19/03/2014 The Wales Report


19/03/2014

Huw Edwards presents a special programme from Westminster discussing the Budget and what it means for the Welsh economy.


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Tonight. We are at Westminster for a special programme on the budget. We

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will be looking at the Chancellor's measures and considering what they

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mean for the people of Wales. Stay with us on The Wales Report.

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We are at Westminster on a busy bars -- budget day. Tonight we have the

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Wales Office minister and a Conservative MP, we have the shadow

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secretary for Wales and a Lib Dem MP as well as the leader of Plaid

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Cymru. It has been a long day so thank you for coming in. What has

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today done for Wales? This budget was never about as silly giveaway

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budget, it is solid measures that are good for the United Kingdom and

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builds on the progress the government have made and ensures the

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recovery continues to spread throughout the United Kingdom. In

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Wales practical help for industry and help for savers. In Wales are

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greater proportion of pensioners and retired people than anywhere else in

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the country. Taking more people out of paying in punk -- income tax and

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showing that hard work can pay. That is something you would applaud,

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isn't it? Lots of measures we would applaud but I do not think it has

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overall done much for Wales. It has not dealt with the crisis people are

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facing in Britain and in Wales in particular because of the gap

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between prices and earnings. There is a cost of living crisis that

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means ordinary people in every street in Wales are finding it

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harder to pay for basic bills and this budget did nothing of

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consequence for those people. Would you give it any credit? I would give

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it some credit. The amount of capital investment was very good but

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the biggest mistake in my view is that there is hardly anything for

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the SME sector which accounts for 90% of the employment in Wales. We

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should target that sector and it should be so # targeted from here.

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If the Prime Minister is serious about rolling out the improvements

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in the UK then he should have targeted that sector. There is talk

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about energy which is welcome but there was nothing else for that

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sector and therefore not a great deal for Wales. People are not going

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to feel very much better off. Where is the Lib Dem stake in this

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budget? The main thing that Liberal Democrats have been pushing is to

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raise the personal allowance, the tax threshold, and take people out

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of paying income tax. It makes a significant difference to people. It

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means that everyone who is paying the basic rate of tax will be saving

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?800. They will have ?800 more in their pocket more than they would

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have done at the beginning of this Parliament than they would have had.

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That makes a big difference. There is a lot of work in the Department

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for the to support the SME sector. They are such an fundamental part of

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the financial world and Wales could be doing far more. We have fantastic

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small businesses that could benefit from exporting services and goods

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that they produce. The government is doing a lot to help that and

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encourage that at because it is a way to rebuild the economy. We have

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got a thought from all of you, headline thought from all of you. I

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wanted to set it in context. We have asked an economist from South Wales

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of the University of South Wales for her take on the challenges facing

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the Welsh economy and this is what she said.

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For those in charge of rebuilding the Welsh economy it must sometimes

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feel as though they are hitting their heads against a brick wall. It

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is not all doom and gloom. The construction industry is growing

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which brings vital jobs to the economy. There are more on the

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horizon. A new nuclear plant is to be built on Anglesey with thousands

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of jobs promised for local people. These steps are positive but they

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are not quite enough to overshadow the problems plaguing the Welsh

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economy. Youth unemployment is falling but it is still very

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difficult for young people in Wales to get a foot on the career ladder.

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The measure by which we judge the value of goods and services in an

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area indicates that we are one of the poorer parts of the UK. Since

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2011 we have been getting progressively poorer in Wales in

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relation to the rest of the UK. Although the economy in Wales is

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growing by 1.6% per year it is still playing catch up with the rest of

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the country. A tell-tale sign of a weak economy is low productivity

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which is happening across Wales. Output per worker is lower than in

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the rest of the UK and businesses are suffering. Recent job losses in

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manufacturing have hit an already struggling economy. Several

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companies have already announced that hundreds of jobs are under

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threat. When there is not alternative and women for those who

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lose their jobs, more people end up claiming benefit. What about the

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public sector? There is bad news there as well. Councils across Wales

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are having their budgets slashed and jobs are being axed. Other

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organisations are not immune to the cuts and purse strings are likely to

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be tightened until 2018. Mother nature is not helping. Recent floods

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in Aberystwyth will have hit leisure and tourism and the muddy knees --

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and the money needed to fix things and it sure does not happen again is

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in short supply. Where do we go from here? To get Wales back on track we

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need more set -- more health -- more help for small businesses and

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measures to increase consumer confidence. That should stimulate

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the economy and put Wales back on track. The views there of an

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economist from the University of South Wales. A lot of encouraging

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signs and a lot of work to be done. There was a line in there, almost

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missed it, to do with projected spending cuts. It is a very

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difficult context. I looked at a figure early and half of the

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projected cuts have not come into affect yet. What will that do,

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especially in an area where they have been playing catch up anyway?

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The impact on Matt on growth levels is going to be pretty big we think,

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isn't it? What are you doing as the government to cushion the blow their

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in these Welsh areas, are you doing anything? It is absolutely the case

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that there are further spending cuts. Whichever party is in

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government after 2015 there will be fiscal restraint and everybody knows

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that and hopefully everyone is being honest about that. The arguments

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that public spending cuts will diminish growth in Wales, we have

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been hearing that for years. The Labour Party said you cannot have

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responsible lending in Wales because the private sector is not strong

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enough to create the jobs to replace the lost jobs in the public sector.

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That has been proved absolutely incorrect. The Welsh private sector

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has provided 100,000 jobs since 2010 more than replacing jobs lost in the

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public sector. As a result jobs growth in Wales is leading the

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country. The unemployment rate in Wales is less than the UK average

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and the growth is faster than in London and other parts of the United

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Kingdom. There is still a long way to go in overcoming the deep-seated

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structural problems in the Welsh economy but a feature of this

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economy that we did not see previously is that Wales is not

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being left behind and it is being included in the economic recovery.

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The government made the wrong choices in 2010 when they decided to

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impose austerity on the wider British economy and a drawdown

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public spending at the very point that private spending had ceased. In

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Germany and France and America, economies that have grown

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significantly faster than ours and remake the ground they lost you to

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the banking crisis, in contrast to those economies we had three years

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of no growth. We are now seeing some growth which is to be welcomed and

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encouraged and we are seeing jobs growth but the truth is that those

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jobs are, lots of them, part-time and many of them are zero hours and

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that explains the point about reducing productivity. We have got

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more people in work but less hours and less security and the jobs are

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poorer. We need a fundamental change. We need things like job

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guarantees that will try and give people a greater sense of security.

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We had that in the last Labour government and we have got it in

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Wales which is why we are seeing some growth in youth jobs in

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particular. There is a really big impact with this Labour government

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and hope -- with this Welsh government and hopefully a new

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Labour government will make that further. You question the assertion

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about the quality of these jobs, that that is something we need to

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improve? At the beginning it was certainly the case that when jobs

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were being created a couple of years ago a lot of people were finding

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they could not get the hours they wanted and so on and there were more

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part-time jobs being created that that is now not the case. Over the

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last quarter almost all of the new jobs that were created were

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full-time jobs. There has been a huge increase in the number of both

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men and women finding full-time permanent jobs. It has really

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started to shift around and the figures are very positive in terms

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of job creation. 30% of jobs are not full-time. Not everyone wants to

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work full-time. The jobs created in the last quarter were virtually all

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full-time. People are finding that they can take more hours than they

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were originally being able to get. The other thing that is really

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important to bear in mind is the investment the government has put

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into apprenticeships which has made an enormous difference to the

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prospects of a lot of young people. There have been over one quarter of

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a million new apprenticeships created and the government in the

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budget today has announced they will extend the grant that goes to

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employers to encourage them to take on young people I give them

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apprenticeships and that is an enormous success story of this

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government that is really making a difference. By putting in resources

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to encourage employers to take on young people we cannot just

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guarantee temporary jobs but instead actually create permanent employment

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opportunities for people and upscale the young people who do not have the

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skills they need to get into permanent and successful work. What

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are your concerns about the quality of the jobs on offer? What kind of

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jobs are being created in your area? Low wage jobs unfortunately

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Matt is one of the biggest problems we have in Wales, to raise the game.

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We need to be thinking about a living wage. If you look at the

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statistics for the Conwy Valley, they are amongst the lowest in the

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whole of the UK. There are parts of London where people are 13 times

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more wealthy than the average person here. We need to even rent, let

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alone think about purchasing a property and so on. It is a dire

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situation. It may be that we are creating jobs right now but they are

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low wage jobs and there is not a great deal of celebration going on

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in the streets of Wales. I do not say it with any degree of pride. I

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want to see us doing well as well but there is a long way to go.

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It is true there is a long way to go but if you look at the data in the

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last 12 months average wages are growing above the rate of inflation

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and we are seeing some of the strongest growth in the UK, albeit

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from a low base. To be fair from you, that is right, it is from a low

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base. There was a lot of work to do yet

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and if the trend continues we may not be saying this in two years

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time. There are really positive things in the labour market in Wales

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and the economy in Wales and we want to foster and encourage that.

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The Labour Party seem to be in denial that the good things are

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happening. They are three years too late. My constituency offices

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opposite a hall where only 18 months ago the best part of 800 people

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queued for 200 jobs in a local supermarket. 2500 people applied for

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jobs that are 16 hours a week, effectively zero-hours contracts,

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low-wage, low paid. Often graduates and people who are returning to work

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are forced into these jobs. People are holding down two or three jobs

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and trying to make ends meet. We have the highest energy costs in

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Wales and the lowest job security. We have the greatest problem in

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terms of reduction in wages. Neither of the government ministers here

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today can contradict the fact that at the end of your period in office

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people will be in this country and Wales worst off than they were at

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the beginning of the Parliament. How do you define it in Welsh terms?

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Both the IFS and OBR have said for the first time since records began,

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since 1870s, we will have a parliament, at the end of it, on

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average people will be worse off than they were at the beginning of

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it. The truth, is unfortunately things like the personal allowance,

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which is a good thing, that people are being taken out of tax, nobody

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would deny that. The they are more than offset by the other changes

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that your Government introduced, VAT changes, changes to benefits,

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changes that have hit Wales harder because we have an older, sicker,

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less - population that is less easily placed into work. That is the

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truth of Wales. We need meaningful change. We are not seeing it from

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this Government. Let's pause for a second. You mentioned London, of

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course, the overwhelming power of the London regional economy, if you

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like, is often cited in a less than positive way when it comes to the

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nations and regions of the rest of the UK. David Smith, the economics

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editor of the Sunday Timeses believes Wales could boost its

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fortunes by learning lessons from London. This is what he had to say.

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-- Times. # London calling... #

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Canary Wharf. This is one of the most successful, perhaps the most

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economically successful parts of Europe, even in the wake of a

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financial crisis. Just a few decades ago, this area

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was in decline. The docks had mostly been closed and this was a

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wasteland. It was popular with film directors looking for images of

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urban decay, but not much else. Like Cardiff Bay it was reclaimed from a

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defining industrial and commercial past. When the docks were in

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decline, so was London. It's populations fell in the 1970s

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because people wanted to move out. This was a time when big cities were

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in trouble. New York technically went bankrupt. London made a

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comeback, the question is, what Wales can learn from it? For

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centuries the Welsh have come to London to make their fortunes in

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commerce, manufacturing, retailing and the city. Mostly, however, they

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left behind a country that had its own powerful role in the British

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economy. Even half a century ago, there was little doubt about the

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prosperity of Wales. Gross domestic product per head stood than more

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than 95% of the national average. It was only 10% or so below London and

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the south-east. There was gold in the Welsh hills.

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Now, the picture is very different. The London economy is nearly seven

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times the size of the Welsh economy. London has a bigger population of

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course, but that doesn't explain it. London's population is

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two-and-a-half times that of Wales, not seven times. The result, Welsh

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income per head is now the lowest in the UK. That's enough depressing

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statistics. What can Wales learn from London? What can it do to stop

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the brain drain from Wales to London and its hinterland? The solution

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does not lie in more Government spending. Wales and some other parts

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of the UK are suffering for having built up too large a public sector

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in the past. To me, the solution lies with what Iowa call "the three

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is 's." More investment by new existing and growing businesses to

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help create the wealth and jobs that will restore some of its pass

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prosperity. To get more investment, you need more businesses. Wales has

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the lowest number of active businesses per head of population in

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the UK. Unless you successfully create and renew the number of

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enterprises, starting with the very small, Wales will suffer. The second

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i is invasion. It is no use having lots of new businesses unless they

:19:44.:19:48.

do something special. What a successful business sector means is

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not just start-ups, but businesses that last. The London economy is not

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perfect, but it works because it has clusters of successful businesses

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feeding off each other and innovating, creating new and

:20:03.:20:06.

exciting ways of doing things. Wales needs some of that. The third i is

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infrastructure. One of the keys to attracting more inward investment.

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Wales needs better transport links and it needs them now. We should not

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be too down hearted. It is possible to stage a comeback and London

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proves that. Nobody pretends it will be easy.

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Some pointers, if you like, from David Smith the Economics editor of

:20:33.:20:42.

the Sunday Times. I will pick up o the infrastructure. Today the

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Chancellor in the Budget statement mentioned the M4. Mentioned the fact

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there was money there for the Welsh Government to be using to improve

:20:49.:20:52.

that very important bit of Welsh infrastructure. Why is that proving

:20:53.:20:57.

so slow? Well for 13 years under the previous Labour government nothing

:20:58.:21:01.

happened to improve that section of the M4. Everybody knows that portion

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of the M4 is the single most important piece of transport struck

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for the Welsh economy. We are getting it moving. Powers to Welsh

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Government to borrow and start making the investment. Are they

:21:14.:21:17.

taking advantage of the powers? They are. One of my roles is to meet with

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Welsh ministers in Cardiff. I'm encouraged. They want to get

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cracking with this important project. It's a vital project for

:21:27.:21:31.

the Welsh economy generally. David's point about investment and

:21:32.:21:34.

infrastructure is critical. It's not just about roads, the unprecedented

:21:35.:21:38.

level we are putting into railways, not just across the UK with HS2 and

:21:39.:21:45.

Crossrail projects which will link Canary Wharf with Cardiff. Two hours

:21:46.:21:49.

of travelling. Extending that rail infrastructure investment to Wales

:21:50.:21:54.

as well. Before I come to Jenny and talk about the M4 line today, which

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is interesting. When you look at the ambition for the infrastructure in

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Wales. Does it depress you that we are talking about a bit of the M4 in

:22:05.:22:08.

the south-east. We are not looking at much more ambitious schemes to

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link north and south rather than looking east to west. Our train

:22:13.:22:16.

structure is something we need to look at too. The amount of money

:22:17.:22:21.

needed is astronomical, there is no sign of us being able to spend that

:22:22.:22:24.

money. What does that mean in terms of our ability to expand the economy

:22:25.:22:28.

in the next, let us say the next 10 years? Partly, it's the fault of

:22:29.:22:33.

various governments who have been far too London sent Rick. I tell you

:22:34.:22:38.

why London improved, there was a concentration on London and the

:22:39.:22:41.

south-east. Good luck to them, you might say, I would say that as well.

:22:42.:22:44.

To roll out any form of assistance to the rest of the UK you need to

:22:45.:22:50.

look in a very constructive way, the Barnett Formula goes under funding,

:22:51.:22:57.

it is still going on, that would have dealt with the infrastructure,

:22:58.:23:01.

in my view. We can do it, we have ambitious people in Wales. People

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who are able to, who are entrepreneurs who can do a job. I

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just fear for the way we are looking at these things. We have this

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begging bowl mentality at this moment in time. Where we just hoping

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for some crumbs to come our way from London. With those crumbs somehow we

:23:17.:23:20.

will build up the infrastructure. Currently, under this current

:23:21.:23:24.

system, it ain't going to happen, I'm afraid, whoever is in power in

:23:25.:23:30.

Cardiff, it seems to me. The M4, Jenny, how soon should that work

:23:31.:23:34.

start, how soon should we see results in terms of solving what, in

:23:35.:23:38.

many parts of the UK, would be seen to be just one more transport

:23:39.:23:42.

problem? In Welsh terms it has been a major problem to get around. How

:23:43.:23:46.

soon can people see results there? Well, we need to get the project

:23:47.:23:50.

right to make sure that we are doinglet right thing with the money.

:23:51.:23:58.

-- right thing with the money. Also electrify education of the rail line

:23:59.:24:01.

from south Wales to London, that will be really important. It has to

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be able to drive investment in our region, in the south. Clearly HS2

:24:05.:24:11.

will benefit North Wales as well - It will not benefit. We would like

:24:12.:24:17.

to electrify the North Wales line. HS2 will be a waste of time and

:24:18.:24:21.

money for Wales. I think it will drive investment into the North as

:24:22.:24:26.

well. I think that Lek arify case of the line from Cardiff through to

:24:27.:24:30.

Swansea and the Valleys lines will make us an attractive prospect in

:24:31.:24:34.

south Wales to bring investment in. We have the people. We have the

:24:35.:24:37.

universities, we have the able to develop skills am we have small

:24:38.:24:41.

businesses and fantastic resources in south Wales that if we can make

:24:42.:24:44.

those connections much more effectively we can really build the

:24:45.:24:48.

economy. Owen, how soon do you want the Welsh Government, your

:24:49.:24:50.

colleagues in the Welsh Government to be getting on with that M4 work?

:24:51.:24:55.

As soon as they can. They could be getting on with preparation for it.

:24:56.:25:01.

They have done. They have published potential routes. The key thing is

:25:02.:25:04.

not blow out of proportion the importance of M4 redevelopment

:25:05.:25:09.

verses everything else. What you saw in that fillsome the reality of deep

:25:10.:25:14.

seated problems in the Welsh economy, the analogy of London is

:25:15.:25:19.

imperfect, London has always pushed out of every recession. London is

:25:20.:25:22.

enormously important, global financial centre. Wales isn't going

:25:23.:25:26.

to become that. However, we can learn if you do invest. The one

:25:27.:25:31.

thing that did, you know, jar with me was David's suggestion it isn't

:25:32.:25:36.

about state spending, it isn't about public spending. Lots of the reality

:25:37.:25:40.

of the underpinning structures, Crossrail, and lots of other things,

:25:41.:25:45.

state funding is required. The M4 development is ultimately state

:25:46.:25:49.

funding. His point was more to do - Partnership is what we need. Over

:25:50.:25:53.

dependance on the public sector was the point he was making? The point

:25:54.:25:57.

he was making invasion was required. That is absolutely right. The

:25:58.:25:59.

suggestion was that investment needs to be drawn in. The crucial thing

:26:00.:26:03.

that I think we understand in Labour, the current government

:26:04.:26:07.

doesn't get, you need a partnership between public and private, both in

:26:08.:26:11.

terms of individual firm sectors and crucially the investment in the

:26:12.:26:14.

underpinning strengths of the economy and infrastructure is part

:26:15.:26:18.

of that. That's why I think it's positive that we are seeing - Over

:26:19.:26:23.

the next five years you will see the M4, that section built, you will see

:26:24.:26:28.

the rail infrastructure investment. Lek arify case, you can do the

:26:29.:26:32.

things at the same time. Where I disagree with David's video piece,

:26:33.:26:36.

there is a suggestion that we don't have the dynamic businesses hubs in

:26:37.:26:43.

Wales that London has. We need to enhance them. We need

:26:44.:26:48.

private-sector-led organisation, assisting businesses to make the

:26:49.:26:51.

most of whatever funding there is. To mentor them and get them through.

:26:52.:26:55.

We have been arguing it for a long time. I think the time has come if

:26:56.:26:58.

we are going to make a difference to Wales. There is a fantastic Airbus

:26:59.:27:07.

and hi-tech developments going on. The challenge is to spread is it out

:27:08.:27:10.

into more rural parts of Wales and put in the that infrastructure to

:27:11.:27:14.

get people in constituency like Owens, who are unemployed to get

:27:15.:27:18.

them to places where jobs are being created. When I feel sick in nigh

:27:19.:27:30.

stomach to see that Wales is being held up as a negative example. He is

:27:31.:27:35.

doing it because public services in Wales are failing under the Labour

:27:36.:27:42.

government. He is doing it because as conceded in the papers last week

:27:43.:27:46.

you are targeting Wales to smear Labour. Politicalcle strategy. One

:27:47.:27:52.

of the routes why Wales lacks behind is the fundamentally lack of

:27:53.:28:00.

ambition. The lack of ambition is a you pokerful one which will be

:28:01.:28:03.

controversial. A last word to Jenny. We are nearly out of time. In a

:28:04.:28:06.

sentence today as Lib Dems what did you not get in the Budget you would

:28:07.:28:11.

have liked? I'm pleased. Our main property was to make sure that

:28:12.:28:15.

hard-working people got more of their tax in their pockets. They

:28:16.:28:18.

have more money to spend in their communities and we achieved that.

:28:19.:28:24.

Jenny, Owen and Steven and Elvin, good to see you both. Good to see

:28:25.:28:28.

you all. Thank you for coming in on Budget Day. That is all we have time

:28:29.:28:35.

for tonight. My thanks to my guest guest today. We will be back next

:28:36.:28:38.

week in our usual home and at the usual time. In the meantime you can

:28:39.:28:43.

get in touch via our email address: We are on Twitter too: From

:28:44.:28:51.

Westminster on Budget Day, thanks for watching. Good night.

:28:52.:28:58.

On The Wales Report with Huw Edwards - a special programme from Westminster - to discuss the Budget and what it means for the Welsh economy.


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