19/03/2014 The Wales Report


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


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.


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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