22/03/2012 Dragon's Eye


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As regional pay comes a step closer, will it be good or bad for Wales?


Good evening. In his Budget yesterday, the Chancellor gave


Government departments the all- clear to press ahead with moves


towards regional pay once the current pay freeze ends. In the


meantime, he's published the UK Government's submission to the pay


review bodies considering regional pay for teachers and health workers.


They're due to give their recommendations in July. Wales tops


the list of areas with the highest disparity between public and


private sector wages at 18%. should see what we can do to make


our public services more responsive and help our private sector to grow


and create jobs in all parts of the country. With that, the debate


began. What is the lodger behind local pay for public workers? Well,


independent analysis has suggested that if you work in the public


sector in Wales like the DVLA here at Swansea, you are paid 18% higher


than your private sector counter- parts and companies and businesses


say they just can't compete with that. As a result, they are missing


out on the best workers coming to work for them. To begin with, the


UK Government are looking at the pay of the 5,000 to 6,000 people


who work at the DVLA as well as the 6,500 people who work at the DWP in


Wales, Jobcentres and the like. Their inflated wages cost jobs


according to the body representing industry in Wales. What many


businesses have found is that they are being crowded out because of


the wages that are being offered by the public sector, particularly


during better economic times, so probably a few years ago more than


today. That is a real issue. They can't fill the jobs they want to


with the people they want to. If we are to return to growth within the


economy, the only part of the economy that can drive that growth


is the private sector so we need to rebalance the economy in favour of


the pray vat sector. There is a danger -- private sector. There is


a danger that all you do by lowering public sector salaries is


pull money out of the local economy. You take a lot of purchasing power


out of the economy. To a certain extent, there would be less money


spent in restaurants, pubs, shops, so the private sector would


possibly hit. There would be a loss of jobs there. What the Government


is hoping is as a result of the wages being lower, the


manufacturing would be competitive once again. To become competitive


against Eastern Europe and China and India, you may need wages to


fall a long way before you bring back some of those manufacturing


jobs. As the Chancellor mentioned in his speech yesterday, local pay


already exists in parts of the public sector. We are also looking


to see whether we can make public sector pay more responsive to local


pay rates. It is something, as we have just heard, the last


Government introduced into the court service. The union for the


bosses of the Civil Service told Dragon's Eye the policy could


undermine their work. What we would see is further fragmentation of the


Civil Service, a lack of flexibility, they would have


different pay rates and certainly for a lot of our members, there's


greater mobility from one part of the country to another. This will


be another tier of bureaucracy. Welsh Government have made their


opposition to the plans clear. The Finance Minister told us it would


also be a logistical nightmare. must value the rate for the job and


we must value our nurses and doctors and police officers and


social workers. Our civil servants, we should value them for the work


they do. The work that's been done and negotiated through collective


bargaining over years, working well on an England and Wales and a UK


basis. This has worked. It seems to me also that this is a Government


that wants to keep the union and it's driving these divisions. This


is divisive. Again, I go back to the point, the Finance Minister, I


feel it is inappropriate at this time. Trying to sort out pay at a


local level sounds like it is much more complicated than what it is


now. Do you think that could be a difficulty? Great difficulty. In


the '80s, a previous Tory Government tried this in the Health


Service and they realised it would be impossible, particularly in


terms of different rates of pay between Trusts and Health Service,


you know, this is just the wrong thing. It is still early days on


the policy, the UK Government departments have just started


discussions. Already, the very idea of local pay is hugely contention.


Arwyn Jones reporting. As well as the move towards local


pay agreement, the Chancellor also announced another increase in the


personal allowance - that's the amount someone can earn before


paying tax. He said the measure would remove two million low-paid


workers around the UK from tax altogether. George Osborne also


announced plans to end the age- related tax allowances for


pensioners. And a cut in the top rate of tax for those earning more


than �150,000 from 50p to 45p. Let's speak to the Secretary of


State for Wales, Cheryl Gillan, who joins us from Glasgow. Welcome.


Good evening. Are pensioners paying for the abolition of the 50p tax


rate? No, not at all. What was announced in the Budget by the


Chancellor was in fact that there is going to be the largest cash


increase for pensioners ever in living history and, at the same


time, we are going to simplify the tax system. That will cost


pensioners a small amount, presumably? There are going to be


no cash losers between 2012/13 and 2013/14. As you said, one of the


other things we have done is increase personal allowances and we


will be increasing personal allowances, hopefully to �10,000,


but at the moment it stands at �9,205 and that means that that


takes a large number of people, 95,000 people out of tax in Wales


and 1.1 million other people benefit. Perhaps many of those


people and many others who don't earn anywhere near �150,000 a year


will wonder why the Chancellor was so keen to cut the 50 pence tax


rate? Well, I think he explained that very well. The yield on this


tax of 50p, which is the highest in the G20, is relatively small. With


other measures in the Budget, he is raising five times that amount from


the wealthiest in our country. What is very interesting for me is that


Labour had 13 years to introduce that 50p tax if they were so keen


on it, but in fact they introduced on it, but in fact they introduced


it in the dying days of their Government. The challenge now is


for Labour is would they return to that 50p tax rate? They introduced


it because until recently the Chancellor was saying now would not


be the time to reduce that. Can I ask you about the question of


yield? In his speech to the Commons, the Chancellor said that he found


aggressive tax avoidance morally repugnant and yet the fact that


rich people were avoiding the 50p tax seems to be his explanation for


removing it, isn't he rolling over? I don't think anybody would expect


us to keep a tax that makes us uncompetitive and is the highest


tax rate in the G20 when we are trying to compete around the world.


Why not deal with the avoidance if yield is an issue? What... Why not


deal with that by tackling the avoidance? What he has done is deal


with the wealthiest in society by imposing measures that will raise


five times that amount from the Exchequer so this Budget was making


those that are the wealthiest pay more into the tax system and


lifting more at the lower end of the earnings scale completely out


of tax altogether. In his first Budget, nearly two years ago, the


Chancellor forecast economic growth for 2012 of 2.8%. Yesterday, he


said the forecast had been reduced to 0.8%. Is that not proof that the


Government's strategy for growth is failing? We have growth and you


have only got to look around the world to see the way in which the


growth forecasts have been revised down in other areas... The American


economy is looking pretty buoyant? The measures we have adopted in


this Budget, particularly some of the measures for Wales, whereby we


are giving 100% capital allowances in the Deeside Enterprise Zones, we


will make Cardiff the most super- connected city with �12 million. In


fact, finding an extra nearly �12 million for the Welsh Government in


a balanced Budget and �500 million extra since October 2010, I think


we are putting everything we can into the Welsh economy and now I


hope that the Welsh Government is going to get on with the job.


Surely, the plan is to take money out of the Welsh economy by


introducing regional or local pay agreements? How can that stimulate


the private sector if you are going to be taking money out of people's


pockets that they might otherwise be spending? Let's be clear about


this. Local pay was brought in by the last Labour Government. They


brought in local pay for the court service. What we have asked is the


pay review body to look at this area and it will be up to


individual departments and, in particular, it will be... Very


briefly, can you explain how it can stimulate growth? It will be up to


the Welsh Government to decide whether to implement it for the


people they employ. At the moment... How can it stimulate the private


sector, can you explain that? differential between public sector


pay and private sector pay in Wales is 18%. The private sector just


can't compete in some areas. I think if there is a level playing


field we will find that stimulus for the private sector that we need.


If the Labour Government and if the Welsh Government is so against


regional pay, I presume their new office in London they won't be


paying London weighting to their staff. That is also local pay.


presume local pay is not going to be a big issue in your


constituency? This is something poorer areas of the country will


have to deal with, you accept that? Local pay is something that was


brought in by the last Government. It will be looked at by the pay


review bodies and it will be up to those departments in Government to


decide whether to implement it. Thank you very much. Let's get


Labour reaction to the proposals on local pay rates in the public


sector. Owen Smith is the MP for Pontypridd and the Party's Treasury


spokesman. He's in Westminster. Welcome to the programme. Hello.


you accept that the economy in Wales is out of balance between the


public and private sector and measures need to be taken to


measures need to be taken to address that? I accept there is


some differential. Whether it is 18%, we would need to look at that


very carefully. That is a very high number. It is frightening for


public sector workers in Wales to hear that number being used quite


so freely by the Government. Is that the volume of pay cuts they


are expecting people to take? I don't know. It's alarming to me


that they are talking about a differential of a fifth and


implying that they might need to rebalance that. I'm sure they are


not proposing to try and get private sector companies to put up


their pay by 18%. I'm sure what is in their mind is to deflate the


salaries and deflate the local economies. Presumably, the private


sector needs some help to compete, the CBI have said that? I don't see


any evidence of that. I have heard the same words as you have from the


CBI. I talk to business. Frankly, if it were true that private sector


businesses across Wales were struggling to get workers, we


wouldn't have 2.67 million people unemployed across the country. We


would have full employment if there was a real difficulty getting


people to get out there and work. It is about attracting the


talented? I think what is in the back of this is the fact this


Government has got a ideological fixation in dividing our country


between public and private. It is an old-fashioned view. The public


and the private sector are intertwined in all sorts of ways


which is why we have seen, when the public sector has been so cut in


the last year or so, the private sector struggling to do what the


Government thought would happen and fill the gap left by a reduction in


public sector spending. It is just not that simple. If the Labour,


forgive me, just to address this point - if the Labour Party thinks


that local pay or regional pay is such a bad idea, why did the


previous Labour Government establish the principle by


introducing it for the court Let's nail that lie once and for


all, because this Government should have learned they can't keep saying


their policies are evolution of our policies as they've done on the


health Bill, only to have the rest of the world realise shortly


thereafter that it's revolution, not evolution. When we introduced


the changes in the court service, back in 2008, we were bringing


together all of the different parts of the court service, the Crown


Courts, County courts, magistrates courts, in which there were over 43


separate pay bands right across the country, into five. Four in the end.


We ended up with a London pay band, outer London pay band, and base


clay the rest of the country -- basically the rest of the country.


We didn't have radically localised bargaining right across the rest of


the UK, that's what they're proposing. They're proposing to


break up pay, break up national pay bargaining in order to drive down


public sector wages. It's a bad idea. They tried it before in the


1980s, in the NHS. It took them over a year to try to come to


agreement across the country. It didn't work, which is why they got


rid of it. There is a dilemma here for the Welsh Government in Cardiff


Bay, which is whether to seek to have pay and conditions in areas


like education and the NHS devolved if the Government presses ahead


with this. Do you think they should press for that? Well, I think at


the moment we as Labour in Wales & West Minister should be arguing for


national pay bargaining, which is the most efficient way to keep an


eye on what wages are doing, but it's also the most equitable way to


make sure you get paid the same rate for doing the same job in


different parts of the country. We should also have London waegting to


-- waiting to -- weighting. But we need to make sure we are fair to


people and deflating the wages of Welsh workers or workers in the


north-east is a disgrace and shouldn't be allowed to happen.


Thank you very much for joining us. Leanne Wood made her debut as Plaid


Cymru leader at First Minister's questions this week. She was


welcomed to her new position by the other party leaders and she asked


the three of them to join with her in condemning regional pay rates in


the public sector. We shut it would be a -- we thought it would be a


good opportunity to send our pundit Brian Meechan to find out how


Plaid's leadership substitution changes the Senedd politics games.


Labour's just about able to field a full team on the bumpy pitch of


Senedd politics with 30 of the 60 Assembly members. But a united


opposition could do some damage against the Welsh Government, if it


got its tactics right. To the surprise of some Leanne Wood


choose to go after the UK Government policy in the form of


regional pay, rather than than challenging the Welsh Government.


Will you therefore join me and invite the other party leaders to


stand together in a united position in order to stop this UK Government


from putting further pressure on household incomes in Wales? Leader


of the opposition. I think it's safe to say from our exchanges that


there are some differences between the two of us. LAUGHTER. Teammates


deny Leanne Wood's natural instinct will be to tackle the Tories rather


than Labour. It's instinct to be pro-Wales actually. That's what I


saw yesterday and of course yes it's OK to agree with Labour on the


things that you actually agree on. Leanne Wood is unashamed in


sporting her socialist badge. Some commentators believe she will be


less interested in what's happening on the Senedd pitch. She will be


thinking, look, you know, the way to win votes for Plaid is to be


seen out there. She will be on those picket lines out there there,


as she has been in the past. She will want to associate her party


with every protest, respectable protest e that's going. I guess the


focus of Leanne Wood's attention will not be on the National


Assembly for Wales, but on Wales itself and the people out there.


Opponents say Plaid's move to the left is a tactical blunder. What's


happened is the Tories have lurched to the right under their new


leadership and Plaid have lurched to the left under their new


leadership. The problem for the Liberal Democrats is that they're


really unsure about where to go. They're still under the shadow of


the UK coalition. What we Nellie have is the centre -- what we


eepbgs -- essentially have are the left. There will be an enormous


debate between Plaid and Labour over who is going to be the more


left-wing on certain issues. I think the real debate is going to


be going forward about devolution and about where everybody's stance


on it and also about the actual delivery of services and how


successful that's been and under Labour and a Labour Plaid


administration actually that's just been pretty poor. And she thinks


there is an opportunity for the Tories to be distinctive. It's very


important that we are able to claim the centre and centre right ground


and I think we have displayed that. We have displayed that with the


policies that we have, with the Budget that we set last time around


and I think that people are beginning to see us for what we


really are, which is a Welsh Conservative Party. The Liberal


Democrats have been playing defensively since they joined the


coalition with the Conservatives at Westminster. Quite successfully,


only losing one at the last election. Labour is the largest


party. At the end of the day in budget terms they need one vote to


actually achieve a majority. They conducted discussions with Plaid


Cymru and with ourselves. We were able to reach an agreement, Plaid


weren't. It's my view that Kirsty Williams actually got a good deal


for the Liberal Democrats, more importantly she got a good deal for


the poorest children in Wales. After the 2007 Assembly elections


there were serious discussions about a rainbow coalition


Government bringing together Plaid Cymru, the Conservatives and the


Liberal Democrats. But Leanne Wood and Andrew Davies are now


Captaining different teams. A key Plaid player in previous coalition


talks has shown the red card to any future rainbow coalition. I think


it will be a very long way off. But then again I wouldn't want Carwyn


Jones to sit back and say that could never happen, that the other


parties couldn't gang up on me and sort of vote me down on things,


because obviously he recognises that he's got a minority Government


and he's got to co-operate with other parties on any piece of


legislation or important votes and so on, but obviously he's going to


try to pick us off one at a time, depending on the issue. There were


four people in Plaid Cymru last time that were ruling any kind of


rainbow out, when they were trying to establish that. And Leanne Wood


was one of them. So you can forget that.


Formations, tactics, strategies, all important for football clubs as


well as political teams. But for their supporters it's results that


ultimately matter. That report from Brian Me, cha --


Meechan. Let's discuss those issues with media Wales Senedd


correspondent Matt Withers and rod rod -- Rod Reurdz. -- Richards.


We heard there were some Often we have heard of cosy in the


past, it's been too cosy. In 2007 we came close to rainbow coalition,


that isn't going to happen now. We have seen the Conservatives under


RT Davies take a very much lurch to the right, pro-unionist, pro-


monarchy. Very much pro-market and then huge change in Plaid now in


terms of Leanne Wood, very radical socialist. Somebody in Labour was


saying to me today she's going to turn into the Respect Party. If you


were to draw a diagram of these two politician it is would be very


difficult to find the point at which they merge. Rod Richards, you


have experience of leading an opposition party in the Assembly.


How important is it to be an effective opposition to work with


your other opposition parties at times? Well, it's going to be a


very interesting chamber, at least an interesting chamber and RT


Davies is going to be a much happier leader than Carwyn Jones.


He must be looking at ways of winning back the rural votes gone


to Plaid and Carwyn Jones must be concerned about losing his left-


wing vote. When it comes to legislation and voting on


amendments that's going to be actually in Carwyn's favour. I am


trying to think of amendments Plaid and RT Davies might agree upon,


there must be something. From that point of view, of legislation, as


Matt says, they're going to be fragmented so Carwyn will have an


easier ride there. What about the point Leanne wood is going to be


looking to park her tanks on Labour's lawn, going for those


valley heartlands, traditional Labour voters saying I am over here,


I am of the left, Plaid is a different party to the one you have


always imagined. Yeah, absolutely. Certainly she's going to look to


take Labour on from the left and that's got Labour licking their


lips. Everybody I have spoken to in Labour since Leanne Wood's election


has said bring it on, that they don't think that Plaid can outleft


them, they don't think they can take them in the valleys again,


that Leanne Wood herself has tried to gain a personal vote in the


valleys in elections and has failed, has had to go in the Assembly on


the list. Labour are looking forward to taking Plaid on in the


valleys. I think as well Carwyn Jones might well turn out to be


lucky Carwyn because it's always possible that a Labour AM would


defect to Plaid and therefore give him the majority. Defect to Labour.


Or might become shall we say independent of Plaid and support


Labour in certain circumstances or in certain ways. So that option or


possibility remains open, indeed I think it's getting stronger. Do you


share that view? I think it's a slightly mischiefous view. I can't


personally see that happening in the future. There is a slight


problem for Carwyn Jones, I think this limits his options in terms of


future deals. We saw in the run-up to the budget vote at the end of


last year he was able to cleverly play off Plaid and the Lib Dems and


ultimately agree a deal with the Lib Dems because it was cheaper.


Next time around when he comes to negotiate he is going to be


knocking on Kirsty Williams' door first, because if he says to Leanne


Wood what do you want to support this budget she's going to be


asking for things he can't deliver. Constitutional things. The chance


of a Plaid Labour coalition before the next election, any likelihood


of that happening do you think? think it's remote, certainly far


less likely than it was before. The Welsh Lib Dems, of course, are


caught between a rock and a hard place because of the party's


relationship with the Tories in London. And indeed the Lib Dems in


Wales must be seriously worried about getting sidelined in this


chamber. We shall see what happens. Thank you very much. Now let's go


over to our political editor Betsan Powys here. Let's go back to the


Budget and particularly regional pay. It's coming closer. Do we


understand how it might work at the moment? Regional, local, that sort


of thing? Regional and local not quite. The Treasury pointing out we


should be using the term local, rather than regional. There's


something I have seen that what local would mean. If you accept the


word region for Wales, that's where it seems to be. I think it was much


clearer after yesterday that the Government are going for it and


want to go for it and how that might work, through Government


departments and so on, that once deals come to an end you will be


able to negotiate another more local deal. And a Welsh


Conservative MPs who are really very, very nervous about it. They


look at their own seats and go to meetings with more gung-ho


colleagues in Westminster and have you seen my seat, would you call


that affluent, I wouldn't. And you go down this route, the words were


used potentially very dangerous. struggle to find either a


Conservative or a Liberal Democrat MP in Wales who can come on the


programme to defend it today, although perhaps it's because they


were busy, far be it it for me to speculate. Are we likely to see


some civil civil service departments pressing ahead with


this irrespective of the view which isn't reporting until July? Yes,


they've been given the go ahead to do that and the DVLA, Jobcentres


and so on, that's now what they're facing and that's why those


Conservative MPs are nervous because there will be a tester of -


- taster of this and they know to sell that with the arcment we are


all in this together is not going to be easy. But last night you


heard Jonathan Edwards talking in terms of of let's devolve, Labour


pick up on this and say Plaid are in favour of some sort of local or


regional pay. That's the dilemma for the Labour Government now.


Because even if they did devolve it surely they would struggle to find


money to top stphup. They would and it was the only second and and


split second I thought in the interview with Owen Smith where he


thought for a second how he was going to respond. There are


difficulties here for everybody. Kirsty Williams in Cardiff making


it very clear, no matter what her party thinks in Westminster, she


think it is would be bad for Wales and could cause real, real problems.


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