05/07/2012 Dragon's Eye


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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


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