22/03/2012 Dragon's Eye

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.