ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Now Thursday wasn’t just a bad day for the Conservatives, the Liberal Democrats didn’t have much to shout about either, they lost 124 council seats and came 7th in the South Shields by-election. So how are they dealing with the UKIP challenge? I’m joined now by the Lib Dem Deputy Leader, Simon Hughes, a very good morning to you.

SIMON HUGHES: Good morning.

DM: Where are you on this so-called ‘clownometer’ when it comes to UKIP? I mean are the individuals involved and the people who vote for them okay but some of their policies are clown-like?

SH: Well can I just deal with your analysis firstly very quickly. Yes, obviously we went back and that’s never good and I share the grief of those who lost their seats but compared to the last two years, it wasn’t as big a setback. In every single council that was fought bar one we are a presence and in half of them we are the second party. We went up in seven of the councils, not down, so I hope people don’t paint a picture that says this is a real setback everywhere. In some places – Wiltshire, Gloucestershire – we went forward, Cornwall held up.

DM: Well swings and roundabouts to continue with that analogy but back to UKIP, is the Liberal Democrat attitude perhaps similar to Labour, saying well look who they affect most, it’s the Conservatives and actually we’re quite glad they’re around secretly?

SH: No, I think firstly what it’s done is forced us all to take UKIP seriously. They have serious messages which we all should be concerned about because all of our voters are and I have to say one of them is clearly immigration and it’s a legacy of governments of Labour and Tory that we bluntly had a Border Agency that didn’t control the borders, that we had a lot of illegal immigration …

DM: Illegal immigrants who until not very long ago you wanted to give an amnesty to.

SH: No, no, no, we never wanted to give an amnesty. What we wanted to do, we were willing to confront this issue and I’m not embarrassed about this at all, we said at the last general election that the previous governments had ignored the fact that we are a million plus odd people here. What should we do about them? Just forget them, should we believe we are going to be able to find them or should we seek to give them, if they have been here for a huge length of time, a route into citizenship? So that was the reason. This government, to its credit, has tried to sort out the Border Agency and we are part of that and I am clear we have to be very positive about the benefits of immigration past and present, legal immigration, very positive about immigrants coming as students, very positive about people we need from abroad to work and we have to hold the line that actually the European Union net is plus for Britain because the advantages we get from travelling to other parts of Europe and being able to work there bring us lower prices, bring us one in ten of our jobs and are a net plus and we need to take that …

DM: We know that analysis from the Lib Dems but that poses questions, doesn’t it? You say you are effectively working in coalition with the Conservatives over the Border Agency but what about when it comes to Europe? There is a real push within many sections of the Conservative party to say, okay, we’ve given the pledge on the referendum but some now want to bring it this side of the general election?

SH: Well I don't know think that in my constituency just over the bridge in south London, people are thinking every morning ‘Do we want a referendum?’, that’s not what people are waking up thinking. They are thinking about jobs …

DM: But a lot of those UKIP voters do want that.

SH: No, no, the first concerns in Britain are making sure the economy continues to grow and doesn’t slip back, making sure unemployment comes down and doesn’t go up, making sure interest rates don’t go up because that’s all about people’s mortgages and so on. People’s concerns are the economy. Now, the government has legislated that if there is ever a proposal to hand over more power from the UK to the European Union there will be a referendum, we’re the first government ever to have done that, we’re part of that. In the next two years before the next general election, I think it would be madness to have a referendum and spend all our time thinking about whether we should be in or out of Europe when the priority is to sort out the economy which is in difficulty in this country and in worse difficulty in many other parts of the world. That’s the priority, not to distract people about Europe.

DM: What are you going to say about … it was interesting listening to the Foreign Secretary there when I asked him about the pledge that was meant to be enshrined in law about giving 0.7% of our gross national income to overseas aid. Now that’s something that is in the coalition agreement, that you want enshrined in law. The suspicion is that that’s not going to happen, it’s not going to be in the Queen’s Speech.

SH: Well there are many things in the coalition agreement which came from a Liberal Democrat commitment, one of them was that we should have 0.7% of our spend going around the world to held developing countries. We think that is something we will deliver in this parliament, we will be the first government ever to have delivered that and the coalition agreement …

DM: But you need it enshrined in law?

SH: The coalition agreement said it should be in law and we want that to happen just as we’ve been able to …

DH: And if it doesn’t?

SH: Well let’s see what happens in the Queen’s Speech but it is a commitment. The coalition agreement said we would lift the tax threshold for poor people, we’ve done it; the coalition agreement said we would restore the link between pensions and earnings, we’ve delivered; the coalition agreement said we’d give more money to poor kids at school, we’ve delivered. So we have delivered on many things. Now the question I think we have to answer is not just do we continue to deliver on our coalition agreement, which we should and in all but one respect it has been honoured, but what do Liberal Democrats say to the public for the years ahead?

DM: Well that’s the point, isn’t it, because what we saw demonstrated on Thursday and as those results came in on Friday, was an anger from people, an anti-politics feel, saying a plague on all of you …

SH: I agree.

DM: … and you are more or less saying steady as we go.

SH: No, I’m not saying that, for our party I’m not saying that. I’m saying we have to honour our deal to try to sort out the economic mess in the coalition, we have to recognise that UKIP and its voters who are generally a right wing party, they believe in less public spending, they believe in less regulation. Farage has bizarrely contradictory policies so he says less public spend but lots more on defence and loads more people in prison, which costs something even though crime figures are going down, so he can argue his case but we have to have arguments that appeal to the British public for the next election. In my view we have to argue for the redistribution of wealth, we have to argue as to how we can bring prices down, we have to make sure we can stop the huge bonuses still in the City and in some ways Europe is our ally. If we are seen to be a party in favour of a redistribution of wealth in Britain then we are true to our Liberal roots and we have to set out our manifesto between now and the next election just as Mr Farage is going to set out his.

DM: Well good luck with that argument with the UKIP supporters. Simon Hughes, Deputy Leader of the Liberal Democrats.