:00:09. > :00:14.Chapters four and five of the most charged story in politics right now,
:00:15. > :00:23.the cost of keeping the lights ablaze. It is with pride that I now
:00:24. > :00:28.open Calder Hall, Britain's first atomic power station. The Queen
:00:29. > :00:32.moved a lever, releasing atom power producing electricity into the
:00:33. > :00:35.National Grid. Once upon time we built nuclear power plants for
:00:36. > :00:41.ourselves, now we ask competitors do it for us. It may be necessary, but
:00:42. > :00:45.is it wise? What happened when the hacker met the tracker who got him
:00:46. > :00:48.convicted. FRMTHS what was the most interesting thing you found on my
:00:49. > :00:52.hard drive. I found lots of interesting things on your hard
:00:53. > :00:57.drive! He was behind the Conservative Party's most famous
:00:58. > :01:04.election poster, why doss Morris Saatchi now think marks may have
:01:05. > :01:12.been right afterall. He's here to tell us. Glory be to China and
:01:13. > :01:16.France, out of the goodness of their hearts, and with the promise of
:01:17. > :01:21.massive guarantees from the British Government, and tax-payers, they are
:01:22. > :01:24.generously restarting Britain's nuclear energy programme. The Prime
:01:25. > :01:27.Minister said the Government was securing the country's energy
:01:28. > :01:32.future. Now there was a time when Britain led the world in this sort
:01:33. > :01:42.of technology. No longer. None the less, building the Hinkley C Power
:01:43. > :01:47.Station may create 25,000 jobs. To say that Britain has lost its
:01:48. > :01:52.lead in nuclear power doesn't adequately describe the decline in
:01:53. > :01:57.the UK civilian nuclear programme. Today announcing the building of a
:01:58. > :02:01.new Hinkley C power station, the Prime Minister talked about a
:02:02. > :02:05.rebirth. It is going to give another kick-start to our nuclear industry,
:02:06. > :02:11.I think many people will see it is going to provide good, long-term,
:02:12. > :02:16.well-paid, high-tech jobs for our future. It is also going to provide
:02:17. > :02:23.low-carbon, reliable, safe, secure energy supplies long into the
:02:24. > :02:27.future. All of us here know that we are present at the making of
:02:28. > :02:30.history. But some may regard this as more of a national humiliation.
:02:31. > :02:35.Britain once led the world in civilian nuclear power. Britain's
:02:36. > :02:46.first atomic power station. When Her Majesty opened the first one, in the
:02:47. > :02:49.world at Calder Hall, nobody would think that the new generation of
:02:50. > :02:54.nuclear power plants would be built and owned by the Chinese and French
:02:55. > :02:59.Governments. Here is the rise and decline in graph, the decent upturn
:03:00. > :03:02.is simply due to so unplanned shutdown stations coming on-line.
:03:03. > :03:08.The trend is down and down fast. There are three reasons for this
:03:09. > :03:14.decline, the first is technology. It is one of the country's first
:03:15. > :03:19.generation of Magnox nuclear power stations. Because we got to go
:03:20. > :03:23.first, we created our own generators, others went down the
:03:24. > :03:27.safer and more efficient water-cooled route. They didn't want
:03:28. > :03:29.our technology and we couldn't create the economies of scale that a
:03:30. > :03:34.big export market would have brought us. We ended up with handful of
:03:35. > :03:37.different types of reactors that no-one wanted to know about. The
:03:38. > :03:43.advantage of water-cooled technology, such as the plant
:03:44. > :03:48.planned for Hinkley Point C, is it is more efficiently, water carries
:03:49. > :03:52.the heat to make electricity better than carbon dioxide gas, which was
:03:53. > :03:57.the British approach. The fact that the rest of the world didn't follow
:03:58. > :04:02.gas-cooled technology left us in deadent. We couldn't export any of
:04:03. > :04:07.our reactors, our second generation stations. It took a long time to get
:04:08. > :04:11.them working well. The next problem our nuclear industry has faced is
:04:12. > :04:15.the market. When Conservative ministers hit the button on energy
:04:16. > :04:20.privatisation, the nuclear industry was packaged up into British Energy.
:04:21. > :04:23.Whilst other companies bought up domestic suppliers, ensuring they
:04:24. > :04:27.always had a market, British Energy didn't. When the energy market
:04:28. > :04:31.crashed, they had nothing to cushion the fall, they went bust. Sorting
:04:32. > :04:35.out the mess meant a decade was wasted. Plans to build an earlier
:04:36. > :04:38.version of Hinkley C was scrapped at this time, when it was deemed
:04:39. > :04:44.uneconomic. The other problem we had, in the UK, certainly didn't
:04:45. > :04:47.look like a problem at the time, plentiful North Sea oil and gas.
:04:48. > :04:52.Just when we needed to be replacing our nuclear power station, it looked
:04:53. > :04:57.like we didn't need to. FRMTHS in 1973 the French were dependant on
:04:58. > :05:01.imported oil for two thirds of their energy in their economy. They were
:05:02. > :05:07.massively hit by the oil price hike and problems of 1973 and OPEC. So
:05:08. > :05:12.they switched an awful lot of their electricity from oil to nuclear. In
:05:13. > :05:16.the UK we had oil Gas in the North Sea. Not directly used for
:05:17. > :05:21.electricity, but certainly great cushion in terms of our overall
:05:22. > :05:24.energy picture. We still had home mined coal. The case for nuclear
:05:25. > :05:31.looked weaker than it did in a number of other countries like
:05:32. > :05:35.France. Then there is the politics, building nuclear power stations are
:05:36. > :05:39.hugely expensive, huge upfront costs and a long life. So the politicians
:05:40. > :05:45.who commissioned them just get to take the flack and pay the bills
:05:46. > :05:48.they probably won't cut the ribbon. What has changed? Well George
:05:49. > :05:53.Osborne visiting a new nuclear plant being built in China last week has a
:05:54. > :05:56.sense of urgency that previous politicians just haven't had.
:05:57. > :05:59.Because after years of underinvestment, there is a real
:06:00. > :06:03.prospect now of Britain's lights going out within a few years. And
:06:04. > :06:08.politicians who are blamed for power cuts don't tend to do well. Needing
:06:09. > :06:12.nuclear power in a hurry, and cheaply, means foreign-owned and
:06:13. > :06:19.foreign-operated was the only option.
:06:20. > :06:24.With us now is Dr Sue Ian of the Royal Academy of Engineering, and a
:06:25. > :06:33.former technology director she is at British Nuclear Fuels Ltd. David
:06:34. > :06:38.Norris is chairman of Conservative Friends of Nuclear Energy.
:06:39. > :06:43.Is this a humiliation? No, I see it as good news for the engineering
:06:44. > :06:48.sector in the UK. Although the current designs about to be built
:06:49. > :06:51.are overseas-designed, our engineers in the UK have been involved in some
:06:52. > :06:55.of these designs on the international stage for some years.
:06:56. > :06:59.It is UK engineers that will help to build the plant and operate it
:07:00. > :07:03.ultimately. It may be overseas-owned, but there are plenty
:07:04. > :07:08.of British engineers involved now and in the future. How do you feel
:07:09. > :07:12.about it? I'm elated we are getting the nuclear power stations finally
:07:13. > :07:19.built. Doesn't it matter who builds them? Not to me, as the good doctor
:07:20. > :07:23.was saying before, we have the home-grown effect in my
:07:24. > :07:27.constituency. Explain your constituency and what the
:07:28. > :07:30.Aberdeen-effect is? It is lots of expertise going overseas to work in
:07:31. > :07:35.an industry that you have been brought up, in Aberdeen it is the
:07:36. > :07:41.oil industry. In my area it is the nuclear power industry. We have lots
:07:42. > :07:51.of youngsters with good jobs at the moment, with go skills they can
:07:52. > :07:55.export. The North West dose is st coast is a good breeding ground for
:07:56. > :08:01.that to happen. We are always told that the future of the economy is in
:08:02. > :08:04.knowledge, if the key parts of this project is foreign-innovated,
:08:05. > :08:11.doesn't it make you worry about future of this country? One of the
:08:12. > :08:15.good things done is to invest in the nuclear manufacturing advance
:08:16. > :08:19.research centre. A joint venture between the University of Manchester
:08:20. > :08:24.and Sheffield. This is designed to bring 21st century techniques to the
:08:25. > :08:26.designs to be built. Although the designs are overseas, the
:08:27. > :08:32.manufacturing and tools and techniques may well have UK IP
:08:33. > :08:38.associated with them, as we go through the decades. When you hear
:08:39. > :08:43.somebody prominent in the project talking about it being muck-shifting
:08:44. > :08:46.what do you think? They might one day regret their choice of words in
:08:47. > :08:50.that. Even the British construction industry is a world-class
:08:51. > :08:53.construction industry with a world-class safety record, as
:08:54. > :08:58.evidenced by the Olympic Games and the Channel Tunnel. British
:08:59. > :09:03.engineers are involved in the nuke clear power -- nuclear power
:09:04. > :09:06.programme, and with the new investment that is about to be made
:09:07. > :09:10.that will grow. The other thing is we have fantastic university base
:09:11. > :09:16.here in the UK. Our nuclear courses in our universities like ones here
:09:17. > :09:21.in Manchester and at Imperial College in London, they are
:09:22. > :09:25.fantastic international low- renowned courses attracting a lot of
:09:26. > :09:27.students. There is another element which is Government industrial
:09:28. > :09:31.policy, doesn't it look at an occasion like this as if the French
:09:32. > :09:36.got it right and the British got it wrong. I have always advocated that
:09:37. > :09:41.we should have gone straight into nuclear instead of going into wind
:09:42. > :09:44.farms. I'm bound to that say, that' the chairman of the Conservative
:09:45. > :09:49.Friends of Nuclear Energy. I do believe the way ahead is nuclear.
:09:50. > :09:56.But ?90 as a strike price seems high at the moment. It is ?150 for on
:09:57. > :10:03.shore wind farms as strike price. EDF is what 80% or so owned by the
:10:04. > :10:08.French taxpayer. Right? We just flog all these things off? We have not
:10:09. > :10:12.got at the moment with austerity measures the actual finance to build
:10:13. > :10:15.these things outright. It is good to have foreign investment coming into
:10:16. > :10:19.our country to do this. At the end of the day we will be keeping the
:10:20. > :10:23.lights on and that is really what we are in it to do. You don't wore, you
:10:24. > :10:27.don't worry? I do worry, I joke in parliament all the time that I could
:10:28. > :10:32.be the man that signs off the next generation of nuclear power
:10:33. > :10:35.stations. I really want public subsidy into nuclear power stations
:10:36. > :10:38.because we are going to have a shortage of energy. We can't be
:10:39. > :10:44.reliant on gas forever and a day. 2013 looks like we are going to be
:10:45. > :10:48.80% reliant on gas. We can't have, that we must have nuclear power
:10:49. > :10:54.built sooner rather than later. We all know what we expect a soldier
:10:55. > :11:01.to look like right? Pale, spotty, rarely seen outside a darkened room,
:11:02. > :11:05.tracksuit bottoms and lots of pizza cartoons lying around. That is an
:11:06. > :11:09.artist's impression of what the defence of this country may hang.
:11:10. > :11:16.The defence committee is not just committed to cyberprotection, but
:11:17. > :11:24.cybercounter-attack. The people who can mastermind that campaign won't
:11:25. > :11:28.be found on the playgrounds of Eton. We're barely ware of it any more,
:11:29. > :11:34.but our lives are dependant on a digital world that operates unseen.
:11:35. > :11:42.In parallel to the one all around us. Being wired has changed the way
:11:43. > :11:48.we do everything, but also means new VUNabilities. So what kind of people
:11:49. > :11:53.seek to disrupt it? And what motivates those who try to protect
:11:54. > :11:57.it. There is often little difference between the hackers and those who
:11:58. > :12:03.track them. Is it time to include hackers in our plans to protect the
:12:04. > :12:10.nation from emerging cyber-threats? The same people who make very good
:12:11. > :12:14.malicious hackers can also be very good at non-malicious hacking. I
:12:15. > :12:17.prefer to look at the skills these people may be bringing rather than
:12:18. > :12:22.putting labels on the skills. It will be highly beneficial to recruit
:12:23. > :12:25.hackers, especially at a corporate level. They are scared to do it.
:12:26. > :12:28.There is wealth of talent underground. Not the place that
:12:29. > :12:32.industry and the military would orderly look for new recruit, but
:12:33. > :12:38.they may just have the skills we are going to need. Perhaps the most
:12:39. > :12:45.notorious of recent hacking groups sprang out of the Anonymous
:12:46. > :12:52.Movement. A jokey offshoot called Lulsec, that came to worldwide
:12:53. > :12:57.attention, at first they targeted for laughs. Jake Davies went by the
:12:58. > :13:09.name of Topiary, he was their quirky spokesman and shaped the on-line
:13:10. > :13:13.Presence. The youngest was 16. When they turned their hacking skills
:13:14. > :13:18.against law enforcement, most of the members were eventually tracked down
:13:19. > :13:22.and sent to prison. Some are now free and thinking about what to do
:13:23. > :13:25.next with their lives. Those who have been immersed in the world of
:13:26. > :13:29.hacking talk about it being exciting, even thrilling, about an
:13:30. > :13:34.intellectual stimulus that's hard to beat. So is it ever possible for a
:13:35. > :13:48.malicious hacker to turn their skills for good. Is there such a
:13:49. > :13:52.thing as hacker reHAB! This hacker MustaffaAl-Bassam was convicted with
:13:53. > :13:58.a sended sentence earlier this year, and is studying computer science.
:13:59. > :14:05.The computer forensic expert whose evidence helped convict him was
:14:06. > :14:09.David Day. We brought hacker and tracker together. This is the first
:14:10. > :14:14.time they have met. What was the most interesting thing you found on
:14:15. > :14:17.my hard drive! I found lots of interesting things on your hard
:14:18. > :14:25.drive, maybe some of the more interesting things I'm not sure I
:14:26. > :14:29.want to talk about now. But I found pretty much every website you looked
:14:30. > :14:34.at. I found loads and loads of files which you probably thought had been
:14:35. > :14:37.deleted. I found them in system information folders in place they
:14:38. > :14:48.were hidden away. Was it thrilling for you to look at someone's almost
:14:49. > :14:55.life? Honestly? A little bit. He was looking for evidence that he and the
:14:56. > :15:01.Anonymous hacker T-Flow were one in the same. He doesn't condone
:15:02. > :15:05.anything he did but can't admire his programming -- ANT help but admire
:15:06. > :15:11.his programming skills. I don't know if you are aware that you are more
:15:12. > :15:15.skilled at doing shows things than other people. What is the motivation
:15:16. > :15:20.DPOR doing it? Being a teenager at the time, the motivation was the
:15:21. > :15:25.ability to use basic technology to embarrass major corporations and
:15:26. > :15:30.people in authority. That was a thrill as a teenager. In simple
:15:31. > :15:35.terms it was just for fun, for kicks? Pretty much. It is like
:15:36. > :15:40.solving a puzzle or problem solving. If when you complete the problem at
:15:41. > :15:43.the end you do get quite a sense of achievement. Do you know that's
:15:44. > :15:47.exactly the same feeling that you get when you are doing forensic work
:15:48. > :15:53.as well. I think what was more important for the group was showing
:15:54. > :15:58.the world how these major corporations weren't following basic
:15:59. > :16:02.security. One of the codefendants in the case was the PR man Jake Davies.
:16:03. > :16:08.We last spoke to him before the case came to court. I don't feel like a
:16:09. > :16:15.criminal, I feel like a kid that put the creativity in the wrong place at
:16:16. > :16:20.the wrong time. Jake sent 37 days in a youth offenders institution in
:16:21. > :16:26.Feltham, now he said the time he spent off line had a bigger impact.
:16:27. > :16:29.What changed me was the two years being banned from the Internet,
:16:30. > :16:35.electronically tagged to my house. The 37 days in Feltham was
:16:36. > :16:39.interesting. It gave me some good perspective on where our youth end
:16:40. > :16:45.up when they have done what the state perceives as wrong. Has turned
:16:46. > :16:49.away from -- he has turned away from hacking and leads a different life,
:16:50. > :16:54.working in film distribution. The same parts are being stimulated in
:16:55. > :16:57.the same way but they won't, you get paid at the end of the month rather
:16:58. > :17:05.than being sent to Feltham. We are often told there is a short-terming
:17:06. > :17:10.of people with skills in the industry, to protect the Government
:17:11. > :17:14.systems from attack. The MoD is calling for cyber-reservist, a GEEK
:17:15. > :17:28.version of the Territorial Army. Is anyone likely to sign up, should
:17:29. > :17:34.former hackers bother to apply. At the Ministry of Defence's
:17:35. > :17:38.multimillion pound communication centre, specialists from all three
:17:39. > :17:41.force, army, Navy and air force, work together to keep the country's
:17:42. > :17:46.military communications systems secure. Cameras are rarely allowed
:17:47. > :17:50.in. Each screen we filmed had to be individually vetted. This is the key
:17:51. > :17:55.centre that operates and defends the UK's military networks worldwide. It
:17:56. > :17:58.is also where some of the new joint reserve unit will be based and
:17:59. > :18:01.trained. And the hope is to employ people who are not only from
:18:02. > :18:06.elsewhere in the military and defence, but also from industry and
:18:07. > :18:10.people who are not necessarily traditional military material.
:18:11. > :18:14.Lieutenant Colonel Michael White is the commanding officer of the new
:18:15. > :18:18.reserve unit. He said the kind of people they are looking for are in
:18:19. > :18:23.short supply, so they would have to be open-minded when recruiting. If
:18:24. > :18:27.somebody had a quirky personality but very good at computing, you
:18:28. > :18:31.might consider them? We will look the individuals in the round as they
:18:32. > :18:35.apply, we are looking at the capability development rather than
:18:36. > :18:39.setting hard and fast rules about individual personal traits. If
:18:40. > :18:44.somebody came to you and they had a criminal record for hacking but all
:18:45. > :18:48.the skills you were looking for, you wouldn't necessarily rule them out?
:18:49. > :18:52.If they could get through that security process, then if they have
:18:53. > :18:58.that capability that we would like, then if the vetting authority was
:18:59. > :19:04.happy with that, then why not. Simply building cyber s is not
:19:05. > :19:08.enough. We also have to decertificate. Britain will build a
:19:09. > :19:12.dedicated capability to counter-attack, and if necessary to
:19:13. > :19:17.strike in cyber-space. This was the first time that Britain's approach
:19:18. > :19:22.to cyber s had been spelt out so clearly. That we will not only
:19:23. > :19:26.defend against attacks but potentionally launch our own. But
:19:27. > :19:33.the Government may find it hard to attract the talented individuals the
:19:34. > :19:37.needs, if former hacker Mustafa is typical. If you had the opportunity
:19:38. > :19:40.to take up a role or assist in trying to prevent threats to the
:19:41. > :19:45.nation's security, would that be something you would be interested in
:19:46. > :19:48.using your skills for? For me that would be important, I can understand
:19:49. > :19:52.the need for a Government to protect itself, but when you go ahead and
:19:53. > :19:57.stamp on everybody's civil liberties, which we have seen on the
:19:58. > :20:06.massive surveillance stories broken this year, you will repel talented
:20:07. > :20:10.people. A stereotypical hacker mentality, often anti-establishment,
:20:11. > :20:14.may not fit neatly into Government institutions. There is heightened
:20:15. > :20:21.sensitivity after high-profile leak, such as those by insider Edward
:20:22. > :20:32.Snowdon, who revealed details of secret masseur veilence by UK and US
:20:33. > :20:40.groups. So -- mass Surveillance by UK and US Government groups. As a
:20:41. > :20:44.hacker you have an inset belief, the people who would hire that are
:20:45. > :20:48.afraid, there could be another Snowdon situation, they don't want
:20:49. > :20:52.discrepancies in anything. It would be highly beneficial to recruit
:20:53. > :20:57.hackers, especially at a corporate level, but they are scared to do it.
:20:58. > :21:01.Are they right to do it? It depends on the hacker. It can be
:21:02. > :21:05.particularly difficult to get a job in industry after you have been
:21:06. > :21:10.convicted of malicious hacking. Which in certain situations for
:21:11. > :21:14.certain individuals is a terrible shame, if they have those abilities
:21:15. > :21:21.and those skills, some of the best talent and we can't use it. Would
:21:22. > :21:25.you employ a former hacker? That is tricky. That is very tricky. I think
:21:26. > :21:32.it would have to be every case on its merits. You have met Mustafa
:21:33. > :21:37.today, would you employ him? He seems like a really nice lad, and
:21:38. > :21:45.obviously clearly very talented. I might. A surprise, perhaps, that
:21:46. > :21:48.there is a growing appetite for hiring ex-hackers, even within the
:21:49. > :21:53.military, but those prepared to take the risk may find it harder than
:21:54. > :22:02.they think to win over the GEEKs as defenders of our on-line security,
:22:03. > :22:07.or as part of a cyberarmy. I spokes to the Defence Secretary Neil
:22:08. > :22:14.Hamilton and I asked him whether the armed services would employ someone
:22:15. > :22:17.with a criminal conviction for hacking? The Armed Forces don't
:22:18. > :22:20.necessarily exclude people with criminal convictions. Each
:22:21. > :22:24.individual case would be looked at on its MER sits. The conviction
:22:25. > :22:31.would be examined in terms of how long ago it was, how serious it was,
:22:32. > :22:39.what sort -- its merit, the convictions and how serious it was,
:22:40. > :22:44.I couldn't rule it out. In the cyber-world, is there any way to
:22:45. > :22:47.know how someone has gone from a black hat hacker to white hat
:22:48. > :22:52.hacker? There are many professional people out there with the skills you
:22:53. > :22:57.might traditionally associate with the hacker's skills set, who have
:22:58. > :23:00.never done anything illegal and who scruplously maintain their
:23:01. > :23:05.activities on the right side of the law. This will be a matter of
:23:06. > :23:09.judgment in individual cases. But the Armed Forces overall do not have
:23:10. > :23:13.an absolute bar on people with criminal convictions becoming
:23:14. > :23:18.members of them. Would a hacker recruited to your cybersecurity
:23:19. > :23:25.force have to wear a uniform and pass standards of physical fitness?
:23:26. > :23:30.Well the cyberreserve that we are recruiting will have considerable
:23:31. > :23:34.flexibility in terms of recruitment criteria around areas like fitness.
:23:35. > :23:43.Clearly it is not necessarily for somebody who is going to spend their
:23:44. > :23:45.serving time doing cyber-work, not necessarily necessary for them to
:23:46. > :23:53.have the same level of fitness as someone who was joining a royal
:23:54. > :23:58.marine or an infantry reserve unit to do. Will they wear a uniform? The
:23:59. > :24:03.routine would be that they would wear uniform, but again service
:24:04. > :24:07.personnel when they are doing and performing roles that are not in
:24:08. > :24:10.public, don't necessarily need the wearing of uniform, they may not
:24:11. > :24:15.always need do so. Would they have to have a haircut? The regulations
:24:16. > :24:21.around The Verves will still apply, but there will be some flexibility
:24:22. > :24:25.where we're talking about members of the cyber-reservists. What we are
:24:26. > :24:29.trying to do is recruit the very brightest and the best from across
:24:30. > :24:34.the IT industry. And use the skills sets that they have got in the
:24:35. > :24:40.national interest to enhance our cyberdefences, and to help us build
:24:41. > :24:47.an offensive cybercapability. Can you tell us what a cyber-attack is
:24:48. > :24:53.please? There are two types, there are cyber-attacks seeking to take
:24:54. > :24:58.information from the victims' systems and there are cyber-attacks
:24:59. > :25:03.seeking to deny service to the victims' system, shut them down. The
:25:04. > :25:08.United States has identified China as the source of the greatest threat
:25:09. > :25:13.at a Government level. Who is our enemy? We don't, it is not about a
:25:14. > :25:19.specific enemy, it is about being aware that both our traditional
:25:20. > :25:23.perceived potential adversaries and also some non-traditional smaller
:25:24. > :25:27.states do have this capability. There are a number of countries
:25:28. > :25:32.around the world who have recognised that this is an asymmetric
:25:33. > :25:38.capability. It is an area whereby building a niche capability, a
:25:39. > :25:42.relatively small country could have a disproportionate effect. That they
:25:43. > :25:46.could never hope to do by building up traditional conventional military
:25:47. > :25:51.forces. Can you tell us what these countries are? I'm not going to name
:25:52. > :25:54.individual countries. How many are there? There are a number of major
:25:55. > :25:59.players around the world who are already known to have
:26:00. > :26:02.cyber-capabilities. There are other smaller countries who are known to
:26:03. > :26:09.be seeking to develop them. What would a British cyber-attack be
:26:10. > :26:17.like? I should start by emphasising that this is very naisent
:26:18. > :26:22.early-emerging technology. But it is possible in time there will be
:26:23. > :26:26.capabilities to interfere with an enemy's ability to control its
:26:27. > :26:31.weapons systems. You might be able to deny an enemy the use of certain
:26:32. > :26:37.weapons systems. You might be able to interfere with the way they
:26:38. > :26:41.worked. You might be able to do by cyber-intervention, something that
:26:42. > :26:46.today would be done by a kinetic strike. By bombing or missile
:26:47. > :26:50.attacks. Would such an take have to be authorised by the Prime Minister?
:26:51. > :26:55.Well any, we're very clear that the law of armed conflict applies to the
:26:56. > :26:59.cyber-domain, there is an interesting debate going on
:27:00. > :27:03.internationally at the moment and quite openly about how the law of
:27:04. > :27:10.armed conflict should properly be applied in the cyber-domain. We are
:27:11. > :27:14.very clear that any cyber-activities will have to be lawful and have to
:27:15. > :27:19.meet the same standards as we require for conventional attacks.
:27:20. > :27:27.That is to say they will have to be proportionate to the threat that we
:27:28. > :27:30.were dealing with or the attack that we had suffered.
:27:31. > :27:35.Another energy company waded into politic today, NPower is going, wait
:27:36. > :27:38.for it, to put up its prices by an average 10%, just like the other two
:27:39. > :27:44.that have already announced their hikes. The Government advice to all
:27:45. > :27:49.those squirming with anxiety or boiling with anger is we should shop
:27:50. > :27:52.around. Labour, by contrast, promises to cap energy prices for a
:27:53. > :27:56.while at least. The voters like that idea, which has given the Tories a
:27:57. > :28:00.bit of a problem. In the Mail on Sunday, the former Conservative
:28:01. > :28:05.Party chairman, Lord Saatchi pointed out, it is now 21 years since the
:28:06. > :28:08.Conservatives won an election. The corrosive question for people
:28:09. > :28:16.like him is whether they can ever do so again. I will be talking to him
:28:17. > :28:22.in a moment or two. First we report. With his conference speech, Ed Mill
:28:23. > :28:25.band set the political weather, and is a said this autumn energy prices
:28:26. > :28:51.would go up and so they have. The number of Labour voters
:28:52. > :28:55.satisfied with their leader is up by 22 points since the Labour Party
:28:56. > :29:02.Conference. The party's overall lead on the Tories hasn't extended. Some
:29:03. > :29:10.Tories are delayeded with the energy price freeze. They believe that he
:29:11. > :29:14.resusitated Markism, and it is no longer a plaque on the wall. There
:29:15. > :29:21.are two camps with how to deal with the energy freeze from Ed Miliband.
:29:22. > :29:25.Some believe they don't have to do anything and figures say that it
:29:26. > :29:29.shows the purring purring along. Then there is the tax camp,
:29:30. > :29:38.believing to give people more money back. The third camp is competition.
:29:39. > :29:41.That Ed Miliband is right the energy companies need to be cracked down
:29:42. > :29:44.on, but the Tory answer is competition.
:29:45. > :29:48.Vast sections of the country favour action on the utilities companies.
:29:49. > :29:53.In one recent poll only 12% trust gene companies to treat their --
:29:54. > :30:01.energy companies to treat their customers fairly. 3% don't. 3%
:30:02. > :30:05.support plan to freeze energy prices for 20 months. But the Labour
:30:06. > :30:09.leader, pollsters say, has to convince voters a little more if
:30:10. > :30:13.he's to capitalise on this. David Cameron is a veteran of
:30:14. > :30:19.election campaign, but one colleague of his from this, a 1992 campaign,
:30:20. > :30:30.none the less urging him to realise the new threat posed by Ed Miliband,
:30:31. > :30:37.one-time Tory chairman, Lord Saatchi said unfettered capitalism will help
:30:38. > :30:40.Labour into power, Ed Miliband has set the weather and the Tories need
:30:41. > :30:46.to dress for it. Lord Saatchi is here. You think that
:30:47. > :30:52.Marx might have been right? I really would like it, I would like him not
:30:53. > :30:57.to be proved right. The particular aspect of his prophesis, which
:30:58. > :31:06.worries me, which is why I wrote the article in the Mail on Sunday is he
:31:07. > :31:10.forecast that after years of warfare amongst capitalists, there would be
:31:11. > :31:13.fewer and fewer capitalists controlling vaster and vaster
:31:14. > :31:18.empires, that seems an accurate prediction. I would be alarmed if
:31:19. > :31:25.that was allowed to take hold and what it says behind me, "capitalism
:31:26. > :31:30.isn't working "became what people believe. Then they might turn to
:31:31. > :31:36.state socialism, and state control as a free market system that they
:31:37. > :31:39.don't regard as being effective. The energy, as you have been dealing
:31:40. > :31:43.with in the programme, this is a key test for public opinion. Absolutely,
:31:44. > :31:47.it is clear where public opinion resides in this, it is also quite
:31:48. > :31:52.clear that when David Cameron says that people should shop around, he's
:31:53. > :31:59.talking nonsense really isn't he? He's expressing what is the true
:32:00. > :32:05.faith of Conservatism. That is at the root of Conservatism is free
:32:06. > :32:09.market competition. This is what we believe in. It strikes at the heart
:32:10. > :32:13.of Conservative belief to find a situation in which there isn't real
:32:14. > :32:17.competition. I think the Prime Minister is expressing the view
:32:18. > :32:20.that's what he wants. That's what Conservatives want. But it isn't
:32:21. > :32:26.what we have got, we have cartel? That is true. So now here you have a
:32:27. > :32:29.serious problem. That's why I wrote what I wrote. How did the
:32:30. > :32:35.Conservatives find themselves on the wrong side of the fence on this? I
:32:36. > :32:41.think the solution that Labour proposes is a solution that we don't
:32:42. > :32:45.want. Because what is the solution? The solution would be some kind of
:32:46. > :32:50.state control. Our solution more in keeping with free market views would
:32:51. > :32:52.be that the market should operate. That is what the Prime Minister is
:32:53. > :33:00.saying. But the market isn't operating? People should be able to
:33:01. > :33:06.shop around. This the market isn't working? If globalisation has, as an
:33:07. > :33:10.unintended consequence of globalisation is the creation of
:33:11. > :33:14.global cartels, that is a major problem. As you are seeing with
:33:15. > :33:16.energy will come to many other categories, people will come to the
:33:17. > :33:19.conclusion that the free market competition is not working, because
:33:20. > :33:23.there is not enough competition. That is what I'm trying to suggest,
:33:24. > :33:27.this is something we must watch out for very carefully, which Labour
:33:28. > :33:30.could exploit if we don't. We must make sure they can't. If the
:33:31. > :33:36.consequence, you believe in the market because you believe it makes
:33:37. > :33:41.people free isn't that right? If you asked me what is the actual
:33:42. > :33:48.fundamental belief of Conservatism, I would say in one word it is
:33:49. > :33:53.freedom, independent, individuality, self-determination. It hasn't led to
:33:54. > :33:59.freedom has it? Energy is a classic case, it hasn't led to freedom, if
:34:00. > :34:04.you can't afford to pay the bill it is an interesting and philosophical
:34:05. > :34:09.idea but that is all? Let me go on with basic Conservative belief, will
:34:10. > :34:12.that help? Yeah. Let's say the fundamental Conservative belief is
:34:13. > :34:16.freedom. Now let me ask you this, is there a connection between freedom
:34:17. > :34:23.and money? I would say that there is. To deny that would be
:34:24. > :34:28.hypocritical. I take as my case Professor JK Galbraith, he said, I
:34:29. > :34:32.think it is very memorable, he said "the greatest restriction on the
:34:33. > :34:37.liberty of the citizen is a complete absence of money". Therefore what
:34:38. > :34:43.Conservatism should aim at is that people will have more money. How
:34:44. > :34:46.will that, in order that they can be more free, you take my point. In
:34:47. > :34:52.other words there is a moral purpose to Conservatism which it is very
:34:53. > :34:55.important important to express, it could lead people to the view that
:34:56. > :35:00.Conservatism is only interested in money. We are interested in money,
:35:01. > :35:07.but the root is to the highest thing of all, freedom. What do you think
:35:08. > :35:13.the Tories should do? I am the chairman of a fine body called the
:35:14. > :35:16.Centre for Policy Study, created by Margaret Thatcher some years ago. It
:35:17. > :35:20.was responsible for iconic policies that allowed the Conservative Party
:35:21. > :35:23.to win many elections, including of course you can own your own home,
:35:24. > :35:31.the sale of council houses. We are going to have to develop and we
:35:32. > :35:34.will. A policy, just one, more than one is already too complicated,
:35:35. > :35:43.before the next election that has the iconic status in terms of appeal
:35:44. > :35:47.and simplicity of "you can own your own home". That is our aim in the
:35:48. > :35:50.Centre for Policy Studies. And we will do it, this will have a big
:35:51. > :35:55.impact. Do you know what that policy will be about? Yes. Go on? It is
:35:56. > :35:58.going to be about freedom. It is going to be about freedom and the
:35:59. > :36:05.connection between freedom and money. We are not going to shy away
:36:06. > :36:08.away from the fact that to speak about freedom and money is
:36:09. > :36:14.hypocrisy. The Conservative Party is often accused, are we not, condemned
:36:15. > :36:19.for being money obsessed. Therefore having a heart of stone. But at the
:36:20. > :36:25.root of Conservatism is a very high moral purpose. Which is the pursuit
:36:26. > :36:29.of freedom and independent. When the Centre for Policy Studies produces
:36:30. > :36:36.this policy, you will see that it connects the aim of freedom with the
:36:37. > :36:46.need for money. And it will be DRAM Maastricht Treaty, will be dramatic,
:36:47. > :36:52.culture changing. As someone who has been finding somewhere to live will
:36:53. > :36:56.be know, the cost of property in the capital has conbeserk. Asking prices
:36:57. > :37:01.have gone up 10% between September and October. The British obsession
:37:02. > :37:04.with homeownership is part of the reason. So too perhaps is the
:37:05. > :37:08.Government's help to buy scheme. But it is also quite clear that many
:37:09. > :37:13.foreigners are frantic to buy property in London, and in so doing
:37:14. > :37:24.the city is being made unaffordable to many. Before we talk about it we
:37:25. > :37:30.have this report. Whose housing boom is it? For four years the rest of
:37:31. > :37:34.the UK has watched as prime property in central London behaved like it
:37:35. > :37:39.was part of a different country. Price booms started in London in the
:37:40. > :37:43.past and went out to the UK. In the capital they have risen 60% since
:37:44. > :37:50.2009, the rest of the country has some catching up to do. If you look
:37:51. > :37:52.at the stamp duty take from the two central London borough, Kensington
:37:53. > :37:59.and Chelsea and City and Westminster, in 2012/13 it was ?7208
:38:00. > :38:02.million, that is ?78 million more than Northern Ireland, Scotland,
:38:03. > :38:09.Wales and the north-east and the North West and Yorkshire and Humber
:38:10. > :38:13.put together. Who are the buyers who can afford prime central London
:38:14. > :38:17.property? The latest research shows 49% of them aren't British
:38:18. > :38:20.nationals. The biggest chunk are from other European countries,
:38:21. > :38:23.followed by buyers from Russia in the former Soviet Union countries,
:38:24. > :38:28.close behind are buyers from the Middle East, followed by Americans,
:38:29. > :38:32.Asians, and the rest of the world. To rich international investors,
:38:33. > :38:38.London property means financial safety. Initially it was an exchange
:38:39. > :38:41.rate thing, people cashing in at the bottom of the market and weak
:38:42. > :38:45.sterling. A lot is driven by safe haven places, uncertainty in the
:38:46. > :38:48.eurozone looking for alternative investments driving wealth into
:38:49. > :38:52.London. We have also a lot of wealth being generated in immature markets,
:38:53. > :38:58.they are keen to put their money into a safe, secure and well known
:38:59. > :39:02.asset. And prime central London ticks those boxing. Buyers are going
:39:03. > :39:06.off central London, prices rose 8% last year. Central London is so
:39:07. > :39:09.awash with money looking for a home that it has pushed prices up to the
:39:10. > :39:15.point where you can't really make money. If you bought one of these
:39:16. > :39:20.modest sized flats for probably ?1 million, you might get a rent of
:39:21. > :39:24.?30,000 a year, a 3% return, not much better than savings. Don't
:39:25. > :39:30.forget you are taking a risk with money. Now those international
:39:31. > :39:35.buyers are copying an old British habit, they are searching for better
:39:36. > :39:43.value for money. Welcome to London's latest house price hot spot. A
:39:44. > :39:46.stone's throw from West Ham's football ground, it may not always
:39:47. > :39:49.have been a magnet for buyers, foreign or domestic, but it is one
:39:50. > :39:52.of the few places in London where you might get a house for less than
:39:53. > :39:58.a quarter of a million pounds. To use a local expression, I'm not
:39:59. > :40:04.taking the mickey, if you judge an economy by house price, Plaistow is
:40:05. > :40:08.booming, prices up 15% by January, agents say they are accelerating. On
:40:09. > :40:15.the weekend more than 30 people were booked into see this three-bed
:40:16. > :40:18.terrace, on offer at ?240,000. In a sellers' market like this, there is
:40:19. > :40:23.no need to tidy up. Buyers are looking for what is known as
:40:24. > :40:28."potential. This couple are among those hoping to take advantage of
:40:29. > :40:33.cheap Help To Buy mortgages before prices take off. This isn't for
:40:34. > :40:36.them. The rooms are really small, for us wanting to start family as
:40:37. > :40:41.well. They are too small for us. Is that your plan at the moment? In the
:40:42. > :40:46.next few months, yeah. Is it your plan too Chris? In the next few
:40:47. > :40:53.years! Ten years ago, if you worked in Dubai and got an ?80,000 job in
:40:54. > :41:00.Canary Wharf, you would look in the City, for this City high flyer
:41:01. > :41:05.Plaistow is the best he can get. You are in corporate finance, should be
:41:06. > :41:13.able to afford stuff? It still means having, if you are buying a ?1
:41:14. > :41:17.million property you need ?200,000 in the bank. What is the answer?
:41:18. > :41:21.Bank of mum and dad. Not all buyers are well-healed, born in Vietnam and
:41:22. > :41:26.brought up in Australia, this man has come to Plaistow because Help To
:41:27. > :41:30.Buy has priced him out of Leytonstone? It is too hot. I think
:41:31. > :41:33.it might get worse because they were tightening the lending, now they are
:41:34. > :41:44.starting releasing it, so everybody can get the loan. It pushed the
:41:45. > :41:47.price up. So even as an of a -- earner ?40,000, I don't think you
:41:48. > :41:50.can afford that sort of property in London. Behind London's boom is a
:41:51. > :41:53.chronic shortage of property for sale and some of the cheapest
:41:54. > :41:56.mortgages ever offered. If the market is this heated here, buyers
:41:57. > :42:02.looking for better value for money are going to have to travel even
:42:03. > :42:06.further out of town. With us now is Michael Goldfrab an American
:42:07. > :42:11.journalist observing London since 1985 and Isabel Harding, editor of
:42:12. > :42:14.the Spectator's Coffee House blog. What has gone wrong in your view?
:42:15. > :42:20.Trends have been going on for quite a long time. The accel RANT in all
:42:21. > :42:26.of this has been Help To Buy in the last month. What has happened in
:42:27. > :42:32.2008 we had the crash, it didn't reform the financial services
:42:33. > :42:34.industry. Money has been thrown at the financial services industry.
:42:35. > :42:38.Rather than in investing in things that create jobs and business, if
:42:39. > :42:42.you want a quick return get into bricks and mortar and in London. And
:42:43. > :42:46.so what's happened is London property is no longer, it is no
:42:47. > :42:49.longer an investment and shelter for a family to make over a 25-year
:42:50. > :42:53.mortgage term, it is something for people who want to turn a quick
:42:54. > :43:00.buck. Just this weekend Jeremy in Hong Kong they launched, there is a
:43:01. > :43:04.little three storey block of flats in E 15, they are launching it in
:43:05. > :43:09.Hong Kong to buy it off plan. The people who buy it will never see the
:43:10. > :43:13.building. That is not healthy is it? It is not very helpful, I think it
:43:14. > :43:17.is only 28% of foreign investors who are nonresident in the UK. But the
:43:18. > :43:22.fact is that they are distorting the UK housing market and distorting the
:43:23. > :43:29.London housing market. And their activity has been increasing since
:43:30. > :43:33.200 #. In -- 2007. In 2011 the investment in the housing market
:43:34. > :43:37.alone was more than the Government investment in affordable housing in
:43:38. > :43:40.the whole of the UK. A good or a bad thing? Not a good thing for people
:43:41. > :43:46.in London not PRATH at that level. There is another problem which is
:43:47. > :43:50.supply. The number of households will far outstrip supply in London.
:43:51. > :43:54.The communities and local Government department estimates I think it is
:43:55. > :43:59.525,000 new households in the next decade. There is nowhere near enough
:44:00. > :44:03.homes being built to match that. You are absolutely right, when I was
:44:04. > :44:05.talking long-term, supply and demand, there has never been enough
:44:06. > :44:09.supply. One of the interesting things is you hear people, I mean
:44:10. > :44:14.Conservative politicians saying the Government needs to build house, the
:44:15. > :44:19.Government doesn't build house, Barrett builds house, what hasn't
:44:20. > :44:27.been done... The Government has build houses. I know I live very
:44:28. > :44:32.near some greater London council 190 -- 1900 thousands and they survived
:44:33. > :44:36.and lovely. It is true that the planning laws are old and should be
:44:37. > :44:41.revived, what Governments successively have not done is create
:44:42. > :44:47.an infrastructure that allows the free market to work. I don't want to
:44:48. > :44:50.sound like Lord Saatchi here. The free market is working, people are
:44:51. > :44:55.buying property. The market is not working, the market should be about
:44:56. > :44:59.shelter for people who live in Britain. Why should it be. That is
:45:00. > :45:03.not the market. There is a limited supply of this commodity and
:45:04. > :45:09.increasing demand,ering geothe price goes up? Is it a demand for shelter
:45:10. > :45:12.or a demand for the equivalent of that. One of the really important
:45:13. > :45:16.things that politicians can do, rather than penalising those at the
:45:17. > :45:22.top who can afford to move into the high-value properties is protect
:45:23. > :45:27.those at the bottom. I'm not so worry -- worried that I can't afford
:45:28. > :45:31.a nice property in London, it is those cleaning offices in London who
:45:32. > :45:36.can't afford the train fares or the housing. Does that matter? It does,
:45:37. > :45:40.London has a mixed capital heritage, unlike Paris, you can walk past a
:45:41. > :45:44.council estate in the middle of Westminster. We have a heritage
:45:45. > :45:49.where the founder of the olders and largest housing association was an
:45:50. > :45:55.American bank e Joseph Peabody, that has to be safeguarded by politicians
:45:56. > :45:58.like Boris Johnson who can create that sort of protection for the
:45:59. > :46:03.people who keep the city moving and feed the city as well. One of the
:46:04. > :46:07.things that could be done is for Boris to use his bully pulpit. We
:46:08. > :46:12.know he doesn't have that much power, but he's good on the bully
:46:13. > :46:16.pulpit. He says he doesn't care? He was writing today about stop beating
:46:17. > :46:20.up on foreigners. I'm not, I'm saying let's make the housing market
:46:21. > :46:24.be about housing and not about some new form of global reserve currency.
:46:25. > :46:28.There is another thing in London and let's be clear about it, councils
:46:29. > :46:32.are sitting on a lot of properties, many of them are rotting away. I
:46:33. > :46:37.come from New York, and in New York in the 80s when I left, the city was
:46:38. > :46:41.in very bad shape. There were a lot of houses that had been repossessed
:46:42. > :46:45.by the city. What they did is they started selling them back to people
:46:46. > :46:49.who couldn't possibly raise a mortgage, like a dollar down, and
:46:50. > :46:53.you put sweat equity in it, they took these houses that were off the
:46:54. > :46:57.market and turned them into SDWELings, it would be useful if
:46:58. > :47:06.councils like Hackney and tower hamlets started putting their houses
:47:07. > :47:10.back on the market. Southwark Council has been looking out to
:47:11. > :47:14.Limehouse and Popular, they are thinking about how to increase the
:47:15. > :47:18.overall housing supply. Boris says don't beat up foreigners but he has
:47:19. > :47:23.ambitious targets on affordable housing, we can have an argument
:47:24. > :47:27.about how affordable it is, it is still 80% of market rent. He has the
:47:28. > :47:33.aim to protect those who can't afford the sky high prices.
:47:34. > :47:37.Tesco revealed today massive quantities of food and fresh fruit
:47:38. > :47:42.and vegtables simply thrown away by the supermarket and its customer,
:47:43. > :47:49.four out of ten apples they sell end up in the tip. Most of those nice
:47:50. > :47:54.bags of salad decompose, as we say good night, we have been reminded in
:47:55. > :47:57.2001 decomposition can be quite beautiful.