01/12/2011 Dragon's Eye


01/12/2011

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Lower growth, higher borrowing a longer period of austerity. What

:01:02.:01:12.
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happened to the light at the end of the tunnel? This is Dragon's Eye.

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Fie. Good evening. The Chancellor George Osborne has some depressing

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news when he made his Autumn Statement on Tuesday, he said the

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economy will recover more slowly than he anticipate and the

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Government will have to borrow more and take longer to cut the deficit.

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The news that public sector pay rises will be capped at 1% will

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have done nothing to repair relations with the unions, he made

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that announcement the day before yesterday's strike and they will

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have been far from happy with the announcement the Government is

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looking to move away from UK-wide pay negotiations for teachers,

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nurses and other public sector worker to regional deals. The First

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Minister has reacted angrily to the plans P -- plans. This is a

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significant step towards creating a more balances economy in regions of

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our country, that does not squeeze out the private sector. What they

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will do is say what is the cost of living in a particular place, we

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will pay you less than someone living somewhere else, that can't

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be right. It wasn't one of the main headlines from the Chancellor's

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speech, but the mere mention of moving away from UK-wide pay

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negotiations for key public sector workers, prompts strong reactions.

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Opponent says for Welsh worker, it is only mean a worse deal. --

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workers. I have spoken the trade union officials following the

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Autumn Statement, to gauge their public opinion. If they weren't

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angry enough about the pensions they will be livid about this. This

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will be a major campaign t consequences will be significant if

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we see this sort of policy, because it will entrench that regional and

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individual wealth divide which exists. We have nationally

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negotiated pay deals, which look at the clinical and the performance

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levels of our staff within the public sector, I am talking about

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the NHS predominantly. I do not accept we should have regional pay

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for jobs. But does the current UK structure for nurses, teacher and

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other public sector staff stifle the growth of the private sector?

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That has been argued by a liberal think-tank. There is an argument

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that actually it is at the moment having high pay in the public

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sector is putting the private sector at a disadvantage in

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competing for skilled workers. So I think there is a win-win both for

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the public services in terms of getting more for your money, but

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also for the private sector as well. It is not about cutting the public

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sector wage bill, say the Welsh Conservatives. I think this is

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about looking at the different regions of the UK, seeing how they

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can deal with this situation better, it is also about making sure that

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we grow the private sector, I think all partys in Wales accept that the

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private sector has been too small and we want to make sure that over

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time that we address that balance and get more people working in the

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private sector, a better balance with the public sector. It was a UK

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Labour Government which last looked at introducing regional pay. This

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is not new. I mean this was something that Gordon Brown

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suggested going back to 2006. In fact, the Ministry of Justice and

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the courts service have been doing this since 2007, so there is, this

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is being announced and some people are portraying it as being a very

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major change. It is an acceleration of something that is already

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happening. But the First Minister has said he is dead against it.

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Well, ultimately, we may have to look at taking over pay and

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conditions here in Wales. It is not as easy as it sounds. There are

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real issues in terms of how that is done. But if we are forced into

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that situation, better that than to have people's pay cut by UK

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Government in London. It is not the first time it has been talked about

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and the opposition to it remains resolute. But in view of the wider

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economic picture, UK ministers maybe more determined this time in

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pushing for the break up of the UK public sector pay map. Well, I

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spoke to the Welsh secretary and asked her whether she accepted that

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regional pay would inevitably mean Welsh public sector workers being

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paid less than colleagues in the south-east of England for doing the

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same job? Think what you are doing is jumping the gun. What the

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Chancellor has asked is the independent -- independent Pay

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Review Bodys to look and see how pay can be responsive to local

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conditions. I think that work will report in July 2012. Yes, that is

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eight months away, so that is not a very long time away, is it. I

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wonder whether in terms of its potential impact on Wales, that is

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something that concerns you, because it is possible, surely,

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that if the body does recommend some form of regional pay, that

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public sector workers in your constituency may even say see their

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pay rates go up, whereas plaque workers in Wales would say it go

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down when you compare the average pay rates for the two areas.

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think we need to see they are independent Pay Review Bodys that

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will be looking at that. I think we will need to see what their

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recommendations are, we need to see how local pay rates can be made

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more responsive. So that the private sector can come into areas

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which are dominated perhaps by the public sector. So it may be helpful

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in bringing in private sector jobs in allowing them to compete in a

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market where the public sector is dominating the market. I wonder

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what your reaction is to the First Minister's kphebs on this. He said

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if regional pay is introduced he would look to ask for pay and

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conditions in the public sector to be devolved. Well in the autumn

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financial statement you will see there is also a paragraph in there

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about looking at the departments, and looking whether they, there is

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an element of regional pay that can be looked at as fars departments

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are concerned. It does say in there that secretarys of state will be

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responsible for deciding whether to implement those if they were

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recommendations that came forward, so there are interesting things on

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this patience but let us face it, we are in a time when we have been

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living above our means for a long time and everybody knows that. We

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are having to face up to one of the largest debts that any Government

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has inherited. We are having to pay down that debt, and we are having

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to deal with other external factors. On that point... The eurozone, the

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price of oil... On that point public sector workers feel they are

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unfairly having to bear the burden of trying to get the grips can some

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of the problems. The Chancellor said one the pay freeze ends,

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public sector pay rises will be capped at 1%. He has revealed he

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has bodies looking into the prospect of regional pay all this

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while the Government is in industrial dispute. Are they

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bearing an unfair share of the burden? We are not the only

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Government that has looked at local pay. The last Labour Government

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looked at local pay as well, so this is not something that is new.

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Look at the wider context of the public sector. So let us put that

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first of all in perspective. Secondly, as I say, we have been

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living above our means. Are public sector workers bearing an unfair

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share of the burden here? public sector at the moment, and

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even Labour politicians have said in Wales, the public sector is far

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too large in Wales. We need to look at ways of encouraging in the

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private sector, the private sector will be encourage kaurgeed in if it

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feels it can compete with public sector pay rates and come into

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areas where they are not in a high profile in Wales, but let me also

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go on to the pension, because we have looked tat forecast of the

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pensions and we brought in John Hutton, a former Labour minister to

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do the work on this. Our pensions need to be affordable, and the work

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we are putting in on pensions and the negotiations which are ongoing

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with the unions, is this Government's attempt to make sure

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that well valued, high valued civil servants, high valued public sector

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workers, have the opportunity to have a sustainable future as far as

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their pensions are concern, if pensions no longer become

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affordable, that is not a situation we can allow to continue. OK. Thank

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you for joining us. Let us hear Labour's take on that. The shadow

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chance lore Ed Balls is visiting Wales today. Bethan Powys caught up

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with him and asked him what he made of the idea of regional pay. There

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has always been flexibility in pay in the health service, there is

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London weightings but I think national Pay Review Bodys have

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serveded a important purpose, they have allowed flexibility, they have

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also kept control on cost and they have been fair. I think to be

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honest the Chancellor George Osborne was looking for ways to

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divert attention away from an economy not growing, broerg going

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up. Unemployment rising, I think he should be very careful indeed

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before he goes down this road. I think he will be throwing out the

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baby with the bath water. The last Labour Government mooted the same

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idea. What is the difference nowst There has always been flexibility

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in pay locally and regionally, you need that for different skills,

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there is agenda for change in the NHS. But they wanted to do it as

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the Chancellor wants to do it no When I was Secretary of State for

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schooling we talked about more what we could do, but you can do that,

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within a national frame works, within pay review body what George

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Osborne is talking about doing is scrapping the Pay Review Bodys,

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handing it over to different regions. My fear is you will end up

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with competition between regions, with inflation in pay, it would

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cost more and you would lose flexibility. So to have some

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variation, yes, but to go wholesale down this road, he needs to be

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really really careful. I think it could be risky. So no to that. In

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the report there was little comfort for George Osborne, you might argue,

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you would certainly argue, wouldn't it be fair to say there is not that

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much comfort fou you either, yes there are difficulties, yes there

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is difficulty with growth but that is not because of anything this

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Government is doing. It is not because they are cutting too fast

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and deep. George Osborne said it was the euro crisis causing the

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huge problems. The OBR said they were going to increase the estimate

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for growth in the euro area this year, as they downgraded the

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forecast for the UK. That is what unemployment has gone up, because

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confidence is down, domestic demand is down. We are not creating job,

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unemployment is up. They said, the OBR high inflation, that rise in

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VAT this year was very damaging too. I think when I look at the this

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report what they are saying is, if we are not careful we will have

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slower growth and higher borrowing for years to come, from the

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Chancellor who promised he would get borrowing down. They haven't

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come down the other side and said yes Government, we believe you

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cutting too fast, you are cutting too deep. It is not working, they

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haven't come to that conclusion which is no comfort for you either

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is it? The independent OBR have accomplished a report. In which

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they say growth down, unemployment up. Borrowing up, everyone of the

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things that George Osborne promised has not come truement. We can

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debate the detail, of the report. There are some economists who think

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they are pessimistic, we can argue about the alnay -- anal

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circumstances no economist agrees with everybody else. On the

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fundamentals did they revise up growth. No it is down. Did they say

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the growth plan is going to help the economy? No, it is not going to

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make a difference. What will it mean for Wales,? Disproportionally

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hit hard by public sector jobs going and unemployment rising as

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well. I think this is a pretty risky prospect for us To finish

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there was no business in the assembly yet yesterday because of

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the strike. Labour ministers stood on the picket line. They didn't

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come in to work. They weren't in the assembly. Was that the right

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thing to do? Devolution means people make difference choices.

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no? Wefrpblgts had Prime Minister's Questions where David Cameron stood,

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rattle and defensive as he attacked low paid public sector workers and

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called them irresponsible. He didn't strike a chord with anybody.

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May take that as a no? Well, I went to work. Ed Balls speaking to

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Wales is to get an extra �216 million in capital spending over

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the next three years as a result of announcements made by the

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Chancellor, George Osborne, in his Autumn Statement. Labour says it'll

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consult the Liberal Democrats on how that money should be spent as

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part of the deal between the parties to get the budget through.

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That deal also saw an agreement to spend an extra �20 million on some

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of Wales' poorest pupils next year. �14.5 billion, that's the Welsh

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Government's budget for next year. With only 30 of the 60 seats,

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Labour knew it had to get the support of another party to get its

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Budget through. The Opposition parties were trying to work out

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what concessions they could ring from the Welsh Government.

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Labour and the Liberal Democrats were thought to be close on their

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negotiation points, while Plaid appeared to be demanding more than

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ministers were willing to give. The Welsh Liberal Democrats agreed

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a deal that would see them support the Labour Budget in return for an

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extra �20 million going to the schools that he had kates the

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country's poorest children. They call it the pupil premium, one

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of the party's key policy areas. Observers say it is a big move from

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Labour. It is a big concession in that they have been rubbishing it

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in the chamber for months. Clearly, Plaid have latched on to the fact

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that this is Labour implementing a so-called con-dem policy and that

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makes it awkward. It is not as big as they would have to do if they

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brought Plaid Cymru in. Labour can be reasonably pleased with the deal.

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Opponents dismissed the deal. It is not a good deal for Wales,

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this is a one year addition to the free school meal entitled pupils.

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It doesn't address the economic issues or the skills issues in

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Wales. Labour have got to sit down and

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invent a new policy, invent a new structure to go and administer, it

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bunch of extra work for civil civil servants, half of to of that �20

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million will end up being gobbled One-third of all money spent on

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education gets gobbled up by red tape.. The deal does only cover

:16:51.:16:55.

this Budget, but the funding will continue over the next three years.

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Labour's backbenchers remained quiet, but observers say it has

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given the Lib Dems a victory in education policy. The minister

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responsible is behind the deal, despite previously ruling out any

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such pupil premium. On the record, he said what

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minister wouldn't want more money in their departments, budget, I

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don't know if privately he finds this difficult implementing the

:17:18.:17:21.

Liberal Democrat policy, but he himself is a former Liberal

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Democrat and you never forget your first love.

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Opponents believe it could help the Liberal Democrats in next year's

:17:28.:17:35.

council elections. Williams has always want to

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detoxify the Welsh Liberal Democrat brand. It is not a different party,

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it is the same party, but she is able to say and point to doing a

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deal with Labour in certain areas of Wales in the next election in

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May, and she will say, "Look, we did this deal with Labour, we are

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not as bad as you think." We have been a Welsh party. What this is

:17:59.:18:01.

about is the Welsh Liberal Democrats delivering on their

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manifesto priorities. At a UK level we have worked with the

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Conservatives to deliver the priorities and extra money for

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pensions. In Wales, we are working with Labour because they are in

:18:11.:18:14.

Government and we're delivering the same benefits for pupils here too.

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The UK Government announced plans this week for extra spending to

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help boost economic growth. Wales will get over �200 million as part

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of that. Labour and the Liberal Democrats already agreed as part of

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the budget deal that they will negotiate between the two of them

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to see the best way that money can be spent.

:18:31.:18:35.

. I hope the Welsh Liberal Democrats will look at this in the

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cold light of day and think about whether we really want to prop up a

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budget of a Government that we have all said, all the opposition

:18:45.:18:49.

parties said fundamentally fails Wales in education, in health and

:18:49.:18:53.

probably at the moment most importantly of all, in getting that

:18:53.:18:57.

economy that we so desperately need to get get going.

:18:57.:19:03.

All four parties will continue to raise questions over what each has

:19:03.:19:07.

gained and lost in this agreement, but the budget will be passed next

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week. Brian Meechan reporting.

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This is what the Finance Minister, Jane Hutt, had to say earlier.

:19:16.:19:20.

Education Minister told AMs that he was opposed to the Liberal

:19:20.:19:26.

Democrats pupil prem um idea. -- premium idea. What has changed?

:19:26.:19:32.

is important that this grant will be targeting our poorest pupils and

:19:32.:19:37.

that we have tailored it and this is in discussion with the Welsh

:19:37.:19:40.

Liberal Democrats to ensure it does provide the all important

:19:40.:19:44.

investment in pupils who perhaps are disadvantaged, it is going tobt

:19:44.:19:52.

pupils who get -- to be the pupils who get free school meals. Leighton

:19:52.:19:57.

Andrews is very keen in taking forward his school effectiveness

:19:57.:20:02.

grant which does link a target, the issue between disadvantaged and

:20:02.:20:05.

educational attainment. There is no issue here as a Government. This is

:20:05.:20:10.

very much engrained with our policy. Whatever you choose to call it, you

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promised �20 million to help the poorest pupils in the next budget

:20:14.:20:17.

year, but the commitment is only for that year, as I understand it.

:20:17.:20:24.

Do you intend to roll it out beyond 2012/13? We have put in sums for

:20:24.:20:28.

the second and third year because we hope very much this pupil

:20:28.:20:33.

deprivation grant will do what we intend it to do which is target the

:20:33.:20:36.

poorest pupils and make a difference to their educational

:20:36.:20:40.

educational opportunities and it is the responsible thing to do and as

:20:40.:20:42.

Finance Minister to have an indicative allocation in the

:20:42.:20:45.

following two years. Yes, because it would be a waste of

:20:45.:20:49.

money just to do it for a year, wouldn't it, given that the idea of

:20:49.:20:53.

the grant is that it follows the poorest pupils through the system

:20:53.:20:59.

so it gives them the buck up as they need as it were? It is a

:20:59.:21:06.

responsible way for taking forward the budget. Clearly we had little

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room for man manoeuvre. 99% of the budget is what we agreed in

:21:12.:21:16.

February. We had little room for manoeuvre in order to try and

:21:16.:21:22.

ensure we could meet issues and concerns that were raised during

:21:22.:21:28.

the draft budget process. It is critical that we spend this money

:21:28.:21:33.

effectively and in line with our policies and indeed, the schools,

:21:33.:21:37.

of course, are up to this and are pleased to welcome the funding.

:21:37.:21:40.

Tell me about the commitment to ongoing negotiations with the

:21:40.:21:45.

Liberal Democrats over the extra money that will be coming to Wales

:21:45.:21:50.

after the Chancellor's Autumn Statement this week? Not only the

:21:50.:21:54.

pupil deprivation grant, but the money that we had from the council

:21:54.:21:58.

tax freeze which we're using for economic stimulus, that was part of

:21:58.:22:05.

our discussions with other parties and that was important, but also...

:22:05.:22:09.

Yes. The �250 million as a result of the

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chancellor's sometime, yes -- statement, that is part of the

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agreement and we will discuss with them as to how we should allocate

:22:16.:22:19.

the funding. Can I say one interesting point about this?

:22:19.:22:23.

Across the chamber there is widespread support for the Wales

:22:23.:22:27.

infrastructure investment plan that I've announced. We all know we need

:22:27.:22:32.

an economic stimulus and that's that's to help not just the recover

:22:32.:22:37.

reap of the economy, transport links are crucial, but to make sure

:22:37.:22:41.

our public estate is fit like our schools. In the statement thaw

:22:41.:22:44.

issued signalling -- that you issued signalling the agreement

:22:44.:22:48.

that you had come from the Liberal Democrats. I am wondering whether

:22:48.:22:51.

that is paving the way to coalition with the Liberal Democrats more

:22:51.:22:55.

formally in the future? What is very clear in terms of this

:22:55.:23:01.

agreement, this agreement for the budget for next year for 2012/13,

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we are we are clear about that, the First Minister and the leader of

:23:05.:23:07.

the Welsh Liberal Democrats and I think that's a very important point.

:23:07.:23:12.

It is a lot of money. What the Chancellor announced for Wales that

:23:12.:23:16.

�216 million is over the next three years and your statement does say

:23:16.:23:20.

any further result frght chancellor's Autumn Statement will

:23:20.:23:23.

be the result of discussion in order to reach agreement on how it

:23:23.:23:27.

can be used. That suggest as longer commitment to continued

:23:27.:23:31.

negotiations with the Lib Dems? Well, that statement is very clear

:23:31.:23:36.

because we have got that �216 million coming to us and we need to

:23:36.:23:40.

make decision about that very quickly in times of plan -- in

:23:40.:23:45.

terms of of planning and in terms that we get it out there and in

:23:45.:23:47.

terms of capital investment. That's the agreement we made and that's

:23:47.:23:57.
:23:57.:23:59.

the sum of money we're talking Kirsty Williams joins us. For some

:23:59.:24:03.

voters they may see a contradiction in the Welsh Liberal Democrats

:24:03.:24:07.

supporting Labour in the assembly who are critics of the decision

:24:07.:24:10.

making of the UK Government of which your Liberal Democrat

:24:10.:24:14.

colleagues in England are a vital part. Do you see any contradiction

:24:14.:24:18.

there? No. No, I don't. My job, the job of my Liberal Democrat

:24:18.:24:23.

colleagues at the assembly is to make decision on behalf of the

:24:23.:24:27.

people of Wales and to try and implement where we can our

:24:27.:24:31.

manifesto promises and to ensure that the Welsh Assembly Government

:24:31.:24:37.

does the right things for Wales now now and for the future. Let's be

:24:37.:24:45.

clear where why the pupil premium is important. One in five children

:24:45.:24:50.

on free school meals will get five GCSEs. Which thefg in these

:24:50.:24:54.

children now, we can turn that around and make sure they get the

:24:54.:24:56.

the qualification and the skills they need so our economy is

:24:56.:25:00.

stronger in the future and it it would have been irresponsible for

:25:00.:25:02.

Welsh Liberal Democrats to pass that opportunity by to give those

:25:02.:25:06.

kids a better chance. In terms of the �20 million that

:25:06.:25:10.

you have got guaranteed for the forthcoming budget, that's there.

:25:10.:25:13.

Is it your understanding there is a commitment in future years to

:25:13.:25:17.

continue that funding because I'm sure you would agree, it is not

:25:17.:25:21.

much good as a one off, is it? The impact wouldn't be as good as

:25:21.:25:25.

it could be if it is a one off. That's why we have persuaded the

:25:26.:25:29.

Government to include in their allocations for the following two

:25:29.:25:33.

years a commitment to carry on that pupil premium. I welcome that very

:25:33.:25:36.

much. The Opposition parties say you have

:25:36.:25:42.

struck a cheap deal here? Well, there is something depressingly

:25:42.:25:45.

predictable about the reaction of the Opposition parties. When Plaid

:25:45.:25:48.

in opposition voted through a Labour budget in 2006, they did so

:25:48.:25:52.

on the basis of �10 million. �10 million when budgets were rising

:25:52.:25:55.

and there was lots of money around. As for the Conservatives, well we

:25:55.:25:59.

know they want to take money out of the education budget, and make

:25:59.:26:03.

things harder for headteachers, teachers and pupils and the

:26:03.:26:06.

question to the Tories is, I have been able to achieve my headline

:26:06.:26:09.

manifesto commitment with five assembly members, the Tories

:26:09.:26:15.

haven't been able to achieve anything for for Wales with 15.

:26:15.:26:19.

There is a commitment in the statement of your agreement of

:26:19.:26:23.

support that Labour will negotiate with you about what to do with the

:26:23.:26:26.

extra money coming to Wales as a result of what the Chancellor had

:26:26.:26:31.

to say in the Autumn Statement. Is all this paving the way to a

:26:31.:26:34.

potential coalition deal in the future, do you think? No, no, no,

:26:34.:26:38.

it doesn't. I'm glad that the Chancellor's statement does mean

:26:38.:26:46.

that there will be money coming down to Wales to spend on capital

:26:46.:26:49.

projects and we will again work with the Labour Party to ensure

:26:49.:26:53.

that money is spent on schemes that will have an effect on our economy

:26:53.:26:59.

now, keeping people in jobs, creating jobs, but will help build

:26:59.:27:01.

the infrastructure for Wales to compete in the future.

:27:01.:27:05.

Clearly, there are areas you can find common ground with the

:27:05.:27:07.

Government. This agreement is evidence of that. Are you saying

:27:07.:27:10.

that you would not be interested in coalition with Labour should that

:27:10.:27:15.

be on the table for discussion? That hasn't been on the table for

:27:15.:27:18.

discussion. What has been on the table for the discussion is what

:27:18.:27:20.

can we do with the resources that have come down from London that

:27:20.:27:25.

will really make an impact in Wales. Are you ruling it out? It hasn't

:27:25.:27:28.

been a subject for discussion. I don't think that it is something

:27:28.:27:32.

that the Labour Party are interested in. If they were, would

:27:32.:27:35.

you consider it? That's what I'm trying to ask you.

:27:35.:27:41.

I don't think it is worth answering because it isn't a subject for

:27:41.:27:45.

discussion at the moment. What can we do, the Labour Party said said

:27:45.:27:48.

when they didn't win a majority, they would need to be less tribal

:27:48.:27:51.

and they would have to work with other people. I said the Welsh

:27:51.:27:55.

Liberal Democrats would be welling to work -- willing to work with

:27:55.:27:59.

other people if it delivered the right policies for Wales. That is

:27:59.:28:04.

vital to give us the infrastructure we need for Wales to compete in the

:28:04.:28:12.

Our political editor Betsan Powys has hotfooted it back from

:28:12.:28:19.

interviewing Ed Balls for us. Here she is. Let's talk about health

:28:19.:28:22.

boards because it seems that the Health Minister could have a

:28:22.:28:27.

problem brewing here. Fill us in. It is significant. Last week on

:28:27.:28:31.

Radio Wales a Health Minister says, "I am not going to bail out local

:28:31.:28:35.

health boards if they can't break even by the end of the financial

:28:36.:28:39.

year." We look at what they are projecting will be the case by the

:28:39.:28:42.

end of the financial year and six out of the seven are saying, "We

:28:42.:28:46.

will be in the red." By anything from �3 million to �14 million.

:28:47.:28:50.

What is going to happen? We will watch over the next few months as

:28:50.:28:54.

somebody has to blink, either the Health Minister as her predecessor

:28:54.:28:59.

has done, finds the money from somewhere or what? Local health

:28:59.:29:02.

boards have to start cutting fast and furiously to break even by the

:29:02.:29:06.

end of the year. It is a difficult one, isn't she?

:29:06.:29:10.

She left no room for doubt in her public statements? No, she said

:29:10.:29:14.

heads will roll. She will lose whole boards if necessary. She

:29:14.:29:17.

means those running health boards. If you do that, the debt is still

:29:17.:29:21.

there. The deficit is still there, you can roll it through into next

:29:21.:29:27.

year, where does that leave you next year? With even less money.

:29:27.:29:30.

The question is where these boards are going to cut now so late in the

:29:30.:29:35.

Join Felicity Evans as she takes a fresh look at politics through the Dragon's Eye.

Whether it's your local council, the National Assembly, Westminster or Europe, Dragon's Eye will be probing, scrutinising and shedding light on our democratic institutions.

Could Welsh teachers and nurses be paid less under UK Government proposals? And is the Labour-Lib Dem deal over the budget likely to lead to a coalition in the Senedd?


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