05/07/2012 Dragon's Eye

Tonight, we reveal the impact of the UK Government's working tax

credit reforms on low income Welsh Good evening. This programme has

discovered that more than 9,000 low income households will be more than

�70 a week worse off following the UK Government's changes to working

tax credits. Couples earning less than �18,000 are being required to

increase their working hours from a minimum of 16 hours a week to 24 or

lose their working tax credit. That means over 9,000 families in Wales

are losing nearly �4,000 of benefits. One children's charity

has called it a calamity that plunges thousands of children deep

below the poverty line. Arwyn Jones The payment tops up their income of

people on low incomes. But the UK government has insisted that couple

with children will now have to work for 24 hours a week between them

and cannot 16 in order to qualify for working tax credits. Over 9000

Welsh families will lose over �4,000 benefits. A single parent

has to work 16 hours a week to qualify for working tax credit. The

UK government thought it was unfair that a couple between them only had

to work 16 hours a week as well. Unless a couple can find an extra

eight hours a week, they will lose their working tax credit. But can

additional work be found? We have 1.4 million people in part-time

work just now who want to be in full-time work. The number of

people in part-time work has gone up exponentially in the last few

years. It is not easy to pick up an extra eight hours a work to

continue to make it worth your while court out to work. That

fundamental issue of should have been recognised by the government.

They should have thought this through. They are going to do

damage to families and further diminished trust in the welfare

system. There is plenty of work at the Citizens Advice Bureau. They

say thousands of people are coming to them with concerns about changes

to working tax credits. People are coming to us, the message is that

people have to move back into work, but people have found that if they

are not on to be working enough hours, there will not be a

financial support for them and so they have postpone the decision to

return to work. They will be worse off on in work than on benefits.

There is a fear that it will lead to an increase in child poverty.

There will be an eight increase of 800,000 children in poverty. Wages

are stagnating, unemployment is high, prices are high. Food banks

are flourishing in these austere times. A recent report found that

42% of those who used food banks are there because of a result of

changes or delays to their benefits. When it welfare payments are cut,

people still need to buy food for themselves. We have done a survey

of people who come to us for help. About 50% of those people have said

that if they did not receive help, they would have committed a crime,

20% have said they have suffered from depression and 30% of said it

has put a strain on family relationships. The Treasury have

said they have had to take tough decisions but have done so in the

fairest way possible. Meaning that 15 times as many people game than

it loser from the recent changes. We are not looking at people having

to increase there are us. We are saying that if a single pair it has

to work 16 hours, it is not a reasonable that a couple should

only work 16 hours. Some of those families will be benefiting from

other tax changes as well. The overall picture is not as bad as

people are trying to claim. Next year, the rules will change again.

In the meantime, thousands of families in Wales will be losing

out. Arwyn Jones reporting. I'm joined

now by the Labour AM Julie Morgan and the Conservative AM Byron

Davies. Do you have any concerns over those

figures? There are concerns obviously. In at the last 10 hours,

we have been in a terrible state but almost a third of four children

in poverty. And yet you support a government reform that is likely to

put more than 9000 Welsh families just under �4,000 a year worse off.

Government have a responsibility to be equitable in the way it treats

people. I believe this is a good step forward. What do you think?

am extremely concerned about it. Children will be plunged into

poverty. It is an alarming situation. The chances of

increasing working hours are limited. You can see from all the

empty shops. It is difficult to get extra hours of in retail. I am very

concerned. On the face of it, it does seem to have, it does seem

unfair to have the same working requirement for a couple as for a

single parent. It seems to be an unfair burden on a single person.

You have to look at the circumstances under which this is

being carried out and the children that are being targeted. These

credits are targeted at children and that is why they are a success.

Independent studies all agreed that cutting a family tax credit Haas

the poorest children in society. -- harms. We spend a lot of money on

welfare. These are difficult times and we have to be equitable.

mantra has been making work pay. But this appears to be the opposite.

If you cannot raise your working level by eight hours a week, there

is a disincentive to work at all. would save quite the opposite. It

is an incentive to go out to work. I believe this will encourage

people out to work. It is unfortunate for the 9000 families

in Wales, but the fact is, according to the Treasury, vastly

more people will be better off under these reforms. But the

poorest families will be hit most. Raising the tax threshold affects

everybody. These benefits affect families with children. This is a

vulnerable group and they are coming off worst. I cannot see that

this is justified. I do think that the government must think again on

this policy. These families are suffering in other ways as well. It

is a huge concern. If Julia is so worried, why doesn't her government

do something about it in Wales? Welsh Labour government is doing a

lot about it. The Welsh Labour government has specific benefit

aimed at encouraging people to go to work. Free prescriptions. If you

are on benefit and go to work, you get free prescriptions. But it is a

universal benefit now. But it is a benefit to encourage people to go

to work because you do not lose it when you are in work. The Welsh

government is working very hard at this. Council tax benefit has been

devolved and we are going to try to do something with that. Nothing has

changed since Welsh Labour have been in power. Thank you very much

for joining us. Wales will not benefit financially

if Scotland becomes independent according to one of Wales' leading

economists, Professor Gerald Holtham. His report for the Welsh

Government found that the country was being underfunded by �300

million a year because of the Barnett formula. But he has

rejected the conventional wisdom that independence or financial

autonomy for Scotland, sometimes known as devo max or devo plus,

will inevitably mean that Wales will get more funding from

Trade statistics are not covered for Trade within a country. I do

not get the impression that the supply-chain... I think there are

six sections, but the two economies As we currently understand Scottish

independence, it would stay in the single market with the rest of the

United Kingdom, have complete freedom of movement of workers, no

capital controls and would continue to share the same currency. Given

all that, the immediate impact would not be very great at all. The

main impact would come if Scotland were able to have very different

tax rates from the rest of the country which could result in some

businesses moving to or from Scotland as a result. If Scotland

were independent, it would not receive a block grant and it would

be open to the British government to design again at the block grant

that it currently gives the devolved administrations. The

Barnett formula could go and they could adopt an needs based Formula.

In principle, that would be better for Wales. My concern is that

although that should happen, I am not clear that it will. If Scotland

is gone, the UK government could afford to give Wales a bit more

money, but why should it? If we have not been able to bargain and

no go Sirte for that in the present circumstances, it is not obvious

that we would be in a better position with Scotland Independent.

It looks as if the Scots will not vote for devolution. It makes Flint

-- sense for them to say it in a social security union with the UK

but devo plus would be very likely. It is not clear to me that Wales

can follow Scotland very far down the path. The commission I sat on

argued for income tax devolution for Wales and that could work.

Wales has not got the resources to go very far in the direction of

fiscal autonomy because we are running a public sector deficit

which is 25% of the total output of the GDP of the country. It is a

huge deficit. We're running a deficit per head three times the

size of the English or Scottish deficit. Therefore, we will need a

block grant for the foreseeable At the present time, every man,

woman and child in Scotland is borrowing �2,000 a year. As a

result of the recession and the big deficit the UK is running. In Wales,

every man, woman and child is borrowing �6,000 a year. That is

the measure of how much we care the economy is that the Scots economy.

It is reasonable for people in Wales to want to get their hands on

more levers of policy, more ways to stimulate the economy and get it to

grow. Until we succeed in rebuilding the economy, our ability

to have a lot of autonomy will be restricted. He who pays the piper,

will call the tune. Gerald Holtham. Joining me now is the economist and

Plaid Cymru advisor Eurfyl ap Gwilym and the political

commentator David Torrence. Welcome. David, your thoughts on the very

stark contrasts that he was making between the economies of Scotland

and Wales and perhaps the ability of Scotland's to go further in

terms of independence or fiscal autonomy. Yes, that is a

fundamental point. The analysis shows Scotland outside of London is

the wealthiest part of the UK. And clearly that is not the case with

Wales. The piece was right to point towards devo plus which is in

essence the devolution of income tax powers as the most likely

outcome of all of this. In Scotland, income tax is a bit of a red

herring. It has half been devolved all ready by the Scotland Act and

the SNP and no other party are interested in that. They see it as

off-limits. So, that is the most likely outcome but even then it

will not change. What are your thoughts on the contrast but he was

making between the two economies? There is no doubt, as pointed out,

Scotland GDP per capita which is a good measure of economic well-being

and wealth generation, Scotland has Greywell and is doing well and

Wales as poorly. That is what we need to pick up on what he said

towards the end of the report, the real challenge is to say we have

not been doing well for 20 or 30 years, some of the reasons we

understand, and it is disappointing successive Welsh governments have

not done further analysis. We will be producing more analysis and I

would like to see Wales, not a party political thing, people

getting together and say how well we saw the issue out, how will we

overcome the weaknesses are going forward because we need to,

whatever your political view we want Wales to be more successful

economically and socially and that means wrestling with these issues.

I wonder what you make of the knock-on argument for Welsh

nationalism because Gerry Holtham went on when he gave evidence to a

House of Lords committee to say any argument made by Plaid Cymru did

Wales could pay its own weight was obviously preposterous --

preposterous. I am a great admirer of Gerry Holtham. I watched his

performance and I found him despondent. Perhaps he has spent

some months working closely with the Welsh government but certainly

in the short term we have major challenges. There's no doubt. What

I would like to see is how well we address these issues and I think

increasingly we want to look to what we can do in Wales. Awash

government does have a 15 billion padlock ranch which is substantial

sum. How will we make better use of that -- the Welsh government. In

essence, we need more people in work and people in work been better

paid. We want the private sector companies... That is what has

caused the drop in the profitability of world business.

David Torrence, talking about the reform of the Barnett formula air

which is something that all political parties in Wales would

love to see. Scotland does pretty well out of it and has been

considered the block to any reform. Gerry Holtham suggests even if the

block was rebuked he was not optimistic about the possibilities

for reform. The Rhys a certain reluctance in Westminster to open -

- there is a reluctance to open the Pandora's box. You're quite right

again, you look at the statistics and Scotland as well out of the

Barnett formula. It never comes under serious attack. I disagree

with it Gerry slightly, if Scotland was removed from that and the block

grant is over 30 million, I am sure it would be used as a pretext for a

shake-up. The Barnett formula in physical terms is unpopular in

Wales and in the North of England and always has been since its

introduction. I am sure David Cameron would come under pressure

to do something about it. Coming back to the main points, you just

have to look at the opinion polls, Scottish independence does not seem

inevitable and the SNP long ago stopped arguing for full

sovereignty. Briefly, what do you think, is reform possible with the

Scottish block out the way? It will be quite difficult. The Treasury

has been in Cowes at Trent. The parties in Wales want to reform it

but the Labour Party in the UK has not come out against the bonnet for

Miller and it defended it. Therefore, the question is Wales

has few negotiating cards, we want to focus more on what we -- the

authority and what can we do with that rather than the current tactic

of doing a megaphone diplomacy down the M4. Thank you. In the biggest

overhaul of the Army in decades, it's been announced today that four

infantry battalions are to be abolished, including Second

Battalion, The Royal Welsh. In a statement to the Commons, the

Defence Secretary Philip Hammond confirmed that the regular army is

to be cut from 102,000 to 82,000 by the end of the decade - its lowest

level since the Napoleonic Wars. Earlier I spoke to military expert

Major Alan Davies and asked him how he thinks Wales has fared in

today's announcement. Some will think we have done all

right because the Queen should dunes guard survived and only one

battalion has gone. That actually we have lost another regiment in

the Royal Artillery. If you total up the major units it is two from

five. 40% in Wales is not good news. Especially when you compare it to

Scotland which has survived almost unscathed. There was a botched job

to save a company of guards for Holyrood and Edinburgh Castle. With

their record of recruiting compared to a good record for Welsh

regiments in general I think we are hard done by. There was a

suggestion that political considerations are coming into play

with Scotland because the government did not want to give

those Ardwick for the yes vote for the referendum extra ammunition.

Yes, if you cut the record of recruitment, going back over

previous defence reviews and the suggestions the Scottish regiments

going because they cannot make up the numbers required, it is a

regular occurrence. In the 70s and 80s, the Argylls were under threat

but survive. There is nothing new in the threat. What has happened is

the numbers have been done. A political intervention has happened

to ensure there is minimal impact in Scotland, to make sure the

nationalists do not have any arguments a throwback to

Westminster. Explain to last why this is so important to people, why

are there such emotional attachments to battalions? It is

very strange to understand. Sometimes it is difficult to

understand even if you are part of it. It is history, culture,

atmosphere, many people together. Italians that trace histories back

hundreds of years, the Royal Welsh tracing the history back over 400

years. There are things that have happened in that time bringing

people together, heroic moments, moments of absolute Fein in Wales

the story of Gorkss drift and the Victoria Cross. These things unite

people. Soldiers do not fight for Queen, or country, they do not

fight for government. They fight for their mates in the regiment and

their Italian and the guys alongside them. Those bombs come

from a whole set of very subjective elements, the badge, the name, the

history means such a lot. What you think this means for the future

capability of our armed forces because budget are extremely tight

and the cloth has to be cut. cloth has to be cut. We have to

make savings and we cannot afford it. Realistically we have 20% fewer

military plant than this morning, and we have no suggestion as to

what cuts they might be in terms of expectations of the military. If we

look at the rest of the world, there is no certainty we will leave

Afghanistan in 2014, we do not know what will happen in Syria and

Turkey. The threat to the Falkland Islands exists. These are the known

names and there are those unknown events that are yet to be grasping

our attention. We do not know what we will face but we will not be

able to fight in Afghanistan and anyone else at the same time with

an army of 82,000. I do not want us to go to war but there are times

when the need to be able to go. We do not have a plan for the right

number to project our power corrupted. A thank you. Our

political editor Betsan Powys is here. Firstly, the Green Paper UK

government has published on changing Assembly boundaries, there

seems to be a tiff over whether their prime minister said anything

to the first minister. Precisely, the bottom line is they cannot both

be right. There is wriggle room around recollection but I did David

Cameron said to Carwyn Jones the changes to the arrangements would

not be decided without the agreement of the Assembly or he

didn't. David Jones got his feet and said David Cameron did not give

the assurance to the first minister, it was around this or that but the

decision would not be taken by the Assembly. That is not what Carwyn

Jones said. He expects the decision to be taken in London but with the

blessing of Cardiff. David James then said what did Carwyn Jones say

and the notes do not tally with what he said. Labour MPs say the

notes are taken by officials who do not understand the nuances around

devolution. The bottom line is we are not sure who said what to whom

but the respect agenda is looking battered and scrappy. Talking about

discussion about precision in language, there has been a hoo-ha

about the comments about Trident and whether a base is welcome in

Milford Haven. A huge argument. We were discussing how Carwyn Jones

was under little pressure despite not having a majority at his own

words Arad's Trident and is in backbench and put him under real

pressure. Reminding him Labour MPs are not impressed, but it is the