01/12/2011 Dragon's Eye

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