01/12/2011 Dragon's Eye


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


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


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


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


economy will recover more slowly than he anticipate and the


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


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


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


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


have been far from happy with the announcement the Government is


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


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


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


significant step towards creating a more balances economy in regions of


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


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


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


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


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


negotiations for key public sector workers, prompts strong reactions.


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


workers. I have spoken the trade union officials following the


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


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


will be a major campaign t consequences will be significant if


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


individual wealth divide which exists. We have nationally


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


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


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


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


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


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


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


sector is putting the private sector at a disadvantage in


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


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


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


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


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


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


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


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


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


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


Labour Government which last looked at introducing regional pay. This


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


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


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


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


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


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


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


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


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


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


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


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


economic picture, UK ministers maybe more determined this time in


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


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


regional pay would inevitably mean Welsh public sector workers being


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


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


Chancellor has asked is the independent -- independent Pay


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


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


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


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


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


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


public sector workers in your constituency may even say see their


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


responsible for deciding whether to implement those if they were


recommendations that came forward, so there are interesting things on


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


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


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


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


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


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


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


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


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


has bodies looking into the prospect of regional pay all this


while the Government is in industrial dispute. Are they


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


their pensions are concern, if pensions no longer become


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


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


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


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


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


London weightings but I think national Pay Review Bodys have


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


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


honest the Chancellor George Osborne was looking for ways to


divert attention away from an economy not growing, broerg going


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


circumstances no economist agrees with everybody else. On the


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


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


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


hit hard by public sector jobs going and unemployment rising as


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


there was no business in the assembly yet yesterday because of


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


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


thing to do? Devolution means people make difference choices.


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


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


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


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


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


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


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


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


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


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


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


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


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


Budget through. The Opposition parties were trying to work out


what concessions they could ring from the Welsh Government.


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


negotiation points, while Plaid appeared to be demanding more than


ministers were willing to give. The Welsh Liberal Democrats agreed


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


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


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


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


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


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


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


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


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


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


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


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


Wales. Labour have got to sit down and


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


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


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


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


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


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


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


responsible is behind the deal, despite previously ruling out any


such pupil premium. On the record, he said what


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


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


Liberal Democrat policy, but he himself is a former Liberal


Democrat and you never forget your first love.


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


council elections. Williams has always want to


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


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


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


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


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


about is the Welsh Liberal Democrats delivering on their


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


Conservatives to deliver the priorities and extra money for


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


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


The UK Government announced plans this week for extra spending to


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


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


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


to see the best way that money can be spent.


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


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


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


parties said fundamentally fails Wales in education, in health and


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


economy that we so desperately need to get get going.


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


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


week. Brian Meechan reporting.


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


Education Minister told AMs that he was opposed to the Liberal


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


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


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


Liberal Democrats to ensure it does provide the all important


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


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


Andrews is very keen in taking forward his school effectiveness


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


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


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


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


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


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


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


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


poorest pupils and make a difference to their educational


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


Finance Minister to have an indicative allocation in the


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


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


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


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


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


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


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


ensure we could meet issues and concerns that were raised during


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


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


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


Tell me about the commitment to ongoing negotiations with the


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


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


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


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


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


Yes. The �250 million as a result of the


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


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


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


Across the chamber there is widespread support for the Wales


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


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


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


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


issued signalling -- that you issued signalling the agreement


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


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


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


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


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


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


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


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


any further result frght chancellor's Autumn Statement will


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


can be used. That suggest as longer commitment to continued


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


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


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


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


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


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


voters they may see a contradiction in the Welsh Liberal Democrats


supporting Labour in the assembly who are critics of the decision


making of the UK Government of which your Liberal Democrat


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


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


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


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


manifesto promises and to ensure that the Welsh Assembly Government


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


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


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


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


the qualification and the skills they need so our economy is


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


Welsh Liberal Democrats to pass that opportunity by to give those


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


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


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


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


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


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


Government to include in their allocations for the following two


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


much. The Opposition parties say you have


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


predictable about the reaction of the Opposition parties. When Plaid


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


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


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


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


things harder for headteachers, teachers and pupils and the


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


manifesto commitment with five assembly members, the Tories


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


There is a commitment in the statement of your agreement of


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


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


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


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


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


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


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


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


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


the infrastructure for Wales to compete in the future.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Our political editor Betsan Powys has hotfooted it back from


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


boards because it seems that the Health Minister could have a


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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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