28/06/2012 Dragon's Eye

Is the Welsh economy suffering in the name of ideology? This is

Good evening. Welsh businesses are missing out on over �2 billion

worth of public contracts because of the Welsh Government's

ideological antipathy and opposition, according to the

employers organisation the CBI. It's told Dragon's Eye that

businesses and services are sufferinging -- suffering because

the Welsh Government is against using private companies to deliver

public services. Arwyn Jones reports. Bong the Welsh Government

and Councils spend billions every year and it goes on all kinds of

services and goods, from furniture to litter collecting. It has to be

paid for and it's big business worth nearly �4.5 billion every

year. Some of those services are provided by councils in Wales, for

example this recycling facility. What if businesses could over the

same service? Perhaps offer it more cheaply, perhaps even offer a

better service. At the moment around half of the money gez to

businesses around Wales. The remainder stays in the public

sector or goes to companies from elsewhere. The group representing

business leaders in Wales the CBI says companies here are missing out

on a key injection of cash, which could help them to grow their

businesses, create jobs and drive the economy forward. They think the

reason lies with the Welsh Government's political stance.

jort of our members would feel that it's ideological and political. A

few businesses would say there is an antipathy and opposition to

using the private sector to deliver public services near Wales. That's

probably the overriding factor for many. They say it's also harming

public services. In many areas it could be delivered better, but I

think people aren't prepared to sit down and find out how it could be

delivered better, saving money, providing better service, because

certain parts are just ideologically opposed to it.

England, the UK Government want to see more of an open-door policy

towards allowing businesses to deliver public services. It's

something which should now come to here, according to the Secretary of

State for Wales. I think the CBI has a very good point on this.

There's no doubt about it, the ideology and the stated policy of

the Welsh Government is to deliver through the state as a machine.

That's such an old fashioned idea. It was interesting to read what the

Prime Minister said the other day, when he was talking about opening

up public services, which is what the UK Government wants to do.

it isn't just about accusations of ideology. Others complain of too

much bureaucracy in Wales. This company employs almost all workers

locally. They've decided that Scotland is a more lucrative market

because the process of working with the Government there is so much

easier. Up in Scotland, according to our experience, there seems to

be less delays within the planning process. That has meant that a lot

of projects are in the development stage now and actually,

construction stage now I mean, and are actually creating jobs for

companies like us. We have managed to win a number of these contracts

up there. If I was a businessman looking for a public sector

contract in Wales the easiest thing to do is go onto this website. The

Welsh Government we're told three years ago that every public sector

contract should appear here. They say they've done. That but we're

told it isn't always the case. This man made that recommendation. He

says there needs to be a change of emphasis in how the purchasing

power of the Welsh Government and Councils operate. The taxpayer

always has to get value for money. That essential. But the key

performance indicators by which procurement officials and officers

are judged often just focus on that to the detriment of wider

objectives. For example, what our research would suggest is that if

the key performance indicators, the standards by which public sector

purchasers are judged when they carry out procurement activity, if

they were different, they might purchase differently. That could

have more benefit for Wales. According to the CBI if the Welsh

Government used more Welsh companies, it could create over

20,000 jobs. That, at a time when they're dearly needed.

Jane Hutt is the Welsh Government's Finance Minister. I asked whether

the CBI's suggestion that the Welsh economy is suffering because

ministers are ideologically opposed to the private sector delivering

public services is true? Absolutely not. In fact, Emma Watkins gave a

speech on procurement, because this is a key lever to grow the economy

and said we were moving in the right direction. Clearly, our

ambition for every public Welsh pound we have that should be there

to support the economy and to support Wales-based businesses.

Statistics prove we are making a difference. Currently Welsh

business gets around 52% of the public procurement budget. Do you

have a target to raise that? We've made progress because it was down

to 35% in 2003. That's gone up to 52%. As Emma Watkins has said for

every 1% you get a thousand jobs. In the latest statistics, when you

look at SMEs and the fact that they are benefiting enormously out of

public sector awards, if we looked at some of the money I announced

with the Wales infrastructure investment plan, for example, RBED,

an important regeneration scheme, a Welsh company, won that contract,

huge opportunities for local business. I'm sure they're very

pleased about that. But the fact is Emma Watkins is on Dragon's Eye

this evening saying that according to some of her members the Welsh

Government has ideological and political opposition to that. If

that isn't true, are there robust targthaets you're aiming for to

increase that, 52% of Welsh businesses getting the public

procurement budget to a higher amount, for example,, a 10% rise

would see an extra 10,000 jobs. Thafrpblgts would be excellent.

We're working to reduce and remove those barriers to procurement.

We've done good work on that and easing the way, simplyifying the

way thaw actually bid, the pre- icalification process. -- Pre-

qualification process. She said it's the outcomes we want, getting

the businesses at the forefront. She's right when shez supporting

the Welsh Government and wrong when she's criticised it? No, this is

about working in partnership. She sits on the economic renewal

council, along with the key players and they recognise, as we do, that

procurement is a key lever. It's interesting because I've asked the

Scottish businessman to come in and review our procurement to say are

we moving fast enough? Because anything we can do, we want to make

sure that Wales-based businesses secure those contracts. On that

point, then, in your programme for government, you promised to

implement the recommendations of a report designed tone sure that

Welsh business had a better chance of getting a bigger slice of the

cake. The author of that report has told us tonight that some parts of

the tendering ro ses are simply unfit for -- process are unfit for

purpose? He played an important part in assisting us and looking at

the barriers to procurement. We now have an open doors charter. We have

got the key policy in Wales which has been heralded as very

progressive, the community benefits policy. That means that anyone who

is investing, who does win contracts has an obligation to

ensure there's a supply chain for local businesss to benefit and for

local apprentices and also for the money to be spent in Wales and that

was recognised in File on Four recreptly. All these people are

crucial to help us achieve our objectives. You have to remember,

we face a situation where we've had a 40% cut in capital budgets.

That's why this is more important, isn't it? Absolutely. We're going

to the private sector, for example, principality is coming in and

funding our Welsh housing partnership. Thank you very much.

A former employee of the All Wales Ethnic Minorities Association has

won her tribunal against the organisation and the man who used

to run it, Naz Malik. Sylvia Bobrowka claimed that Mr Malik

(arecommenda was wound up earlier this year amid allegations of

financial irregularities. I spoke to Sylvia Bobrowka's solicitor and

asked him to explain the judgment. What has been decided by the

tribunal on a unanimous basis is that the allegations that were made

and the claim made against, brought by Sylvia Bobrowka on the grounds

of harassment and victimisation have been well founded, both

against the first and second Mr Malik personally. Now today, all

you've had is the bare bones of it. The reasoning is to come later, as

is any decision about financial compensation. Is Mr Malik

personally liable for any award of financial compensation that might

come? Yes, he is, on the basis that these are allegations of

discrimination and harassment and victimisation forming part of that

discrimination. That being the case, a person can be held personally

flowing, if those allegations are made out as a result of

-- What will happen now is that Miss Bobrowka will have the

opportunity to reduce evidence to show the impact of what is had on

her and that will take the form of medical evidence. She has suffered

greatly as a result of this discriminatory behaviour. That is

partly, the issue of causation is partly an issue of medical

causation and of finding at the remedy hearing which is yet to be

fixed. So, she says this experience has actually made her ill?

Absolutely, yeah. What was her reaction to today's judgment,

briefly? I have spoken to her this morning and firstly, she wants to

make it clear and she's very appreciative of all the support

she's been given by everybody, but from her position, of course, she

welcomes this judgment and the fact it's unanimous judgment against the

respondants, both AWEMA and Mr Malik.

Thank you for joining us. As eurozone leaders prepare for

another summit on the fate of the single currency, Dragon's Eye has

discovered that the banking crisis in Spain is affecting banks in the

UK. Some Welsh public bondies have pulled out of Santander UK. That's

despite the company's assurances that their deposits are safe.

Supporters say that the councils and universities involved are being

prudent. Critics warn withdrawing funds from British banks isn't

justified and can damage public confidence in the industry. Here's

While eurozone leaders are betting on keeping the single currency

together, the markets remain sceptical about the finances of

many European nations and their banks. Spanish banks received a

bail out from eurozone funds. And now it seems the banking crisis is

having an impact closer to home. Public bodies like councils are

under pressure to cut costs while maintaining services. Shrewd

investment plays a part in helping them do that, but it is about

finding the balance between risk and reward. Local authorities in

many cases continue to use a select group of very strong foreign banks,

Australian banks, Canadian banks and suchlike, but there has been a

general movement away from European banks, particularly at the moment

with the eurozone. There was more spare change in play when some

Welsh public bodies found themselves short as Iceland's banks

collapsed with taxpayer money tied up in them. They lost �74 million

in the chaos that followed, although some has since been

returned. If you look at the situation with banks across Europe,

many are in a precarious position and it would be foolhardy to

continue to invest in them. It has perhaps got the attention of local

authorities to look at them this mince more closely. All 22 local

operatives and most Welsh universities were protected from

the media banking crisis in the eurozone by having no funds in

Spanish or Greek banks. That might suggest public bodies have become

less inclined to gamble on foreign investment. Miss University of a

nominal sum of �20,000 in a Spanish bank. Most of the European banks,

to varying degrees, particularly in bigger countries, are backed by

their governments. Those governments themselves,

particularly in the case of a country like Spain, look pretty

secured regardless of the chaos and the markets. The so I think local

authorities in Wales can be a bit more relaxed, I think, about many

of the bigger countries and the banks in those countries, and can

therefore earn slightly more of an interest rate than they will if

they put it particularly in the Treasury's Debt Management Office,

where they will be getting next to nothing. But it emerged that three

was universities and four councils had stopped doing business with

Santander a UK in recent months in response to the Spanish banking

crisis. They include Bridgend, Fincher, Gwyneth and Monmouthshire

councils, and Aberystwyth, and Swansea universities. When you that

-- one university withdrew �1 million from Santander UK in

January as the eurozone crisis deepened. Santander you cases it is

ring-fenced from its Spanish parent company, meaning it could not take

money out of Britain without the agreement of the British banking

regulator. It also says that Santander has not received and does

not need any bail out money from the eurozone nations. Public bodies,

looking at what is going on in the world, probably feel a bit of their

own anxiety. But the truth is that Santander is a well capitalised

Spanish bank, and the British arm is a separate institution anyway.

If they are being overly cautious it is no bad thing and they will be

taking decisions with advice from their treasury management

consultants. So it may be no bad thing. To try to say Santander

sounds a bit Spanish, so let's keep clear of that, really is like third

form financial planning, and not the sort of financial planning you

would expect from the major public institutions. Really, what those

institutions should be doing is taking the best of advice,

certainly acting in a very prudent way, but at the same time relying

upon the new, thermo regulatory arrangements that are in place. --

firmer. Adopting a stance that says we will not deal with this bank

because this bank seems to have a foreign name attached to it, really,

that is pretty silly stuff. Critics warn that the run on Northern Rock

in 2007, even though it was in no danger of collapsing after the

Treasury and the Bank of England backed it, shows what can happen

when the public loses confidence in a financial institution. Northern

Rock was one of the first runs on any bank would have occurred in

Great Britain for over a century. - - that had occurred. Local

authorities have a role to play and that, in the seemingly not making a

hasty withdrawals. I do not think local authorities are doing that.

They are making sound investment decisions on the back of sound,

expert advice from their treasury management consultants.

financial crisis of recent years has highlighted the importance of

confidence in fuelling the world's economy. There is a high price to

pay if conference is damaged. I am joined by Professor Patrick

Linford of Cardiff Business School and an economist. Welcome to both

of you. Do you think that the organisations involved are over-

reacting? I do not know how their deposits are distributed. It is

perfectly reasonable to diversify your holdings, make sure you are

not committed to a single institution. That said, I would be

extremely astonished his Santander were any more vulnerable than most

other commercial banks. But if Santander. It is a large

international bank and most of its profits in recent years have been

made in Mexico and Brazil. Of course, it is exposed to the

Spanish economy, but not just the Spanish economy. As has been said,

its British subsidiary, which it got by buying Abbey National, has a

large UK business. I do not see any particular reason to single out

Santander, but I do not blame people for looking at how their

deposits are positioned and making sure they are diversified and put

in safe places. Patrick Linford, what do you think? I agree with

Gerry. Santander UK is essentially a British bank. You might as well

take your money out of Barclays Bank, or RBS. I think, it is a case

of panic, really, because it is associated with a Spanish bank, and

yet it is a separate UK bank, effectively. What are your thoughts

on what this tells us about the way the eurozone crisis has been

managed to this point? In theory, the Spanish banks received a bail

out from eurozone countries, but the markets did not seem to have

much confidence in that. We are seeing another summit shortly to

try to sort things out. Our examples of people doing things

like this the automatic result of politicians' failure to get to

grips with the crisis? The bank that is being bailed out in Spain

is not Santander. It is Bankia, which is the result of an

amalgamation of lots of local lending agencies which leant

heavily on property, in cahoots with local authorities in Spain. So

it is a highly political bad bank that has been put together out of

all of these banks that made foolish loans, really, with local

authority, local political involvement. So it is a very

special situation. I do not think Santander air is particularly

implicated in this. But in terms of the wider political fall-out of an

ongoing eurozone crisis that the politicians do not seem to be

getting to grips with, are these sorts of apparently irrational

actions to be expected? Well, I'm afraid when you get a financial

crisis people often acted in jumpy ways. So I do not know whether it

is to be expected, but they are certainly not a major surprise. And

I think it is the case that European politicians have failed to

rise to this crisis and to address it at root. Therefore, I think

there is every prospect that this grumbling appendix will go on

grumbling. Of course, we did see some Welsh public bodies burned in

the Icelandic banking crash, didn't we? Has that made people over-

cautious, that experience? Yes. This Euro crisis will go on and on.

-- euro there is no resolution in sight. It is quite a different

thing putting money in European banks directly and putting it into

a branch in the UK which is essentially ring-fenced and a

separate entity. They ought to distinguish those things. Do you

agree? You have said it is sensible to diversify the portfolio and

perhaps that is all that is going on. But if the reason is a concern

about what is happening in the Spanish banks, something Santander

a UK is protected from, are you concerned at the level of financial

advice that some public bodies in Wales are getting? Yes, it sounds

as if they could do with some more professional advice. But does sound

to be the case. -- that does sound to be the case. And your thoughts?

I agree, they are misinformed. Thank you for joining us.

The Welsh Secretary and her Labour shadow are having a row over when

and how to hold a debate discussing proposed changes to Assembly

constituency boundaries. The Labour's Owen Smith was pressing

for a debate on the floor of the House of Commons Chamber. Sarah

Gillan offered him a slot at a special session of the Welsh Grand

Committee at 11:30am on Monday. He objected, she cancelled. This is

Mrs Gillan's side of the story. Well, it was cancelled because the

Labour Party objected to it when it was put in the Order Paper. And I

know the new Shadow Secretary of State is trying to make his mark

but this is really not the way to do it. It is a green paper. It is

there for discussion. It is not even a white paper and it is not

legislation. I have been perfectly open about it. I wanted to offer an

opportunity to Welsh MPs to discuss this, because I have always

supported the Welsh Grande, unlike previous Labour governments who

have tried to push it into obscurity. I have tried to hold it

on a regular basis. Frankly, the rumour came back that they were

going to boycott it and then 11:30am was too early. Frankly, a

Labour government did hold a Welsh Grand Committee at 10:30am on

Monday, but it would seem the modern Labour MP does not really

like to get up and get to work on Monday for 11:30am. After all, the

house sits on Monday to Thursday, five days a week. But it was not

worth having if they were objecting to it. Quite frankly, I cancelled

it. Owen Smith is Cheryl Gillan's Labour shadow. I asked whether this

was about a new shadow Welsh Secretary trying to make his mark.

No. It is about the fact that we have an important suggestion from

Cheryl Gillan in a white paper that we change the voting arrangements

for people in Wales. I felt that was such a significant

constitutional change that we ought to be debating it on the floor of

the House of Commons in Westminster, where ordinarily constitutional

issues would be debated, as opposed to in a Welsh Grand Committee. So I

wrote to her and suggested we do that. And she surprised us by not

even responding to my letter but simply scheduling on a Monday

morning the Welsh Grand Committee. Let me scotched this nonsense that

it is anything to do with the hour at which she had tabled the Grand

Committee. We would have debated it at any time. It was entirely to do

with the location and the prominence we felt this issue ought

to have been given. And quite why Cheryl Gillan has been reduced to

this sort of school ground name calling around what ought to be an

important issue of substance debate on the floor of the House of

Commons with the due prominence that it deserves, is beyond me.

you threaten to boycott? No. I do not know where she gets that from.

It is some room she has heard. I simply wrote a letter, released to

the press, in which I suggest that it was an important issue which

should be debated on the floor of the house in Government time. It is

a Government green paper. She says it is not legislation. It is a

curious green paper because it only has two options, one of which is

not really a realistic option, which is to reorganise the seats in

Wales but still stick with 40 and 20 and do not will arrive at a

point of it being coterminous with the boundaries marrying up with the

new parliamentary boundaries she is proposing. Or else the option she

favours - 30 seats on the list, 30 seats through PR and 30 seats

directly elected first past the post. Why does she favour that?

Because it would favour her party. It is a partisan, self-interested

proposal they brought forward. We wanted to expose that on the floor

of the house and expose the gerrymandering that is being

proposed in respect of the Assembly boundaries, as has been proposed

for the parliamentary boundaries. Could you not also be accused of

partisan political interest? A reduction in the number of

constituencies is damaging to the Labour Party specifically, isn't it,

when we talk about first past the post elected constituent MPs? This

is about protecting Labour's interests in Wales, isn't it?

think it is damaging to Wales to reduce the volume of voices from

Wales are able to speak for Wales from whichever party at Westminster.

Cutting back from 40 to 30 reduces our voice in Westminster, and

devolution was meant to amplify our voice in Britain, not reduce it.

That is something Cheryl Gillan has never understood. This is not about

parliament boundaries, it is about Assembly boundaries and the fact

that she is trying, on the quiet, to slip through Parliament

proposals to reduce the numbers of Assembly members, or to change the

nature of the election of Assembly members. Surely, in any year of

devolution, she ought to feel that, even if the letter of the law is

clear that she can do this if she wants, if she wants to drive it

through with a Tory majority in Westminster, she ought not to. She

ought to seek the consent of the National Assembly when it comes to

making changes that only relate to the National Assembly and the

people of Wales. It is a measure of her disdain for the National

Assembly that she has not sought to do that properly. Thank you.

Apologies for my slip of the tongue. I didn't mean to say Assembly

members, rather than MPs. Once, I got my own name wrong, believe it

or not! Who knows what I will do next week? Join me to find out.