:00:38. > :00:46.Morning folks. Welcome to the Sunday Politics. George Osborne's fifth
:00:47. > :00:48.Budget will offer more tax relief for the lower paid but not for
:00:49. > :00:50.middle income earners being thrust into the 40p tax bracket. That's our
:00:51. > :00:55.top story. Ed Balls says millions of people
:00:56. > :00:58.aren't feeling any benefit from the recovery. We'll discuss the economy
:00:59. > :01:05.with big political beasts from Labour, the Conservatives, and the
:01:06. > :01:08.Lib Dems. Now that Ed Miliband has effectively ruled out an in/out EU
:01:09. > :01:10.referendum, how does UKIP deal with Tory claims that a vote for UKIP
:01:11. > :01:16.Later in the programme... I've been means
:01:17. > :01:18.Later in the programme... I've been talking to the UK Government
:01:19. > :01:21.minister responsible for welfare reform and can the Budget benefit
:01:22. > :01:22.the economic green shoots of recovery in Wales.
:01:23. > :01:24.the economic green shoots of restoring confidence in the safety
:01:25. > :01:26.of cycling. The three areas of London getting a cash boost to try
:01:27. > :01:38.something different. And with me as always our top
:01:39. > :01:40.political panel - Nick Watt, Helen Lewis and Janan Ganesh. They'll be
:01:41. > :01:45.tweeting their thoughts using the hashtag #bbcsp throughout the
:01:46. > :01:48.programme. So, just three months after his last major financial
:01:49. > :01:53.statement, George Osborne will be at the despatch box again on Wednesday,
:01:54. > :01:56.delivering his 2014 Budget. The Chancellor has already previewed his
:01:57. > :02:07.own speech, pledging to build what he calls a "resilient economy". The
:02:08. > :02:10.message I will give in the Budget is the economic plan is working but the
:02:11. > :02:14.job is far from done. We need to build resilient economy which means
:02:15. > :02:18.addressing the long-term weaknesses in Britain that we don't export
:02:19. > :02:21.enough, invest enough, build enough, make enough. Those are the things I
:02:22. > :02:25.will address because we want Britain to earn its way in the world. George
:02:26. > :02:28.Osborne's opposite number, Ed Balls, has also been talking ahead of the
:02:29. > :02:31.Budget. He says not everyone is feeling the benefit of the economic
:02:32. > :02:38.recovery, and again attacked the Government's decision to reduce the
:02:39. > :02:42.top rate of tax from 50 to 45%. George Osborne is only ever tough
:02:43. > :02:45.when he's having a go at the week and the voiceless. Labour is willing
:02:46. > :02:49.to face up to people on the highest incomes and say, I'm sorry,
:02:50. > :02:55.justifying a big tax cut at this time is not fair. We will take away
:02:56. > :02:59.the winter allowance from the richer pensioners, and I think that's the
:03:00. > :03:04.right thing to do. George Osborne might agree, but he's not allowed to
:03:05. > :03:07.say so. That was the Chancellor and the shadow chancellor. Janan, it
:03:08. > :03:11.seems like we are in a race against time. No one argues that the
:03:12. > :03:15.recovery is not under way, in fact it looks quite strong after a long
:03:16. > :03:21.wait, but will it feed through to the living standards of ordinary
:03:22. > :03:25.people in time for the May election? They only have 14 months to do it.
:03:26. > :03:29.The big economic variable is business investment. Even during the
:03:30. > :03:34.downturn, businesses hoarded a lot of cash. The question is, are they
:03:35. > :03:38.confident enough to release that into investment and wages? Taking on
:03:39. > :03:41.new people, giving them higher pay settlements. That could make the
:03:42. > :03:48.difference and the country will feel more prosperous and this time next
:03:49. > :03:52.year. But come to think of it, it strikes me, that how anticipated it
:03:53. > :03:55.is, it's the least talked about Budget for many years. I think that
:03:56. > :04:00.is because the economy has settled down a bit, but also because people
:04:01. > :04:04.have got used to the idea that there is no such thing as a giveaway.
:04:05. > :04:09.Anything that is a tax cut will be taken away as a tax rise or spending
:04:10. > :04:12.cut. That's true during the good times but during fiscal
:04:13. > :04:18.consolidation, it's avoidable. -- unavoidable. There is a plus and
:04:19. > :04:23.minus for the Conservatives here. 49% of people think the government
:04:24. > :04:25.is on roughly the right course, but only 16% think that their financial
:04:26. > :04:30.circumstances will improve this year. It will be a tough one for the
:04:31. > :04:36.Labour Party to respond to. I agree with Janan. Everyone seems bored
:04:37. > :04:42.with the run-up to the Budget. The front page of the Sunday Times was
:04:43. > :04:46.about fox hunting, the front page of the Sunday Telegraph was about EU
:04:47. > :04:51.renegotiation. Maybe we are saying this because there have not been
:04:52. > :04:56.many leaks. We have got used to them, and most of the George Osborne
:04:57. > :05:01.chat on Twitter was about how long his tie was. Freakishly long. I
:05:02. > :05:08.wouldn't dare to speculate why. Anything we should read into that? I
:05:09. > :05:15.don't know. For a long while there was no recovery, then it was it is a
:05:16. > :05:17.weak recovery, and now, all right, it's strong but not reaching
:05:18. > :05:23.everyone in the country. That is where we are in the debate. That's
:05:24. > :05:29.right, and the Conservative MPs are so anxious and they are making
:05:30. > :05:34.George Osborne announcing the rays in the personal allowance will go
:05:35. > :05:42.up, saying it might go up to 10,750 from next year, and Conservative MPs
:05:43. > :05:45.say that that's OK but we need to think about the middle voters.
:05:46. > :05:48.People are saying the economy is recovering but no one is feeling it
:05:49. > :05:53.in their pocket. These are people snagged in at a 40p tax rate. The
:05:54. > :05:58.Tories are saying these are our people and we have to get to them.
:05:59. > :06:04.He has given the Lib Dems more than they could have hoped for on raising
:06:05. > :06:08.the threshold. Why is he not saying we have done a bit for you, now we
:06:09. > :06:15.have to look after our people and get some of these people out of that
:06:16. > :06:17.40% bracket? Partly because the Lib Dems have asked for it so
:06:18. > :06:21.insistently behind-the-scenes. Somebody from the Treasury this week
:06:22. > :06:24.told me that these debates behind the scenes between the Lib Dems and
:06:25. > :06:28.Tories are incredibly tenacious and get more so every year. The Lib Dems
:06:29. > :06:33.have been insistent about going further on the threshold. The second
:06:34. > :06:39.reason is that the Tories think the issue can work for them in the next
:06:40. > :06:43.election. They can take the credit. If they enthusiastically going to
:06:44. > :06:47.?12,000 and make it a manifesto pledge, they can claim ownership of
:06:48. > :06:52.the policy. The Liberal Democrats want to take it to 12,500, which
:06:53. > :06:56.means you are getting into minimum wage territory. It's incredibly
:06:57. > :07:01.expensive and the Tories are saying that maybe you would be looking at
:07:02. > :07:06.the 40p rate. The Tories have played as well. There have been authorised
:07:07. > :07:08.briefings about the 40p rate, and Cameron and Osborne have said that
:07:09. > :07:12.their priority was helping the lowest paid which is a useful
:07:13. > :07:17.statement to make and it appeals to the UKIP voters who are the
:07:18. > :07:22.blue-collar workers. And we are right, the economy will determine
:07:23. > :07:26.the next election? You assume so. It was ever that is. It didn't in 1992
:07:27. > :07:35.or 1987. It did in 1992. Ed Miliband's announcement last week
:07:36. > :07:38.that a Labour government would not hold a referendum on Europe unless
:07:39. > :07:40.there's another transfer of powers from Britain to Brussels has
:07:41. > :07:46.certainly clarified matters. UKIP say it just shows the mainstream
:07:47. > :07:49.parties can't be trusted. The Conservatives think it means UKIP
:07:50. > :07:52.voters might now flock back to them as the only realistic chance of
:07:53. > :07:55.securing a referendum. Giles Dilnot reports.
:07:56. > :07:59.When it comes to Europe and Britain's relation to it, the
:08:00. > :08:04.question is whether the answer is answered by a question. To be in or
:08:05. > :08:07.not to be in, that is the question, and our politicians have seemed less
:08:08. > :08:10.interested in question itself but whether they want to let us answer
:08:11. > :08:23.it. Labour clarified their position last week. There will be no transfer
:08:24. > :08:26.of powers without an in out referendum, without a clear choice
:08:27. > :08:32.as to whether Britain will stay in the EU. That seems yes to a
:08:33. > :08:35.referendum, but hold on. I believe it is unlikely that this lock will
:08:36. > :08:39.be used in the next Parliament. So that's a no. The Conservatives say
:08:40. > :08:48.yes to asking, in 2017, if re-elected, but haven't always. In
:08:49. > :08:51.2011, 81 Tory MPs defied the PM by voting for a referendum on EU
:08:52. > :08:54.membership: the largest rebellion against a Tory prime minister over
:08:55. > :09:05.Europe. Prompted by a petition from over 100,000 members of the public.
:09:06. > :09:07.The wrong question at the wrong time said the Foreign Secretary of a
:09:08. > :09:10.coalition Government including selfie-conciously-pro European Lib
:09:11. > :09:13.Dems, who had a referendum pledge in their 2010 manifesto, but only in
:09:14. > :09:15.certain circumstances. So we have the newspapers, and the public
:09:16. > :09:18.meeting leaflets. UKIP have always wanted the question put regardless.
:09:19. > :09:27.But Labour's new position may change things and The Conservatives think
:09:28. > :09:33.so. I think it does, because, you know, we are saying very clearly,
:09:34. > :09:38.like UKIP, we want a referendum, but only a Conservative government can
:09:39. > :09:43.deliver it because most suffer largest would say it is possible in
:09:44. > :09:52.the first past the post system to have a UKIP government --
:09:53. > :09:59.sophologists. And then it's easy for as to say that if a UKIP vote lets
:10:00. > :10:05.in a Conservative government, then they won't hold a referendum. UKIP
:10:06. > :10:08.seem undaunted by the clarifications of the other parties, campaigning
:10:09. > :10:11.like the rest but with a "tell it how it is, just saying what you're
:10:12. > :10:18.thinking, we aren't like them" attitude. They seem more worried
:10:19. > :10:22.about us and what we want, and I don't see that in the other parties.
:10:23. > :10:29.In parts of the UK, like South Essex, it's a message they think is
:10:30. > :10:32.working. They are taking the voters for granted again and people have
:10:33. > :10:39.had enough. People are angry, they see people saying they will get a
:10:40. > :10:44.vote on the European Union, but then it just comes down the road. They
:10:45. > :10:50.were quick to capitalise on the announcements, saying only the
:10:51. > :10:56.Conservatives will give you say, so does it change things? Not really.
:10:57. > :10:59.We have been talking about a referendum and having a debate on
:11:00. > :11:03.the European Union for years, and the other parties are playing catch
:11:04. > :11:08.up. They have a trust issue. Nobody trusts them on the European Union
:11:09. > :11:11.and that is why people come to us. Who the average UKIP voter is, or
:11:12. > :11:13.how they voted before is complicated, and what dent they
:11:14. > :11:16.might make on Conservative and Labour votes in 2015 is trickier
:11:17. > :11:24.still, but someone's been crunching the numbers anyway. We reckon it is
:11:25. > :11:28.between 25 and 30% of the electorate broadly share the UKIP motivation,
:11:29. > :11:32.so to top out at that level would be difficult. That's an awful lot of
:11:33. > :11:36.voters, but it's not the majority, and this is the reason why the main
:11:37. > :11:40.parties can't afford to just openly appealed to the UKIP electorate too
:11:41. > :11:45.hard because the elections are won and lost amongst the other 70%, the
:11:46. > :11:50.middle-class, the graduate, the younger, ethnic minorities. An
:11:51. > :11:54.appeal to the values of UKIP voters will alienate some of the other
:11:55. > :11:57.groups, and they are arguably more significant in winning the election.
:11:58. > :12:00.Whatever, the numbers UKIPers seem doggedly determined to dig away at
:12:01. > :12:03.any support the other parties have previously enjoyed.
:12:04. > :12:06.Giles Dilnot reporting. UKIP's leader, Nigel Farage, joins me now
:12:07. > :12:23.for the Sunday Interview. Nigel Farage, welcome back. Good
:12:24. > :12:26.morning. So the Labour Party has shot a fox. If Ed Miliband is the
:12:27. > :12:31.next by Minister, there will not be a referendum customer there's a long
:12:32. > :12:35.way between now and the next election, and Conservative party
:12:36. > :12:38.jobs and changes. We had a cast-iron guarantee of a referendum from
:12:39. > :12:42.camera, then he three line whip people to vote against it, and now
:12:43. > :12:45.they are for it. What the Labour Party has done is open up a huge
:12:46. > :12:49.blank to us, and that is what we will go for in the European
:12:50. > :12:53.elections this coming year in May. I think there is a very strong chance
:12:54. > :12:56.that Labour will match the Conservative pledge by the next
:12:57. > :13:01.general election. There may be, but at the moment he has ruled it out,
:13:02. > :13:04.and if he does not change his mind and goes into the election with the
:13:05. > :13:11.policy as it is, the only chance of a referendum is a Tory government.
:13:12. > :13:15.If you think the Tories will form a majority, which I think is unlikely.
:13:16. > :13:19.Remember, two thirds of our voters would never vote Conservative
:13:20. > :13:23.anyway. There is still this line of questioning that assumes UKIP voters
:13:24. > :13:27.are middle-class Tories. We have some voters like that, but most of
:13:28. > :13:32.them are coming to us from Labour, some from the Lib Dems and a lot of
:13:33. > :13:39.nonvoters. But it come the election you failed to change Mr Miliband's
:13:40. > :13:42.line, I repeat, the only chance of a referendum, if you want a
:13:43. > :13:46.referendum, if that is what matters, and the polls suggest it doesn't
:13:47. > :13:49.matter to that many people, but if that is what matters, the only way
:13:50. > :13:54.you can get one is to vote Conservative. No, because you have a
:13:55. > :13:58.situation in key marginals, especially where all three parties
:13:59. > :14:01.are getting a good share, where we will see, and this depends a lot on
:14:02. > :14:08.the local elections and the European elections, there are target
:14:09. > :14:12.constituencies where UKIP has a reasonably good chance of winning a
:14:13. > :14:18.seat, and that will change the agenda. Every vote for UKIP makes a
:14:19. > :14:21.Tory government less likely. Arab voters are not Tory. Only a third of
:14:22. > :14:28.the UKIP boat comes from the Conservative party -- our voters are
:14:29. > :14:32.not Tory. -- the UKIP vote. It was mentioned earlier, about blue-collar
:14:33. > :14:35.voters. We pick up far more Labour Party and nonvoters than
:14:36. > :14:39.conservatives. On the balance of what the effect of the UKIP boat
:14:40. > :14:42.is, the Tories should worry about us, they should worry about the fact
:14:43. > :14:48.they have lost faith with their own electorate. Even if there is a
:14:49. > :14:51.minority Ed Miliband government, it means no referendum. Labour and the
:14:52. > :14:56.Liberal Democrats are now at one on the matter. The next election is in
:14:57. > :15:00.a few weeks time, the European elections. What happens in those
:15:01. > :15:03.elections will likely change the party stands and position on a
:15:04. > :15:08.referendum. The fact that Ed Miliband has said this means, for
:15:09. > :15:11.us, our big target on the 22nd of May will be the Labour voters in the
:15:12. > :15:16.Midlands and northern cities, and if we do hammer into that boat and we
:15:17. > :15:25.are able to beat Labour on the day, there's a good chance of their
:15:26. > :15:32.policy changing. One poll this morning suggests Labour is close to
:15:33. > :15:39.you at 28, the Conservatives down at 21, the Lib Dems down at eight. You
:15:40. > :15:43.are taking votes from the Conservatives and the Liberal
:15:44. > :15:50.Democrats. We are certainly taking votes from the Lib Dems but that is
:15:51. > :15:56.comparing the poll with one year ago when I don't think most people knew
:15:57. > :16:00.what the question really was. You seem to be in an impossible position
:16:01. > :16:06.because the better you do in a general election, the less chance
:16:07. > :16:12.there will be a referendum by 2020. No, look at the numbers. Only a
:16:13. > :16:17.third of our voters are Conservatives. When we have polled
:16:18. > :16:21.voters that have come to us, we asked them if there was no UKIP
:16:22. > :16:27.candidate who would you vote for, less than one in five said
:16:28. > :16:32.Conservative. Less than one in five UKIP voters would be tempted to vote
:16:33. > :16:37.Conservative under any circumstances so the arithmetic does not suggest
:16:38. > :16:40.we are the Conservative problem, it suggests we are hurting all of the
:16:41. > :16:45.parties and the reason the Tories are in trouble is because they have
:16:46. > :16:52.lost their traditional base. Why do you think Nick Clegg is debating
:16:53. > :17:00.Europe? I think they are in trouble, at 8% they could be wiped
:17:01. > :17:05.out, they could go from 12 to nothing and I think it is a chance
:17:06. > :17:12.for Nick Clegg to raise their profile. They are fringe party with
:17:13. > :17:17.respect to this contest so I see why he wants to do it. One of our big
:17:18. > :17:21.criticisms is that we have not been able to have a full debate on
:17:22. > :17:26.national television on the alternatives of the European Union
:17:27. > :17:39.so I am looking forward to it. How are you preparing? I think you can
:17:40. > :17:45.be over scripted with these things. Are you not doing mock debates? No,
:17:46. > :17:49.I am checking my facts and figures and making sure that I can show the
:17:50. > :17:55.British people that in terms of jobs, we would be far better off not
:17:56. > :18:00.being within the European Union, not being within its rule book, not
:18:01. > :18:06.suffering from some of the green taxes they are putting on the
:18:07. > :18:11.manufacturing industry. The idea that 3 million jobs are at risk, I
:18:12. > :18:17.want to show why that is nonsense. Who do you think is playing you in
:18:18. > :18:25.their mock debates? They probably went to the pub and found someone!
:18:26. > :18:29.We will see. You have promised to do whatever it takes to fund your
:18:30. > :18:35.European election campaign, how much has been given so far? Just give it
:18:36. > :18:42.a few weeks and you will see what Paul is planning to do. He has made
:18:43. > :18:50.a substantial investment in the campaign already. How much? I'm not
:18:51. > :18:54.answering that for now. We are well on our way to a properly funded
:18:55. > :19:01.campaign and our big target will be the big cities and the working vote
:19:02. > :19:05.in those communities. Your deputy chairman Neil Hamilton is another
:19:06. > :19:11.former Tory, he says so far we haven't seen the colour of his
:19:12. > :19:17.money. Exactly two weeks ago, and things have changed since then. Mr
:19:18. > :19:27.Sykes has written a cheque since then? Yes. This morning's papers
:19:28. > :19:34.saying you will be asking MEPs to contribute ?50,000 each, is that
:19:35. > :19:40.true? Over the next five years, yes. Not for the European campaign. So
:19:41. > :19:46.lack of money will not be an excuse. We will have a properly funded
:19:47. > :19:50.campaign. How we raise the kind of money needed to fund the general
:19:51. > :20:00.election afterwards is another question. What is UKIP's policy on
:20:01. > :20:05.paying family members? We don't encourage it and I didn't employ any
:20:06. > :20:12.family member for years. My wife ended up doing the job and paid for
:20:13. > :20:19.the first seven years of my job. She is paid now? Until May, then she
:20:20. > :20:26.comes off the payroll am which leaves me with a huge problem. In
:20:27. > :20:32.2004 you said, UKIP MEPs will not employ wives and there will be no
:20:33. > :20:36.exceptions. An exception was made because I became leader of the
:20:37. > :20:40.National party as well as a leader of the group in European
:20:41. > :20:45.Parliament. Things do change in life, and you can criticise me for
:20:46. > :20:50.whatever you like, but I cannot be criticised for not having a big
:20:51. > :20:59.enough workload. No, but you didn't employ your wife when you had told
:21:00. > :21:02.others not to do it your party. Nobody else in my party has a big
:21:03. > :21:08.job in Europe and the UK. We made the exception for this because of
:21:09. > :21:12.very unusual circumstances. It also looks like there was a monetary
:21:13. > :21:19.calculation. Listen to this clip from a BBC documentary in 2000. It
:21:20. > :21:25.is a good job. I worked it out because so much of what you get is
:21:26. > :21:29.after tax that if you used the secretarial allowances to pay your
:21:30. > :21:37.wife on top of the other games you can play, I reckon this job in
:21:38. > :21:40.Stirling term is over a quarter of ?1 million a year. That is what you
:21:41. > :21:46.would need to earn working for Goldman Sachs or someone like that.
:21:47. > :21:49.I agree with that. More importantly the way you really make money in the
:21:50. > :21:55.European Parliament is being their five days a week, because you sign
:21:56. > :22:00.in every day, you get 300 euros every day, and that is how people
:22:01. > :22:05.maxed out. The criticism of me is that I am not there enough so
:22:06. > :22:09.whatever good or bad I have done in the European Parliament, financial
:22:10. > :22:14.gain has not been one of the benefits. There have been
:22:15. > :22:19.allegations of you also employing a former mistress on the same European
:22:20. > :22:25.Parliamentary allowance, you deny that? I am very upset with the BBC
:22:26. > :22:29.coverage of this. The ten o'clock news run this as a story without
:22:30. > :22:34.explaining that that allegation was made using Parliamentary privilege
:22:35. > :22:41.by somebody on bail facing serious fraud charges. I thought that was
:22:42. > :22:50.pretty poor. You have a chance to do that and you deny you have employed
:22:51. > :22:54.a former mistress? Yes, but if you look at many of the things said over
:22:55. > :22:58.the last week, I think it is becoming pretty clear to voters that
:22:59. > :23:05.the establishment are becoming terrified of UKIP and they will use
:23:06. > :23:12.anything they can find to do us down in public. Is an MEP employs his
:23:13. > :23:17.wife and his former mistress, that would be resigning matter, wouldn't
:23:18. > :23:22.it? Yes, particularly if the assumption was that money was being
:23:23. > :23:29.taped for work but was not being done. Who do you think is behind
:23:30. > :23:35.these stories? It is all about negative, it is all about attacks,
:23:36. > :23:39.but I don't think it is actually going to work because so much of
:23:40. > :23:43.what has been said in the last week is nonsense. A reputable daily
:23:44. > :23:48.newspaper said I shouldn't be trusted because I had stored six
:23:49. > :23:52.times for the Conservative party, I have never even stored in a local
:23:53. > :23:58.council election. I think if you keep kicking an underdog, it will
:23:59. > :24:08.make the British people rally around us. Is it the Conservatives? Yes,
:24:09. > :24:14.and the idea that all of our voters are retired colonels is simply not
:24:15. > :24:23.true. We get some voters from the Labour side as well. Would you
:24:24. > :24:29.consider standing in a Labour seat if you are so sure you are getting
:24:30. > :24:37.Labour votes? Yes, but the key for UKIP is that it has to be marginal.
:24:38. > :24:44.Just for your own future, if you fail to win a single soul -- single
:24:45. > :24:49.seat in the general election, if Ed Miliband fails to win an outright
:24:50. > :24:54.majority, will you stand down as UKIP leader? I would think within
:24:55. > :25:00.about 12 hours, yes. I will have failed, I got into politics not
:25:01. > :25:05.because I wanted a career in politics, far from it. I did it
:25:06. > :25:08.because I don't think this European entanglement is right for our
:25:09. > :25:13.country. I think a lot of people have woken up to the idea we have
:25:14. > :25:20.lost control of our borders and now is the moment for UKIP to achieve
:25:21. > :25:26.what it set out to do. Will UKIP continue without you if you stand
:25:27. > :25:36.down? Of course it will. I know that everyone says it is a one-man band
:25:37. > :25:38.but it is far from that. We have had some painful moments, getting rid of
:25:39. > :25:42.old UKIP, new UKIP is more professional, less angry and it is
:25:43. > :25:48.going places. Nigel Farage, thank you for being with us.
:25:49. > :25:50.So, what else should we be looking out for in Wednesday's Budget
:25:51. > :25:52.statement? We've compiled a Sunday Politics guide to the Chancellor's
:25:53. > :25:56.likely announcements. Eyes down everyone, it's time for a
:25:57. > :25:59.bit of budget bingo. Let's see what we will get from the man who lives
:26:00. > :26:03.at legs 11. Despite some good news on the economy, George Osborne says
:26:04. > :26:06.that this will be a Budget of hard truths with more pain ahead in order
:26:07. > :26:09.to get the public finances back under control. But many in the
:26:10. > :26:11.Conservative party, including the former chancellor Norman Lamont,
:26:12. > :26:15.want Mr Osborne to help the middle classes by doing something about the
:26:16. > :26:22.4.4 million people who fall into the 40% bracket. Around one million more
:26:23. > :26:24.people pay tax at that rate compared to 2010 because the higher tax
:26:25. > :26:30.threshold hasn't increased in line with inflation. Mr Osborne has
:26:31. > :26:33.indicated he might tackle the issue in the next Conservative manifesto,
:26:34. > :26:39.but for now he is focused on helping the low paid. It's likely we will
:26:40. > :26:44.see another increase in the amount you can earn before being taxed,
:26:45. > :26:48.perhaps up another ?500 to ?10,500. The Chancellor is going to flesh out
:26:49. > :26:51.the details of a tax break for childcare payments, and there could
:26:52. > :27:08.be cries of 'house' with the promise of more help for the building
:27:09. > :27:11.industry. The Help To Buy scheme will be extended to 2020 and there
:27:12. > :27:14.could be the go-ahead for the first Garden City in 40 years. Finally,
:27:15. > :27:17.bingo regulars could be celebrating a full house with a possible cut in
:27:18. > :27:19.bingo tax. And I've been joined in the studio
:27:20. > :27:22.by the former Conservative chancellor Norman Lamont, in Salford
:27:23. > :27:25.by the former Labour Cabinet minister Hazel Blears, and in
:27:26. > :27:28.Aberdeen by the Lib Dem deputy leader, Malcolm Bruce. Let me come
:27:29. > :27:34.to Norman Lamont first, you and another former Tory Chancellor,
:27:35. > :27:45.Nigel Lawson, have called in the fall in the threshold for the rate
:27:46. > :27:49.at which the 40p clicks in. I would have preferred an adjustment in the
:27:50. > :27:54.Budget but I agree with what you are saying, it sounds like the
:27:55. > :27:59.Chancellor will not do that. My main point is that you cannot go on
:28:00. > :28:03.forever and forever increasing the personal allowance and not
:28:04. > :28:09.increasing the 40% tax threshold because you are driving more and
:28:10. > :28:12.more people into that band. It is an expensive policy because in order to
:28:13. > :28:18.keep the number of people not paying tax constant, you have to keep
:28:19. > :28:24.adjusting it each year. When this was introduced by Nigel Lawson, it
:28:25. > :28:31.applied to one in 20 people, the 40% rate, it now applies to one in six
:28:32. > :28:36.people. By next year, there will be 6 million people paying base. Why do
:28:37. > :28:41.you think your Tory colleagues seem happy to go along with the Lib Dems
:28:42. > :28:56.and target whatever money there is for tax cuts rather -- on the lower
:28:57. > :29:02.paid rather than the middle incomes? They are not helping the lowest
:29:03. > :29:04.paid. If you wanted to really help the lowest paid people you would
:29:05. > :29:12.raise the threshold for national insurance contributions, which is
:29:13. > :29:20.around ?6,000. Is it the Lib Dems stopping any rise in the 40p
:29:21. > :29:26.threshold? We are concentrating on raising the lower threshold because
:29:27. > :29:33.we believe that is the way to help those on lower incomes. Whilst they
:29:34. > :29:36.haven't benefited as much as the lower paid they have participated
:29:37. > :29:41.and I think people understand right now, if you were going to prioritise
:29:42. > :29:45.the high earners, when we are still trying to help those on lower and
:29:46. > :29:49.middle incomes who haven't enjoyed great pay increases but have got the
:29:50. > :29:55.benefit of these tax increases, that is why we would like to do it for
:29:56. > :30:01.the minimum wage level. But the poorest will not benefit at all. The
:30:02. > :30:06.poorest 16% already don't pay tax. Why don't you increase the threshold
:30:07. > :30:15.at which National Insurance starts? You only have two earned ?5,500
:30:16. > :30:20.before you start to pay it. You've got to remember that the raising of
:30:21. > :30:24.the threshold to ?10,000 or more was something the Tories said we could
:30:25. > :30:32.not afford. Why are you continuing to do it? If you want to help the
:30:33. > :30:37.working poor, the way would be to take the lowest out of national
:30:38. > :30:41.insurance. The view we take is they are benefiting, and have benefited
:30:42. > :30:47.from, the raising of the tax threshold. You now have to earn
:30:48. > :30:51.?10,000, we hope eventually 12,500, and that means only people on very
:30:52. > :30:55.low wages. If you opt out of national insurance, you're saying to
:30:56. > :31:00.people that you make no contribution to the welfare system, so there is a
:31:01. > :31:05.general principle that people should participate and paying, and also
:31:06. > :31:09.claim when they need something out. We thought raising the threshold was
:31:10. > :31:12.simple and effective at a time of economic austerity and the right way
:31:13. > :31:18.to deliver a helpful support to welcoming people. -- working people.
:31:19. > :31:22.With the Labour Party continue to raise the threshold, or do they
:31:23. > :31:28.think there is a case that there are too many people being dragged into
:31:29. > :31:32.the 40p tax bracket? If Norman Lamont thinks this is the right time
:31:33. > :31:35.to benefit people who are reasonably well off rather than those who are
:31:36. > :31:39.struggling to make ends meet, then genuinely, I say it respectfully, I
:31:40. > :31:44.don't think he's living in the world the rest of us are. Most working
:31:45. > :31:48.people have seen their wages effectively reduced by about ?1600
:31:49. > :31:54.because they have been frozen, so the right thing is to help people on
:31:55. > :31:58.modest incomes. I also understand that if the 40% threshold went up,
:31:59. > :32:02.the people who would benefit the most, as ever, are the people who
:32:03. > :32:07.are really well off, not the people in the middle. The Conservatives
:32:08. > :32:12.have already reduced the 50p tax on people over ?150,000 a year, and we
:32:13. > :32:15.have to concentrate on the people going out to work, doing their best
:32:16. > :32:19.to bring their children up and have a decent life and need a bit of
:32:20. > :32:23.help. I think raising the threshold is a good thing. We would bring back
:32:24. > :32:29.the 10p tax, which we should never have abolished, and do things with
:32:30. > :32:33.regard to childcare. At the moment, childcare costs the average family
:32:34. > :32:37.as much as their mortgage, for goodness sake. We would give 25
:32:38. > :32:40.hours free childcare for youngsters over three and four years old. That
:32:41. > :32:48.would be a massive boost the working families. We are talking about
:32:49. > :32:51.nurses, tube drivers, warrant officers in the army. There are many
:32:52. > :32:56.people who are not well off but have been squeezed in the way everybody
:32:57. > :33:00.has been squeezed and they are finding it continuing. I am stunned
:33:01. > :33:04.by Malcolm's argument where everybody should pay something so
:33:05. > :33:07.you should not take people out of national insurance, but the
:33:08. > :33:13.principle doesn't apply to income tax. You can stand that argument on
:33:14. > :33:16.its head and apply it to income tax. Most people don't see a difference
:33:17. > :33:21.between income tax and national insurance, it's the same thing to
:33:22. > :33:24.most people. It is true that it isn't really an insurance fund and
:33:25. > :33:30.there is an argument from merging both of them. But we have
:33:31. > :33:36.concentrated on a simple tax proposition. Norman is ignoring the
:33:37. > :33:39.fact the people on the 40% rate have benefited by the raising of the
:33:40. > :33:42.personal allowance. To say they have been squeezed is unfair. The
:33:43. > :33:48.calculation is that an ordinary taxpayer will be ?700 better off at
:33:49. > :33:52.the current threshold, and about ?500 better off at the higher rate.
:33:53. > :33:58.It is misleading to say the better off we'll be paying more. I agree
:33:59. > :34:01.with Hazel, if you go to the 40% rate, it's the higher earners who
:34:02. > :34:06.benefit the most, and we won't do that when the economy is not where
:34:07. > :34:13.it was before the crash. How much will the lower paid be better off if
:34:14. > :34:17.you reintroduce the 10p rate? Significantly better off. I don't
:34:18. > :34:23.have the figure myself, but they'd be significantly better off and the
:34:24. > :34:26.Budget should be a mixture of measures to help people who work
:34:27. > :34:31.hard. That is why I think the childcare issue has to be
:34:32. > :34:37.addressed. ?100 a week of the people with childcare payments. It is a
:34:38. > :34:40.massive issue. We want the job is guaranteed to get young people back
:34:41. > :34:43.into work. There's been hardly any discussion about that, and we have
:34:44. > :34:47.nearly 1 million people who have been out of work for six months or
:34:48. > :34:54.more, and as a country we need to do something to help that. 350,000
:34:55. > :34:57.full-time students, so it is a misleading figure. It is not a
:34:58. > :35:03.million including full-time students. All parties do this. It
:35:04. > :35:06.sounds to me, Malcolm Bruce, you have more in common with the Labour
:35:07. > :35:10.Party than you do with the Conservatives. You want an annual
:35:11. > :35:15.levy on houses over ?2 million, so does Labour. A lot of your members
:35:16. > :35:19.want to scrap the so-called bedroom tax and so does labour. You think
:35:20. > :35:23.every teacher should have a teaching qualification, and so does Labour.
:35:24. > :35:28.Your policy on the EU referendum is the same. Let me go on. And you want
:35:29. > :35:33.to scrap the winter fuel allowance for wealthy pensioners. We want to
:35:34. > :35:36.make sure we get the public finances in order and we have grave
:35:37. > :35:46.reservations about the Labour Party promises. But they followed your
:35:47. > :35:49.spending plans in the first year. The point we are making is we can
:35:50. > :35:52.make a fairer society and stronger economy if you keep the public
:35:53. > :35:57.finances moving towards balance. We don't think the Labour Party will
:35:58. > :36:00.take a stand that track. It is interesting that the Labour Party
:36:01. > :36:05.want to introduce the 10p rate that Gordon Brown abolished. We consider
:36:06. > :36:12.that before we can -- committed to the 0% rate -- we considered that.
:36:13. > :36:17.It makes a complicated system difficult and we think it's better
:36:18. > :36:22.doing it that way. As a fiscal conservative, why are you talking
:36:23. > :36:25.about any tax cuts when the deficit is over ?100 billion, and
:36:26. > :36:29.effectively, anything you propose today can only be financed by more
:36:30. > :36:35.borrowing. I totally agree with you. I said that this week. I thought the
:36:36. > :36:39.best thing would have no Budget. The main thing is to get the deficit
:36:40. > :36:42.down. My argument is is that you have an adjustment in tax rates it
:36:43. > :36:47.should be shared between the allowances and the higher rate, but
:36:48. > :36:52.I don't think that the progress on the deficit is something we can give
:36:53. > :36:59.up on. This is still a very long way to go. We're only halfway through.
:37:00. > :37:03.Hazel, does it make sense to borrow for tax cuts? I am reluctant to do
:37:04. > :37:10.this, but I agree with both Norman and Malcolm. Malcolm Bruce wants to
:37:11. > :37:14.borrow for tax cuts. We absolutely need to get the deficit down and get
:37:15. > :37:18.finances on a strong footing. But we also have to think about having some
:37:19. > :37:22.spending in the system that in the longer run saves us money. We all
:37:23. > :37:27.know we need to build new homes. I don't think it's necessarily the
:37:28. > :37:32.right priority to give people in London mortgage relief in terms of
:37:33. > :37:36.?600,000. We have to get the balance right. Sometimes it is right to
:37:37. > :37:42.spend to save. I'm afraid we have run out of time. There will be
:37:43. > :37:44.plenty more discussion in the lead up to the Budget on Wednesday.
:37:45. > :37:49.It's just gone 11:35am. You're watching the Sunday Politics. We say
:37:50. > :37:53.goodbye to viewers in Scotland who leave us now for Sunday Politics
:37:54. > :37:54.Scotland. Coming up here in 20 minutes, Frances O'Grady, the
:37:55. > :38:18.General Secretary of the TUC, joins Hello and on the Sunday Politics
:38:19. > :38:21.Wales: we'll be looking at welfare reform, asking can culture be used
:38:22. > :38:24.to fight poverty? And with George Osborne's Budget just days away is
:38:25. > :38:27.the Welsh economy starting to bloom? But first, from April seventh, some
:38:28. > :38:30.people on Deeside signing up for job-seeker's allowance won't get it.
:38:31. > :38:33.They'll get something called Universal Credit instead. I went to
:38:34. > :38:36.Shotton in Flintshire to meet the minister overseeing it, Lord Freud.
:38:37. > :38:40.He told me the UK Government is "developing it as we go along". Will
:38:41. > :38:47.that satisfy critics who have attacked the UK government's
:38:48. > :38:50.handling of this reform to welfare? The UK Government has needed its
:38:51. > :38:58.flak jacket for Universal Credit, with rows about delays and millions
:38:59. > :39:01.spent on software that was written off. The principle of a more
:39:02. > :39:06.efficient welfare system has got widespread support, but the process
:39:07. > :39:11.of moving to Universal Credit has proved very difficult for the UK
:39:12. > :39:16.Government. The Minister Lord Freud says the government wants to get it
:39:17. > :39:20.right. From April the 7th, some people walking into this Jobcentre
:39:21. > :39:26.will be the first in Wales to be signed up. At the moment, if you get
:39:27. > :39:30.one of these six benefits or tax credits, your money arrives at
:39:31. > :39:37.different times. Under the new system, it will be merged into a
:39:38. > :39:40.separate sum. It is part of wider changes to welfare that have
:39:41. > :39:48.included cuts to housing benefit which Lord Freud says has saved the
:39:49. > :39:52.taxpayer ?2 billion a year. The tax payer has had to help tide people
:39:53. > :39:59.over with discretionary housing payment. Here in Flintshire, for
:40:00. > :40:07.example, those payments have risen from ?45,000 four years ago to more
:40:08. > :40:10.than ?245,000 in this wine year. It is money from the Department for
:40:11. > :40:18.Work and Pensions, but this year the local council has had to top that up
:40:19. > :40:22.with its own money. The Welsh government has complained about the
:40:23. > :40:27.effect on the economy and on some benefit it pays for, things like
:40:28. > :40:33.free school meals. The big package causes us great concern because
:40:34. > :40:36.there were knock-on effects. If we have to spend more money in one
:40:37. > :40:41.area, we have to take it from somewhere else. We need this clarity
:40:42. > :40:46.and we need it quickly, and we are not getting it. The people who will
:40:47. > :40:51.help claimants adapt to the new system have their own concerns. To
:40:52. > :40:58.administer this process as simply as possible, there will be the need for
:40:59. > :41:05.budgeting advice, access to the Internet, and in reality, some more
:41:06. > :41:16.definition and clarification. What a support will they get? I put all
:41:17. > :41:19.that to Lord Freud, a man who started his working life as a
:41:20. > :41:28.reporter on a newspaper. He advised Tony Blair on welfare reform. Years
:41:29. > :41:36.now a Conservative peer working on the coalition's most important
:41:37. > :41:42.programmes. When Universal Credit is very positive to individuals, it
:41:43. > :41:47.adds ?2 billion to people's pockets. It is much more efficient to
:41:48. > :41:50.administer and we can turn those savings back to individuals who need
:41:51. > :41:55.the money. It is efficient in making sure that the people who need the
:41:56. > :42:01.money are those who are the poorest. In the present system, it is much
:42:02. > :42:06.less clear. Around 200,000 people will benefit from Universal Credit
:42:07. > :42:11.in Wales alone. Are you confident that people will be able to manage
:42:12. > :42:15.this system because there have been examples of case studies where
:42:16. > :42:21.paying benefits to social housing tenants instead of landlords has
:42:22. > :42:27.caused problems? We are building a cooperative system with local
:42:28. > :42:31.authorities so that there is a partnership approach to help people
:42:32. > :42:36.move into independence rather than being trapped in the dependency that
:42:37. > :42:47.we see in the present welfare system. On housing benefits, I know
:42:48. > :42:55.here in Flintshire the discretionary housing payments have gone up to
:42:56. > :43:02.more than ?300,000. Isn't then a fit reform just shifting the burden
:43:03. > :43:09.around the states? -- isn't benefit reform shifting the burden around
:43:10. > :43:17.the state? We will have saved ?2 billion next year so we are getting
:43:18. > :43:21.a grip on expenditure that is out of control, but importantly, we are
:43:22. > :43:25.working collaboratively with local authorities who are the best placed
:43:26. > :43:31.people to take decisions to help those who are more vulnerable than
:43:32. > :43:36.others, and that is as important as Universal Credit itself. It is that
:43:37. > :43:43.cooperation with local authorities that we conduct things. The
:43:44. > :43:49.Chancellor has raised the prospect of more cuts to the welfare budget
:43:50. > :43:56.and welfare spending in the UK. That will put a bigger squeeze on more
:43:57. > :44:02.honourable people, won't it? -- vulnerable. We have to crack down on
:44:03. > :44:08.welfare budget that was out of control. We must do that and we
:44:09. > :44:13.continue to do that but I cannot comment ahead of the Budget. You are
:44:14. > :44:18.not just bearing down on the system, you are bearing down on those who
:44:19. > :44:22.need the money the most, aren't you? We are designing a system that is
:44:23. > :44:25.more efficient than the present system in directing resources to the
:44:26. > :44:32.people that need them the most. That is the reason we can bear down on
:44:33. > :44:42.the system, because we are helping the most honourable -- honourable.
:44:43. > :44:46.You have been working on the welfare system for a long time, did you
:44:47. > :44:54.think it would be so difficult to change the welfare state in this
:44:55. > :44:59.way? So controversial? What is clearly true is that this is a
:45:00. > :45:03.massive cultural transformation, and we are developing it as we go along.
:45:04. > :45:09.The most interesting developments that I had not foreseen when I set
:45:10. > :45:12.out was the importance of creating a relationship with the local
:45:13. > :45:19.authorities so we are able to support people in a more holistic
:45:20. > :45:25.ways, and try and handle all of their problems. I do think it has
:45:26. > :45:28.moved from being just a reform of benefit into being a transformation
:45:29. > :45:36.of the culture of dependency that we have in this country. Making it up
:45:37. > :45:40.as you go along? No, this is a dialogue, a pretty intense dialogue
:45:41. > :45:47.that I have been having with local authorities around the country, and
:45:48. > :45:54.we are listening and responding, and building together a new system which
:45:55. > :46:01.I think will stand written in very good stead in the 21st-century.
:46:02. > :46:04.Thank you. You will have noticed those empty shops on your local High
:46:05. > :46:08.Street in recent years. Well, why don't we fill them with art? A
:46:09. > :46:15.report last week on tackling poverty with culture said disused spaces
:46:16. > :46:18.could become creative hubs. Let's discuss that now with the Minister
:46:19. > :46:26.for Culture and Sport, John Griffiths. Your brief was to find
:46:27. > :46:31.ways that culture can help reduce poverty, what makes you think that
:46:32. > :46:36.is possible? We have made substantial progress in using
:46:37. > :46:41.culture to tackle poverty in recent times. We know that Wales has great
:46:42. > :46:46.strength in culture, but we know that the challenge is to widen
:46:47. > :46:51.participation and involvement in that culture. We have made progress
:46:52. > :46:55.through free entry to art galleries and museums. We have seen lower
:46:56. > :47:02.income groups attending events in greater numbers. That does not make
:47:03. > :47:05.people better off, does it? It is important in terms of quality of
:47:06. > :47:09.life but we know that if you can tackle these issues when young
:47:10. > :47:13.people are going through the school system, so they have a more
:47:14. > :47:19.enriching experience, that builds confidence and esteem, and it means
:47:20. > :47:24.that they achieve better in the subjects they study. This report is
:47:25. > :47:32.full of recommendations on widening access. It suggests that you have
:47:33. > :47:37.failed to change the system that is elitist. I do not think so. It
:47:38. > :47:41.recognises that although we have made progress, there is more we can
:47:42. > :47:46.do. This is why we have commissioned this report, and the challenge for
:47:47. > :47:54.us is to join up effectively within government and join up with major
:47:55. > :48:02.cultural organisations such as arts councils and libraries. We need to
:48:03. > :48:06.all join up around this focus to tackle poverty more effectively and
:48:07. > :48:12.make sure more people in Wales get this very, very important cultural
:48:13. > :48:17.experience. Surely the priority is making people materially better off?
:48:18. > :48:26.This report says that people are in disadvantaged circumstances. Is it a
:48:27. > :48:31.stain on Labour's record? Labour is committed to social justice. We have
:48:32. > :48:39.made a lot of progress. What we will do now... The question is, is it
:48:40. > :48:45.making a difference? What we want to do is bring culture to the table and
:48:46. > :48:51.tackle the challenges of poverty. Of course, we deal with the economic
:48:52. > :48:58.issues as well and there is a policy that does that. There will be a very
:48:59. > :49:03.important action plan with all of the Welsh government involved,
:49:04. > :49:09.including Culture and Sport. I think the report is an important part of
:49:10. > :49:16.addressing that overall picture. Your department's budget is being
:49:17. > :49:22.cut by 5.3%, your revenue budget. That tells you all you need to know
:49:23. > :49:27.about the priority placed on culture in tough times? No, it is a priority
:49:28. > :49:31.for the Welsh government. We want to make sure that the cultural
:49:32. > :49:38.strengths in Wales are used more effectively to look at the issues.
:49:39. > :49:41.What we are doing is far better than England where the cuts to their
:49:42. > :49:45.welfare budgets have been more Draconian. We know we are in
:49:46. > :49:49.difficult times and the challenge is to do more with less. That is
:49:50. > :49:55.possible with new models of delivery, and we are seeing that
:49:56. > :50:00.with our libraries where we have councils bringing one-stop shops
:50:01. > :50:09.together with leisure services. Let me ask you about sport. We have two
:50:10. > :50:15.Premier League clubs in south Wales. Do they have a role to play in
:50:16. > :50:18.tackling this? Absolutely. The government is working with Cardiff
:50:19. > :50:23.City and Swansea City with new programmes of funding. The working
:50:24. > :50:29.with schools to provide quality coaches and making sure we addressed
:50:30. > :50:34.the areas in Wales where social declaration is greatest. John, thank
:50:35. > :50:37.you. We've heard about benefit reform already today. In this
:50:38. > :50:40.morning's sun the Chancellor says he'll use his Budget on Wednesday to
:50:41. > :50:44.tell us more about capping welfare payments. Perhaps more so than with
:50:45. > :50:48.any of his previous Budgets, George Osborne can point to positive signs
:50:49. > :50:51.of economic growth. But opponents say living standards are still
:50:52. > :51:10.falling for some. Bethan Lewis has been looking for green shoots. Is
:51:11. > :51:18.the air, a time for gardeners to prepare the ground and sowed the
:51:19. > :51:23.seeds. -- Spring is in the air. At Westminster, it is a time for the
:51:24. > :51:27.Chancellor's annual update on the country's finances, and for him to
:51:28. > :51:31.set out plans to encourage growth while cutting back on the deficit.
:51:32. > :51:36.The UK Government says it's economic strategy is working but the cuts
:51:37. > :51:43.have two continue for the planned to bear fruit and for the economy to
:51:44. > :51:53.flourish. -- for the plan to bear fruit. We are seeing a -- an economy
:51:54. > :51:56.working. There is a step ahead for the people of this country. There
:51:57. > :52:00.will be changes and we need to look at the way the tax system is
:52:01. > :52:04.becoming oppressive on middle earners. I'm not sure the Chancellor
:52:05. > :52:10.can do anything about that we need to make that those at the lowest end
:52:11. > :52:15.of the pay bracket get the relief they need. Labour says it is pleased
:52:16. > :52:19.to see improvements but it is not all rosy in the garden. We had three
:52:20. > :52:24.years when the economy runs along with no growth. We have seen some
:52:25. > :52:28.growth come back to the economy but the fruits are only being enjoyed by
:52:29. > :52:38.the wealthiest in Britain. They are not being felt here. What we feel is
:52:39. > :52:41.that living standards are on the -- under massive pressure. Wages have
:52:42. > :52:47.stagnated and this is a government that is refusing to face realities
:52:48. > :52:53.of a massive crisis. Abergavenny Garden Centre is a family run
:52:54. > :52:59.business, established back in 1957. It has seen plenty of changes in the
:53:00. > :53:03.economic climate over the years. At the moment, it seems to be on the
:53:04. > :53:07.up, people are coming out and spending money, especially since the
:53:08. > :53:12.nice weather. All our sales are up, compared to last year, but we have
:53:13. > :53:20.to take the weather into factor as well. Hopefully, this is a sign of
:53:21. > :53:25.something good for the future. More consumer confidence is one factor
:53:26. > :53:30.that could boost the economy, so how confident do these customers feel?
:53:31. > :53:33.It feels better and you can see people spending money, and
:53:34. > :53:40.certainly, if you want to get something done in the house, you
:53:41. > :53:42.still have to wait. This is good. There is obviously business about
:53:43. > :53:49.and people feel more positive. The weather helped! We are both
:53:50. > :53:55.pensioners, and our income is going down in real terms all the time. But
:53:56. > :54:02.we have to bear our share of the burden. Personally, I have not
:54:03. > :54:09.noticed much improvement. The cost of food is going up, the cost of
:54:10. > :54:14.transport, fuel, and I really hope the Chancellor does not hammer the
:54:15. > :54:19.motorist again this year. At Westminster, the politician said is
:54:20. > :54:25.more work being done to stop -- more work to be done. The record of
:54:26. > :54:28.investment in the UK economy are among the worst in the whole of the
:54:29. > :54:33.world. That is something the UK Government should be worried about.
:54:34. > :54:37.Unless investment starts picking up, there will be a lopsided recovery
:54:38. > :54:43.and there will be another crash, as bad as 2008. We are starting to see
:54:44. > :54:48.progress in the Welsh economy, and unemployment is coming down. Those
:54:49. > :54:52.are the areas where communities notice, where people are able to get
:54:53. > :54:58.back to work and jobs are being created, businesses are being
:54:59. > :55:03.invested in. Next week budget's statement will possibly say we are
:55:04. > :55:06.long way big economic anything. Last week Plaid Cymru leader Leanne Wood
:55:07. > :55:09.was challenged on her attack of UKIP. It was designed to put
:55:10. > :55:13.pressure on her Euro-sceptic rivals. But it backfired, thanks to her
:55:14. > :55:21.colleague, Lord Elis-Thomas. He said it was "facile". On Thursday Ms Wood
:55:22. > :55:23.sacked him as her transport spokesperson and as chair of the
:55:24. > :55:27.assembly's cross-party environment committee. Let's see if we can get
:55:28. > :55:37.to the bottom of this row with Plaid Cymru chairman Dafydd Trystan
:55:38. > :55:44.Davies. Welcome to the programme. We were talking about describing UKIP
:55:45. > :55:48.as not Welsh. One of your colleague's comments about Sam
:55:49. > :55:57.Warburton. Is your party out of control? What we had in our positive
:55:58. > :56:02.conference speech from Leanne Wood, was the contrast between Plaid
:56:03. > :56:06.Cymru's vision and the right wing agenda from UKIP, and that is the
:56:07. > :56:12.challenge for people to think about in Wales as we face up to the next
:56:13. > :56:18.European elections. That big choice between Plaid Cymru and UKIP. You
:56:19. > :56:23.had a lot of squabbling that is detracting away from that message.
:56:24. > :56:27.Are all those arguments a coincidence or is there a problem in
:56:28. > :56:32.the party? What we have in Plaid Cymru is a positive message. The
:56:33. > :56:37.message was set out to people about the European election, where we are
:56:38. > :56:44.talking about the 150,000 jobs that are dependent on Wales being
:56:45. > :56:51.positive party in Europe. The -- yes, Plaid Cymru needs to be
:56:52. > :56:54.disciplined in order to present that message to the people, and get that
:56:55. > :57:00.message to every person in Wales that there is a choice between the
:57:01. > :57:05.far right agenda of UKIP and the progressive, positive agenda of
:57:06. > :57:08.Plaid Cymru. UKIP may disagree with you as being described as far right.
:57:09. > :57:19.The discipline you are talking about, as chairman of a cross-party
:57:20. > :57:24.committee, why did Leanne do this? As you are well aware, the
:57:25. > :57:32.appointment of committee chairs is a matter for the party groups. It is
:57:33. > :57:37.entirely appropriate, therefore, that as happened with Nick Ramsay,
:57:38. > :57:43.party leaders exercise this. In each case, party discipline in the
:57:44. > :57:48.national assembly, there is a process, and that process has been
:57:49. > :57:55.followed. If you want to look to ten years hence, and how we develop in
:57:56. > :58:04.developing a sovereign party for Wells... Let's not go down that
:58:05. > :58:08.road! Let's look at Lyn Thomas. He is one of the most experienced
:58:09. > :58:15.lawmakers and the kind of person we want to a cross-party committee, and
:58:16. > :58:25.yet Plaid Cymru uses this appointment as cynical is. He will
:58:26. > :58:34.have a significant contribution to make and he has talks about the
:58:35. > :58:37.contribution of the silk committee. He will put that positive case for
:58:38. > :58:42.developing a national assembly for Wales. Do you think it is fine to
:58:43. > :58:51.use party appointments for chairs in this way? It is a tool of
:58:52. > :58:56.patronage. Committee chairs are chosen by the party leaders and it
:58:57. > :59:00.is appropriate when matters of discipline arise that the party
:59:01. > :59:05.leaders uses every means at his or her disposal. Plaid Cymru are
:59:06. > :59:11.putting forward that positive message to the voters. Will there be
:59:12. > :59:16.any more action against them? I foresee no further action and I am
:59:17. > :59:21.sure he will play a positive role, not only in the European election
:59:22. > :59:28.but also in 2015 and his own re-election in 2016. I have no doubt
:59:29. > :59:30.that he will play a positive and constructive role in fighting his
:59:31. > :59:35.seat and making a broader contribution, I hope. This came
:59:36. > :59:42.about because he disagreed with a description of UKIP in a party press
:59:43. > :59:50.release by Leanne Wood as being "not Welsh" . Was that a mistake? The
:59:51. > :59:55.Welsh national interest is not served by UKIP, and the values we
:59:56. > :00:00.have of tolerance and being open, and welcoming of others, we are a
:00:01. > :00:07.nation of migrants. That is the proud heritage of Wales. But it is
:00:08. > :00:14.not very tolerant to call them not Welsh. UKIP do not reflect those
:00:15. > :00:19.values of tolerance or of support for diversity. It is perfectly right
:00:20. > :00:27.for Leanne Wood to call them out on it. Perfectly right to decide who is
:00:28. > :00:31.not Welsh? What we are talking about are the values of the people of
:00:32. > :00:38.Wales. They are open and tolerant, whether it is opposing same-sex
:00:39. > :00:43.marriage or the casual sexism you get from UKIP. I think it is right.
:00:44. > :00:50.Was it a mistake to phrase it in that way? It is right to challenge
:00:51. > :00:55.UKIP. Thank you very much for joining me on the programme. Thank
:00:56. > :00:57.you for watching and I hope you can do the same next week. And
:00:58. > :01:02.you for watching and I hope you can failure marked success. -- not
:01:03. > :01:14.success. Andrew, back to you. Has George Osborne got a rabbit in
:01:15. > :01:18.his Budget hat? Will the Chancellor find a way to help the squeezed
:01:19. > :01:26.middle? And how do Labour respond? All questions for The Week Ahead.
:01:27. > :01:30.And joining Helen, Janan and Nick to discuss the budget is the general
:01:31. > :01:35.secretary of the Trades Union Congress Frances O'Grady. Welcome
:01:36. > :01:38.back to the programme. I know the TUC has a submission, but if you
:01:39. > :01:44.could pick one thing that you wanted the Chancellor to do above all, what
:01:45. > :01:48.would it be? We want a budget for working people, which means we have
:01:49. > :01:54.to crack the long-term problem of investment in the British economy.
:01:55. > :02:00.Certainly I would like the Chancellor to merit that title they
:02:01. > :02:03.want of the new workers party, and take action on living standards, but
:02:04. > :02:14.if they're going to do that it's got to be about unlocking investment. In
:02:15. > :02:17.the period where the economy has been flat-lining there has been
:02:18. > :02:20.little business investment, but there are signs towards the end of
:02:21. > :02:27.last year that it is beginning to pick up. But a long way to go. The
:02:28. > :02:29.problem is we have key industries like construction and manufacturing
:02:30. > :02:35.that are still smaller than they were before the recession. The
:02:36. > :02:41.government itself, of course, has slashed its own capital investment
:02:42. > :02:44.budget by half. There is plenty of good and important work that needs
:02:45. > :02:50.to be done from building houses to improving the transport system, to
:02:51. > :02:55.improving our schools. And the government really needs to pick up
:02:56. > :02:59.that shovel and start investing in our economy to get the decent jobs
:03:00. > :03:04.we need, the pay increases we need, and that in itself will help
:03:05. > :03:10.stimulate demand. It was Alistair Darling who cut in 2011, and it's
:03:11. > :03:15.interesting that Ed Balls in his plans for the next parliament would
:03:16. > :03:18.run a current budget surplus by the end of the parliament as opposed to
:03:19. > :03:23.George Osborne who would have an overall budget surplus. That gives
:03:24. > :03:27.Ed Balls or -- more wriggle room to do what you talk about, but he is
:03:28. > :03:30.reticent to talk about it. He does not want to say that he has an
:03:31. > :03:33.opportunity to spend on investment because he fears if he says it he
:03:34. > :03:37.will be attacked by the Conservatives for being
:03:38. > :03:43.irresponsible. Why is business doing this? The recession was deeper than
:03:44. > :03:49.any since the war and the recovery was slower than almost any since the
:03:50. > :03:54.war. The lag, the time it takes to get over that is longer than anyone
:03:55. > :03:59.expected. I read the same evidence as you towards the end of last year
:04:00. > :04:03.pointing to money being released, and it depends what it is released
:04:04. > :04:07.on, whether it is capital investment or bringing in people on higher
:04:08. > :04:12.wages. The one surprise in the downturn is how well the employment
:04:13. > :04:15.figures have done, but they have not invested in new capacity and they
:04:16. > :04:20.are sitting on a lot of dosh. I looked at one set of figures that
:04:21. > :04:25.said if you took the biggest company in Britain, they have about 715
:04:26. > :04:30.billion pounds in corporate treasury -- the biggest companies. I think
:04:31. > :04:36.it's reduced a little but they are sitting on a mountain in dash of
:04:37. > :04:40.skills. Yes, but they're not investing in skills, wages, or
:04:41. > :04:45.sustainable jobs. The new jobs we have seen created since 2010, the
:04:46. > :04:50.vast majority of them have been in low paid industries, and they are
:04:51. > :04:54.often zero hours, or insecure, or part-time. So it's not delivering a
:04:55. > :04:59.recovery for ordinary working people. Government ministers, as you
:05:00. > :05:03.know when you lobby them, they are anxious to make out that they know
:05:04. > :05:08.the job is not done and the recovery has just begun, but the one bit they
:05:09. > :05:13.are privately proud of, although they can't explain it, is how many
:05:14. > :05:17.private-sector jobs have been created. A lot of unions have done
:05:18. > :05:20.sensible deals with employers to protect jobs through this period,
:05:21. > :05:26.but it's not sustainable. The average worker in Britain today is
:05:27. > :05:33.now ?2000 a year worse off in real terms than they were. On a pay
:05:34. > :05:41.against price comparison? It doesn't take into account tax cuts. The
:05:42. > :05:48.raising of the personal allowance is far outweighed by the raising VAT.
:05:49. > :05:51.Does the raising of the threshold which the Lib Dems are proud of and
:05:52. > :05:56.the Tories are trying to trade credit for, does it matter to your
:05:57. > :06:02.members? -- take credit for. It matters that it is eclipsed by the
:06:03. > :06:05.cuts in benefits and know what is conned any more. We're going to hear
:06:06. > :06:11.a lot about the raising of the allowance, but as long as the real
:06:12. > :06:14.value of work, tax credits, things like that, people won't feel it in
:06:15. > :06:18.their pocket, and they will find it harder and harder to look after
:06:19. > :06:21.their family. When you look at the other things that could take over
:06:22. > :06:26.from consumer spending which has driven the recovery, held by house
:06:27. > :06:29.price rising in the south, it is exports and business investment, and
:06:30. > :06:33.you look at the state of the Eurozone and the emerging markets
:06:34. > :06:37.which are now in trouble, and the winter seems to have derailed the US
:06:38. > :06:44.recovery. It won't be exports. Indeed, the Obie Eich does not think
:06:45. > :06:49.that will contribute to growth until 2015 -- OBI. So the figures we
:06:50. > :06:56.should be looking at our business investment. And also the deficit.
:06:57. > :07:00.The deficit is 111 billion, and that is a problem, because we are not at
:07:01. > :07:05.the end of the cutting process, there are huge cuts to be made. I
:07:06. > :07:08.understand we are only a third of the way through. That will
:07:09. > :07:12.definitely affect business confidence. It is clear that the
:07:13. > :07:15.strategy has failed. Borrowing has gone up and it's not delivered
:07:16. > :07:22.improved living standards and better quality jobs, so cutting out of the
:07:23. > :07:25.recession is not going to work. The structural budget deficit was going
:07:26. > :07:32.to be eliminated three weeks today under the original plan. They missed
:07:33. > :07:37.target after target. Every economist has their own definition of that. I
:07:38. > :07:42.think Mark Carney is right when he says that fundamentally the economy
:07:43. > :07:46.is unbalanced and it is not sustainable, growth is not
:07:47. > :07:53.sustainable. But if it clicked on, it would be more balanced. It is not
:07:54. > :07:56.just north and south and manufacturing a way out with
:07:57. > :08:02.services, but it is also between the rich and everybody else. What do you
:08:03. > :08:04.make of the fact that there will effectively be another freezing
:08:05. > :08:12.public sector pay, or at least no more than 1%? Not even that for
:08:13. > :08:17.nurses and health workers. But they will get 3% progression pay. 70% of
:08:18. > :08:22.nurses will not get any pay rise at all. They get no progression pay at
:08:23. > :08:27.all. I think this is smack in the mouth. Smack in the mouth to
:08:28. > :08:33.dedicated health care workers who will feel very, very discontented
:08:34. > :08:37.about the decision. Danny Alexander, I saw him appealing to
:08:38. > :08:44.health workers do not move to strike ballots and said they should talk to
:08:45. > :08:49.their department. But about what? Is that real pay cut has been imposed,
:08:50. > :08:55.what are workers left with? So do you expect as a result of yet more
:08:56. > :09:00.tough controls on public sector pay that unrest is inevitable? I know
:09:01. > :09:05.some unions will be consulting with their members, but ultimately it's
:09:06. > :09:09.always members who decide what to do. It does seem to me insulting not
:09:10. > :09:18.to at least be honest and say that we are cutting real pay of nurses,
:09:19. > :09:21.health care workers, on the back of a ?3 billion reorganisation of the
:09:22. > :09:29.NHS that nobody wanted and nobody voted for. Their long-term changes
:09:30. > :09:33.taking place here that almost talks about -- there are long-term
:09:34. > :09:40.changes. It is how lower percentage wages have become of GDP on how big
:09:41. > :09:45.the percentage of profits is. It seems to me there is a strong case
:09:46. > :09:50.for some kind of realignment there. The biggest event of my life, in
:09:51. > :09:53.this world, is the entry of a couple of billion more people into the
:09:54. > :09:57.labour supply. At the end of the Cold War, India and China plugged
:09:58. > :10:01.into the global economy. If there is a greater supply of that factor of
:10:02. > :10:06.production, logically you conclude that wages will fall or stagnate and
:10:07. > :10:09.that has been the story in this country and America and large parts
:10:10. > :10:13.of Western Europe in the last generation. What is not possible is
:10:14. > :10:17.for governments to do much about it. They can ameliorate it at the
:10:18. > :10:21.margins, but the idea that the government controls living
:10:22. > :10:24.standards, which has become popular over the last six months, and the
:10:25. > :10:29.Labour Party have in establishing that, and I don't think it's true.
:10:30. > :10:33.George Osborne's options are astonishingly limited compared to
:10:34. > :10:38.public expectations. If wages have reached a modern record low as
:10:39. > :10:44.percentage of GDP, who is going to champion the wage earner? We have
:10:45. > :10:49.lost Bob Crow, Tony Benn passed away, so who is the champion? The
:10:50. > :10:54.trade union movement is the champion of ordinary workers. We need those
:10:55. > :11:01.larger-than-life figures that we will mess. Have you got them yet? We
:11:02. > :11:06.have a generation of workers coming through. One thing about the loss of
:11:07. > :11:09.Bob Crow is that the whole union movement has responded strongly to
:11:10. > :11:13.that, and we want to say that we are strong and united and here to stand
:11:14. > :11:17.up for working people and we will fight as hard as Bob Crow did.
:11:18. > :11:21.Whoever replaces Bob Crow or Tony Benn, we can be sure they will not
:11:22. > :11:25.come from Eton because they all have jobs in the government. I want to
:11:26. > :11:27.put up on the screen what even Michael Gove was saying about this
:11:28. > :11:42.coterie of Old Etonian 's. He's right, is he not? He's
:11:43. > :11:47.absolutely right. We have the idea of the manifesto being written by
:11:48. > :11:54.five people from Eton and one from Saint Pauls. A remarkable example of
:11:55. > :11:56.social mobility that George Osborne, who had the disadvantage of going to
:11:57. > :12:05.Saint Pauls has made it into that inner circle. Here is the question,
:12:06. > :12:08.what is Michael Gove up to? If you saw the response from George
:12:09. > :12:11.Osborne, there was no slap down, and they know this is an area they are
:12:12. > :12:16.weak on an David Cameron will not comment on it. If this had been a
:12:17. > :12:20.Labour shadow minister making a similarly disloyal statement, they
:12:21. > :12:23.might have been shot at dawn. But there is a real tolerance from
:12:24. > :12:27.Michael Gove to go freelance which comes from George Osborne. It's
:12:28. > :12:31.about highlighting educational reforms that he wants to turn every
:12:32. > :12:34.school in to eat and so it won't happen in the future. But it's also
:12:35. > :12:39.pointing out who did not go to Eton school and who would be the best
:12:40. > :12:42.candidate to replace David Cameron as leader, George Osborne, and who
:12:43. > :12:46.did go to Eton school, Boris Johnson. Michael Gove is on
:12:47. > :12:53.manoeuvres to destroy Boris Johnson's chances of being leader.
:12:54. > :12:59.It's a good job they don't have an election to worry about. Hold on. I
:13:00. > :13:03.think they are out of touch with businesses as well as working
:13:04. > :13:06.people. You ask about who is talking about wage earners. Businesses are.
:13:07. > :13:11.They are worried that unless living standards rise again there will be
:13:12. > :13:17.nobody there to buy anything. We are running out of time, but the TUC,
:13:18. > :13:22.are enthusiastic about HS2? We supported. We think it's the kind of
:13:23. > :13:27.infrastructure project that we need to invest in long-term. He could, if
:13:28. > :13:31.we get it right, rebalance north and south and create good jobs along the
:13:32. > :13:37.way -- it could. Thank you very much tool. I have to say that every week
:13:38. > :13:41.-- thank you very much to you all. That's all for today. I'll be back
:13:42. > :13:46.next Sunday at 11am, and Jo Coburn will be on BBC Two tomorrow at
:13:47. > :13:47.midday with the Daily Politics. Remember if it's Sunday, it's the
:13:48. > :14:23.Sunday Politics. The UK economy
:14:24. > :14:24.is on the road to recovery.