25/11/2015 The Wales Report


25/11/2015

The programme discusses the chancellor's spending review and its impact on Wales. Presented by Huw Edwards.


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Transcript


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Tonight on the Wales Report, we're at Westminster

:00:00.:00:09.

for a special programme on today's spending review.

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

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And we'll be asking how the announcements here today affect

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the debate ahead of next year's Assembly elections in Wales.

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Good evening and welcome to The Wales Report.

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We're at Westminster on a busy day - the Chancellor has

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been outlining his spending review and updating MPs on the Government's

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Secretary of State for Wales Stephen Crabb hailed the announcement as a

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landmark for Wales. And remember, you can join

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in the discussion on social media. But first,

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my colleague Felicity Evans outlines how the Chancellor's announcements

:01:04.:01:13.

may impact on Welsh communities. Statement, the Chancellor of the

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Exchequer. George Osborne prepared this

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spending review under pressure under his cuts to tax credits. A recent

:01:30.:01:33.

defeat in the Lords had forced him back to the drawing board. Most

:01:34.:01:38.

commentators predicted a compromise, they got a U-turn. I listened to the

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concerns, I hear and understand them, and because I have been able

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to announce today an improvement in the public finances the simplest

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thing to do is avoid these changes altogether. The households in Wales

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that receive tax credits are likely to be relieved that the cuts have

:01:58.:02:01.

been cancelled. Mr Osborne says he can still reach his target of

:02:02.:02:06.

cutting a total of ?12 billion from the welfare budget during the

:02:07.:02:09.

Parliament. Despite the turnaround critics argue the UK Government's

:02:10.:02:16.

spending plans continue to leave public services exposed. The Welsh

:02:17.:02:22.

government said this does nothing to help public services in Wales, but

:02:23.:02:26.

there were significant announcements on the way the Treasury calculates

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the money the Treasury receives, the Barnett formula. In Cardiff Bay

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there is a widespread conviction that the Barnett formula

:02:37.:02:40.

short-changes Wales and there were calls to ameliorate that. Today Mr

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Osborne agreed. Wales has asked for a public floor to protect public

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spending and now within months of coming to office this Conservative

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government is answering that call and providing that historic funding

:02:55.:02:59.

guarantee for Wales. I announced today that we will introduce the new

:03:00.:03:05.

funding floor and set it at 115%. While he was on the subject of

:03:06.:03:10.

finding Mr Ob spawn confirmed that the block grant from the Treasury

:03:11.:03:15.

for Wales will stand at almost ?50 million by 2020. It was 14.4 billion

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this year. The Welsh finance minister says this amounts to a cut

:03:22.:03:27.

in real terms. The UK Government once the Welsh government to raise

:03:28.:03:32.

some of the money it spends by taking partial control of income tax

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rates but the First Minister is wary of this because of his concerns over

:03:37.:03:41.

fair funding. Today Mr Osborne not only committed to a funding floor

:03:42.:03:46.

for Wales he also removed another barrier to the devolution of income

:03:47.:03:51.

tax. No longer will a referendum be required for the Bush government to

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take control. The Welsh government gave a cautious welcome to a funding

:03:57.:03:59.

floor commitment but asked for clarity on how it will be permitted

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and how reliable the promise will be in the long-term.

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I'm joined tonight by Alun Cairns, Wales Office Minister

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and Conservative MP for the Vale of Glamorgan, Nia Griffith, Shadow

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Secretary of State for Wales and Labour MP for Llanelli, from the

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Liberal Democrats, Baroness Jenny Randerson, and

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I am bound to start with the biggest U-turn of the day, on tax credits.

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We were told the logic for that was clear in the summer but suddenly

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maybe it isn't. I think this demonstrates the strength of the

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Chancellor, he is pragmatic tom he listens to the debate and he has the

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authority to make changes according to the demands made on him. The

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House of Lords threw back the changes and because of the difficult

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decisions taken some time ago he had so much more freedom because the

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revenue for the country is far better than it was even in July so

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he was in a position where he didn't have to force through the tax credit

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changes. All about Parliamentary arithmetic? It is about changing the

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debate but also the better financial position we are rain because of the

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difficult decisions over four or five years. I assume the opposition

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welcomes the change. We have obviously run a strong campaign on

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the opposition benches and we wanted to make sure working people didn't

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miss out but the worrying thing is that he is still talking about

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taking ?12 billion of money off the bubbly some of the very same people.

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When Universal Credit comes in he is talking about taking money off

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people there and when people transfer from one to the other we

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also know there is difficulty with Universal Credit and I worry people

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will miss out so I would like us to continue the campaign to make sure

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that in future years we don't see the people who have been spared this

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year miss out again later on. You are not quibbling with the fact that

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there is still an impact on people with low pay surely, Alun? Universal

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Credit is a fantastic success. It is changing the opportunities that

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people have in terms of finding a fantastic success. It is changing

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the opportunities that people have in terms of finding deployment. The

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Universal Credit has been welcomed by charities, the independent sector

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and employees because of the real difficulty it makes about making

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work more attractive. -- employers. Welfare had to change, people were

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trapped on benefits, that wasn't right, so the Universal Credit is

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recognised widely as the way forward. I am just making the point

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that today are lot of the headlines... It is misleading

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because there are still changes in the pipeline which will affect

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people's income. That is the consequence of benefit reform, that

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is the changes proposed today, they are so much more positive and better

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for those individuals. Universal Credit is transformational the

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quicker we get people on to it the better because it will always make

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sure work pays. Liz, your thoughts on today's change. There is now a

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?4.4 billion hole in the welfare cuts and the Chancellor is committed

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to those, and we don't know where that ?4.4 billion is going to land.

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Even with tax credits, the level of earnings which were disregarded for

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change within tax credits was previously within ?5,000, that has

:07:58.:08:02.

gone down to ?2500, affecting people who work in seasonal industries.

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What would the coalition have done about this, Jenny, if they were

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still in existence? We would never have had the proposal for tax credit

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cuts in the first place because we stopped that in coalition, said it

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couldn't be done, we were totally opposed to cutting benefits for the

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poorest, so it would have been a very different statement from that

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point of view. We have lots to discuss, lots of content. Let's talk

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specifically about our Welsh focus, this thought that income tax powers

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could be devolved without going to a referendum. Does that make sense? If

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the powers are there it is up to each individual party to put that in

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their manifesto if they want to use those powers. First and foremost I

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think we need a thorough impact assessment, let's have a look at

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what actually would be the effect if we had a difference in rate one side

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of the border and the other side. About 50% of people in Wales live

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within commuting distance of the border so we need to look carefully

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at that and I think parties would have to be very honest and upfront

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about what they intended to do. You don't sound too enthusiastic. If you

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look at the powers given to Scotland, they haven't used them in

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the time they have had them there and we may find there is good reason

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for that. Liz, your thoughts. This has been our policy all along and we

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delighted to see it being adopted. Northern Ireland is a different

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context but it is now on the cards for the other nations of Britain and

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we need to look at the wider fiscal arrangements for Wales. If somebody

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on the doorstep says this is a very big thing to do, we should have a

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voice in a separate vote in a referendum on this. Shouldn't this

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be the fair and just thing to do? We have had referendums in the past in

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the Welsh assembly and we are now in a position where we can move ahead

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with this and it is quite an easy case to argue. The level of answer

:10:28.:10:36.

ability is very much improved and we need that to revitalise politics in

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Wales. Nia, do you think this kind of major devolution of power should

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happen? There are other ways the public can express their opinions,

:10:55.:10:59.

we have elections. Lots of issues get mixed up there, the whole point

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of a referendum is to focus on one thing. Yes, but the important thing

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is that people need to be upfront about their proposals and the public

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can decide. You are comfortable this can happen without a referendum?

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Yes. Jenny? I am delighted the idea of a referendum has been dropped

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because we have had several referendums and the people of Wales

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want the Assembly to have additional powers. It is not a good idea to

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have the potential for a power like this to be hanging around in the

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ether. It is time now for the parties to be putting forward in

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their manifesto is what they would do on income tax powers specifically

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and this gives the opportunity for parties to put forward and our

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leader in Wales, Kirsty Williams, has put forward the idea that we

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should be looking at reducing income tax in Wales as part of a way to

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stimulate the economy. That is a fascinating perspective. I will come

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to the lower tax thing in a moment. The referendum first, if somebody in

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your constituency comes up and says, hang on, this is a big thing we are

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doing, I would rather have a say in a referendum, you will say hard

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luck? They can vote for a party that makes various proposals on tax

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changes. This allows me to stand on a platform with my Conservative

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colleagues calling for tax cuts in Wales, but it is easy to have a

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spending body armour something that just distributes money. It now

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changes the responsibility whereby the Welsh government, if they want

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to spend more money, can have the opportunity to raise that money and

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it makes it far more directly accountable to the people who vote

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for it. I think this is a great chance to attract investment,

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entrepreneurs, business people. What a great thing it would be if we had

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a lower rate tax in Wales. -- rate of income tax. If you are facing a

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party that portrays itself as a tax-cutting party, how will Labour

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respond? I think this is a similar move, he

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will cut and cut and cut centrally then make it more and more difficult

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for people to deliver services, whether at the Welsh Government

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level or the local authority level, and therefore he will be throwing

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out to them the question of whether they need to raise taxes in order to

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make up for that shortfall which he is putting into the budget in the

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first place. So I am very worried because I do think it is the

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mechanism he may be trying to use across the UK in order to, if you

:14:02.:14:10.

like, pushed down the way taxes are collected, and people will find

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themselves perhaps having to pay more in the same way they have had

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to pay more VAT. The Welsh Government regularly calls for

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additional spending in Wales. If they want that they can now raise

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the tax... Precisely... But they will have to justify to people.

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Every business and organisation and family must make savings, it is easy

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to spend. They will now have to look voters in the eye and say, we are

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spending more on this project but raising tax because of it. People

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will judge accordingly. So you are proposing that Welsh taxpayers

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should pay more because the Chancellor cuts the block grant.

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That is affecting what you are saying -- effectively. Absolutely

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not. We have associated tax varying powers with a funding floor which

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will guarantee funding for Wales and the longer terms as with the

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independent Silk Commission recommended. The independent expert

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who looked at the funding recommended it and he said it is

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very fair for Wales, and I would take his word over the Welsh

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Government. It doesn't alter the fact that we will still see cuts

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throughout this Parliament through the budget the Welsh Government. You

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mentioned the funding floor, many viewers will know about it, but some

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understandably will not be into the detail. What does it mean, Alun,

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what does it offer the Welsh Government? Many have expressed

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concerns over many years that the way the Barnett For Miller works for

:15:44.:15:47.

Wales does not always advantage Wales over other parts of the UK --

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formula. Arrange was set between ?114 - ?117 to be spent in Wales

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according to ?100 spent in England because it is based on need. So it

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is in that range. The floor is forward hundred and ?15 to be spent

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in Wales compared to 100 pounds in England. In the 1990s we were in the

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realms of 125% which was consistent, and what is worrying here is that if

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we are looking at a needs -based assessment, the needs of Wales don't

:16:29.:16:33.

always compare, they won't track the needs of England. But on the figure

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of 115, to get back to specifics, Gerry Holt is saying... Are you

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saying it is not fair? Going back, what's bad, I said to the 90s, 15

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years or more, it was averaging 125% then. A lot has changed since then.

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It drops to 116 when Wales were -- Labour were in power, it could have

:16:59.:17:06.

been addressed then and is now 111%. 115 is an improvement but the

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question is does that reflect the needs? The Welsh economy was doing

:17:10.:17:17.

better when it was 125 than it is now. Gerry Holden will recognise the

:17:18.:17:25.

need and he said 114-117. I am delighted because the funding for

:17:26.:17:29.

what was something the Liberal Democrats fought for when we are in

:17:30.:17:33.

the coalition, the promise was made in coalition that this would be

:17:34.:17:37.

introduced. I am so pleased to see it. Are you happy with the figure?

:17:38.:17:44.

It is in the range Gerry Houlton spoke about, that he recommended,

:17:45.:17:50.

and Plaid Cymru have not argued before the recommendations. I think

:17:51.:17:56.

there is possibly a case for getting him to make sure and double check

:17:57.:18:00.

and all the rest of it, but the point is, this is the Welsh

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Government's initiative that is being put into place now. Nia, on

:18:07.:18:16.

the figure, are you prepared to say tonight you are satisfied with

:18:17.:18:20.

that? That is the level the Welsh Government has sought and which has

:18:21.:18:24.

been put forward, so in terms of the level of that floor, we are happy

:18:25.:18:29.

with it. We are not happy with the continuing cuts, which there will

:18:30.:18:34.

be, to the Welsh block grant anyway, and also the money sucked out of the

:18:35.:18:40.

economy in Wales through all the different tax changes there have

:18:41.:18:43.

been up till now, and those we anticipate in the remainder of this

:18:44.:18:48.

government, which will suck money from the local economies, the high

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streets, which will have an impact... What is happening to the

:18:53.:18:57.

block grant for Wales? On a capital bases it will go up nearly 70%,

:18:58.:19:02.

which is quite transformational, we haven't seen that increasing many

:19:03.:19:06.

years, so money the Welsh Government will have at its disposal for

:19:07.:19:12.

capital projects, roads, schools, that really is quite

:19:13.:19:15.

transformational. Adding capital and revenue Wales is in a much stronger

:19:16.:19:20.

position as a result. Some departments across Whitehall face

:19:21.:19:25.

cuts of 25%, that region. Wales's position is much stronger than

:19:26.:19:31.

those. Nia, your point? Capital funding over expenditure is less

:19:32.:19:35.

than revenue and the overall effect of the cuts as I understand it will

:19:36.:19:42.

be at least 3.5% of cuts to come. Wiping out, do you mean? The overall

:19:43.:19:48.

effect of cuts to the budget will be 3.5%, so if you think of the cuts

:19:49.:19:53.

they have already been and remember that the money the Welsh Government

:19:54.:19:58.

Spens is almost entirely on front line services, then these cuts that

:19:59.:20:03.

will be additional will have another significant impact. Jenny. In fact,

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in Wales the cuts will be proportionally less than for some of

:20:10.:20:14.

the departments, because the situation in Wales is reflected, the

:20:15.:20:23.

health budget, the education budget, and I noticed the culture budget as

:20:24.:20:28.

well, very small, but those are protected, and therefore, I think it

:20:29.:20:36.

is time the Welsh government stop complaining and made the best of the

:20:37.:20:41.

situation in terms of making their spending a great deal more efficient

:20:42.:20:45.

than it has been until now. Is that a fair point? Everyone needs to make

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savings, but the resources they have at their disposal a significant,

:20:51.:20:54.

both capital and revenue. Ally that then with their borrowing powers as

:20:55.:20:59.

well as tax varying powers, but in addition to these, there is the

:21:00.:21:03.

Cardiff city deal, which will bring more money over and above Barnett,

:21:04.:21:08.

the formula, to Cardiff, to make the city more productive, there is

:21:09.:21:19.

electric and to Swansea, all this money is in addition to the normal

:21:20.:21:22.

black grant -- block grant. The resources being made available to

:21:23.:21:24.

Wales for XE any expectation any political party had a short time

:21:25.:21:27.

ago. Could the Minister clarify how much money the Cardiff city deal

:21:28.:21:30.

will get because we haven't heard that. The Welsh Government has asked

:21:31.:21:37.

for match funding. On electrification can we have more

:21:38.:21:41.

clarity on when it will happen? We have heard this announcement

:21:42.:21:44.

repeatedly and we would like to see action. We have certainly heard it

:21:45.:21:47.

several times on electrification because some of us do that Jenny a

:21:48.:21:53.

lot! Let's go to the Cardiff city deal first, how much money going

:21:54.:21:57.

into that -- do that journey a lot. We have an in principle commitment

:21:58.:22:01.

to being the structure part of the deal, only two weeks ago we had

:22:02.:22:04.

below growth of the deal, only two weeks ago we had below grow 30 bids

:22:05.:22:07.

but this agreement from the Treasury in principle now throws the onus

:22:08.:22:11.

back to the businesses and the Welsh Government to further details. We

:22:12.:22:18.

would have liked to have been further forward because we

:22:19.:22:21.

originally wanted the deal in July but it took until a fortnight ago to

:22:22.:22:25.

get it. We will do that in detail but we have in principle agreement

:22:26.:22:29.

which is significant because that then paves the way to the upgrades

:22:30.:22:33.

of the Valley lines, the metro around South Wales, this is all in

:22:34.:22:37.

addition to the block grant Wales gets, so this is a pretty landmark

:22:38.:22:42.

deal we have announced today. Are you convinced, Liz? We are not

:22:43.:22:47.

seeing electrification in North Wales, there are debates about it.

:22:48.:22:53.

There are also cuts another Westminster department. The Courts

:22:54.:23:00.

estate is to be reduced, HMRC is centralising all services in Cardiff

:23:01.:23:03.

which will affect the rest of the economy, those areas, and we are

:23:04.:23:06.

talking about hundreds of jobs here, with the courts we are talking about

:23:07.:23:11.

an ongoing affect particularly in general areas where services are

:23:12.:23:14.

being drawn out and it will have a terrible effect on the local

:23:15.:23:19.

economy. Alun? The modernisation of railway of the North Wales, I am

:23:20.:23:24.

ambitious about, I was there two weeks ago with the Welsh Government

:23:25.:23:28.

and the transport minister. We need to do develop that with local

:23:29.:23:41.

authorities. I am excited. The window for that bid is next year. We

:23:42.:23:44.

will make a bid to upgrade the railway lines in North Wales. The

:23:45.:23:46.

other areas, of course, every government needs to make savings and

:23:47.:23:48.

look carefully at how it spends, because we need to get more for

:23:49.:23:51.

less, and that is what the UK Government has done. I think there

:23:52.:23:54.

is a big responsibility on the Welsh Government to follow suit just like

:23:55.:23:57.

every other business. The tax is interesting because some people

:23:58.:24:00.

argue there are special circumstances around some Welsh tax

:24:01.:24:04.

offices not least because they provide different services to other

:24:05.:24:08.

parts of the UK. Have you protected that enough or are you going along

:24:09.:24:12.

with Whitehall? We have looked closely at it and there is the Welsh

:24:13.:24:15.

language provision we need to preserve, the Welsh language scheme

:24:16.:24:20.

which we are committed to delivering on, but there is the digitisation of

:24:21.:24:26.

HMRC services, of the Courts service, which will provide the

:24:27.:24:28.

opportunity for a much better service either through the Welsh

:24:29.:24:33.

language or communities. Many people already complain about the tax

:24:34.:24:38.

revenue system. In order to improve it, we need to make changes, but

:24:39.:24:44.

there is a net gain for Wales out of that, at potentially 600 extra jobs

:24:45.:24:49.

in Wales as a result. A and we will move on. Thereat areas in Wales were

:24:50.:24:55.

digital sizes and doesn't work because some areas cannot have good

:24:56.:25:01.

broadband. I am worried about using digital technology to access

:25:02.:25:03.

justice. We don't know the effects of that, if you are a witness alone

:25:04.:25:07.

with the court in another place what will the outcome be? I think we are

:25:08.:25:11.

rushing without knowing where it will lead. We have a few minutes

:25:12.:25:16.

left, looking ahead, I noticed many months, but the assembly elections

:25:17.:25:22.

next year. A thought from each of you as to what you think will

:25:23.:25:26.

dominate the campaign for the months ahead? Clearly today's statement

:25:27.:25:30.

could have a" Don that campaign. I would start with the minister, what

:25:31.:25:35.

you think it will be about? I think it will be about tax cuts or

:25:36.:25:40.

increases for any party but I know my party will propose tax cuts in

:25:41.:25:44.

that manifesto and people will have a choice, you either want to live

:25:45.:25:48.

and work in Wales and pay less tax or go with some of the other parties

:25:49.:26:08.

because they always promised to spend more money in certain areas

:26:09.:26:11.

but now they will have the opportunity to raise it but justify

:26:12.:26:13.

that to voters. Jenny? We have got this far without mentioning the

:26:14.:26:16.

Wales Bill which is going through Parliament, and as it goes on its

:26:17.:26:19.

process, I am sure there will be a lot of discussion about the

:26:20.:26:21.

additional powers we hope will come to the Welsh Assembly, and what I

:26:22.:26:24.

would like to see is a debate that concentrates not on those powers but

:26:25.:26:27.

on what each individual party will do with those additional powers,

:26:28.:26:30.

because that is what people care about. Indeed, and we have spent a

:26:31.:26:37.

long time discussing that bill. Two-day's context, Nia, what does it

:26:38.:26:42.

tell you about what lies ahead? Jenny mentioned the Wales Bill but

:26:43.:26:47.

today's measures change nature of the bill, don't they? To a certain

:26:48.:26:52.

extent but next year people book will be looking for a government

:26:53.:26:57.

that wants to put growth in high-tech industries and strategic

:26:58.:27:00.

support for industries to when sure we keep high-quality jobs in Wales

:27:01.:27:05.

and support industry, make sure procurement uses locally sourced

:27:06.:27:09.

goods, and that is a strong economic platform, which people will look

:27:10.:27:14.

for, they will be looking for a genuine understanding of what makes

:27:15.:27:20.

jobs grow in Wales and how we can do that. Liz? Plaid Cymru will keep the

:27:21.:27:25.

money coming to Wales for health ring fenced for health in Wales. I

:27:26.:27:29.

would also like to remind the Welsh Tories that their manifesto in 2015

:27:30.:27:34.

promised to protect the funding for S4 C and now we are seeing a cut. It

:27:35.:27:41.

is unique to Wales and needs to be protected. That is another programme

:27:42.:27:45.

entirely which we will come back to, an important issue, but thank you

:27:46.:27:50.

very much for coming in. Good of you to come this evening.

:27:51.:27:52.

We'll be back next week with a special programme with

:27:53.:27:55.

And if you'd like to be in the audience and get the chance

:27:56.:27:59.

to put your questions to the First Minister, get in touch - the e-mail

:28:00.:28:02.

or we're on social media - the hashtag is #thewalesreport.

:28:03.:28:07.

Diolch am eich cwmni, nos da, good night.

:28:08.:28:12.

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