19/03/2014 The Wales Report

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

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

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

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

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

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

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

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

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

builds on the progress the government have made and ensures the

recovery continues to spread throughout the United Kingdom. In

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

greater proportion of pensioners and retired people than anywhere else in

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

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

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

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

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

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

means ordinary people in every street in Wales are finding it

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

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

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

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

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

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

If the Prime Minister is serious about rolling out the improvements

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

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

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

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

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

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

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

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

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

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

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

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

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

small businesses that could benefit from exporting services and goods

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

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

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

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

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

the Welsh economy and this is what she said.

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

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

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

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

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

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

are not quite enough to overshadow the problems plaguing the Welsh

economy. Youth unemployment is falling but it is still very

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

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

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

2011 we have been getting progressively poorer in Wales in

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

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

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

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

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

manufacturing have hit an already struggling economy. Several

companies have already announced that hundreds of jobs are under

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

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

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

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

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

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

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

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

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

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

measures to increase consumer confidence. That should stimulate

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

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

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

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

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

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

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

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

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

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

that there are further spending cuts. Whichever party is in

government after 2015 there will be fiscal restraint and everybody knows

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

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

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

responsible lending in Wales because the private sector is not strong

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

That has been proved absolutely incorrect. The Welsh private sector

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

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

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

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

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

structural problems in the Welsh economy but a feature of this

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

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

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

impose austerity on the wider British economy and a drawdown

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

Germany and France and America, economies that have grown

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

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

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

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

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

that explains the point about reducing productivity. We have got

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

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

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

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

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

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

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

Labour government will make that further. You question the assertion

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

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

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

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

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

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

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

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

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

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

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

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

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

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

into apprenticeships which has made an enormous difference to the

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

a million new apprenticeships created and the government in the

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

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

apprenticeships and that is an enormous success story of this

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

to encourage employers to take on young people we cannot just

guarantee temporary jobs but instead actually create permanent employment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

base. There was a lot of work to do yet

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

editor of the Sunday Timeses believes Wales could boost its

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

-- Times. # London calling... #

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

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

financial crisis. Just a few decades ago, this area

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

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

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

defining industrial and commercial past. When the docks were in

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the lowest number of active businesses per head of population in

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

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

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

do something special. What a successful business sector means is

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

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

feeding off each other and innovating, creating new and

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

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

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

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

proves that. Nobody pretends it will be easy.

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

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

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

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

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

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

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

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

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

Government to borrow and start making the investment. Are they

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

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

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

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

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

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

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

of travelling. Extending that rail infrastructure investment to Wales

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

will build up the infrastructure. Currently, under this current

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

those connections much more effectively we can really build the

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

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

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

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

not blow out of proportion the importance of M4 redevelopment

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

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

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

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

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

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

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

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

state funding is required. The M4 development is ultimately state

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

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

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

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

that I think we understand in Labour, the current government

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

terms of individual firm sectors and crucially the investment in the

underpinning strengths of the economy and infrastructure is part

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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