result into account when deciding who should be the next

president of the EU Commission. That's led the pan-European

political groupings to nominate their own candidates. The Party of

European Socialists has already made Martin Schulz, the current President

of the European Parliament, their choice for Commission President. The

Liberal grouping will decide next month whether to choose Ollie Rehn,

the current Economic Affairs Commissioner, or Guy Verhofstadt, a

former Prime Minister of Belgium. He is a well-known federalist. Paul

Nuttal is shaking his head here like I mentioned the devil. And in March

the right-of-centre European People's Party will decide their

candidate. The two declared candidates so far are Jean Claude

Juncker, former Luxembourg PM and Michel Barnier who is the EU

Commissioner for the Internal Market. He is French. So there we

go. OK. Who would you like to be the next president? None of the above is

the answer it that. #12k3w4r do you have a candidate yourself? I

genuinely feel that this needs to be decided amongst the Member States.

It's their prerogative to decide who should be the next president of the

Commission? Do you have a candidate? I would like to see the next UK

Commissioner. Who is that? We don't know yet and we won't until July. I

would actually like to have the Commissioner... I don't believe the

Lisbon Treaty said, the European Parliament should dictate who it

should be. Who would you like the next President to be? No-one, I

don't think we should be in the European Union. I knew we were going

to say that. Predictable. Assuming you don't get your way, who would

you like? None of the above. All that will happen is it'll be a big

group stitch-up like we have with the president of the European

Parliament. The socialist also select their man or they'll come to

a deal and the EPP will select theirs. It won't be democratic,

it'll be business as usual. What is it going to do to the European

Parliament, indeed the whole European project, if after May, we

have in the European Parliament, a huge group of maybe 35%, maybe more

of those outside the mainstream right, and to the further right - I

mean UKIP hopes to do very well. Your party is currently third place

in the polls. Madam LePenn is ahead in the polls in France at the moment

and more in France and Italy. What will that do? My concern is that

most of the work is done in committee and legislation,

individual dossiers. UKIP doented work on those dossiers, in my

committee. What does that mean? Less people doing more work and the

centre will have to work harder to get the votes through on

proportionate decisions. Is it right to say that such a big chunk of the

European Parliament - will that mean more clashes between the Parliament

and the Brussels elite? I hope so, in a way. Because at the moment

they've had an easy ride - well they certainly had an easy ride before

UKIP arrived. I think the make-up of the Parliament is going to change

radically next time. And maybe, just maybe, they will start listening to

national democracies a little bit more. Do you still think you will

come first? I certainly hope so. Do you think you will come first. We

are in with a good chance. You are getting very political these days.

The biggest chunk the European Union budget goes to farmers in the form

of the comaul, it still does. Where does the second-largest chunk go? --

Common Agricultural Policy. Not to flags or MPs' pensions. It is

sent back to the Member States to be spent on their poorest areas. Over

the next seven years it'll be worth more than 300 billion euros. Where

does it all go? In the latest instalment of our A to Z of the

European Union, Adam has been looking at EU regional funds.

Welcome to Cornwall, in the eyes of Brussels, on a par with Sicily or

transvainia. That's because Cornwall's annual income is less

than three-quarters of the EU average which means it qual face for

special regional funding, called convergence, designed to even out

economic disparities across Europe. Here and Wales are the only places

in the UK that get it. In typical EU-style there is a flotilla of

other funds, too, but the bulk of regional money goes to regions like

this. In corn wall's case, half a billion pounds over six years. So,

where has it gone? This yacht builders was awarded ?190,000. Like

all beneficiaries, they had to match the funding with their own money.

And this is what it paid for. The mould for making the hull for a new

model of yacht. The Rustler 37.

The Boats go to the superrich but they are helping to spread the

wealth by creating jobs. Cornwall is pretty around the outside and in

summer when all the range Rovers come down from London and park

outside their lovely holiday cottages, if feels difference but

you drive in five miles and the individual was at a low ebb. Over

the last ten years, I think there has been a huge change. Up the road,

this use the to be fields. Now courtesy of the EU, it is a higher

education campus. The centre-piece - the University of Exeter's

environment and sustainability institute a nip at ?21 million.

They all seem cheap compared to the biggest product, superfast

broadband. BT got ?55. 5 million to pay for t with the company stumping

up the same amount. It all comes together here at the innovation

centre. ! Try the headset on. The investment

in the internet, new work spaces, education and employment, lured this

games company which has gone from one worker last summer to 11 by the

end of this month. They just made me feel a bit six. It is so weird. !

There isn't really an aspect of the business operation down here which

isn't in some way affected by European Union convergence funding.

So, do you go to bed every night thanking the founding fathers of the

EU? I wouldn't say that necessarily. I wouldn't say I think about it that

deeply but it certainly is something that has made - it's made it a will

the easier for us. In return, the EU gets its flag prast mraserred

everywhere. Yes, everywhere, which enrages critics who think the UK

could spend its own money, thank you very much. Would that really be so

bad? As a local councillor I'm not sure that investment would have

happened. It has happened through the European Union and it is going

to happen in the future and we're certainly want to do our best to

make the most of that investment. Home time, and, yes, Europe funded

this place, too. Brussels insiders admit not every

euro of regional funding was well-spent like rural airports in

Spain. A lot quieter than this one. But regional funds aren't going

anywhere. They are staying a crucial and big part of the budget.

Adam disappearing into the sunset there. What is not to like, look at

the funds doing the all this in the West Country? Because it is our own

money. In the last round Britain put in ?30 billion, we got ?#9d billion

back. It is not good value for moneyment in Merseyside-for-every

?2.88 we only get ?1 back. It is our money anyway, you have 20 seconds to

remrie. In all variness, Wales is a huge recipient of convergence

funding and cap funding. We'll take whatever money we get as long as we

spend it correctly. Who can take you for taking all you can get -- who

can blame you. Thank you to my guests for today. That's all for

now. Goodbye.