Wales remains the poor relation in the UK for investment in rail
A train in the North of England,(Image: PA)
The UK Government has announced a huge £45bn capital commitment to improve the rail network of the North of England, but where does it leave “poor old” Wales?
The £45bn Northern Powerhouse Rail (NPR) scheme will focus on the “M62 corridor” between Liverpool, Manchester and Leeds, along with better links for Bradford, York and Sheffield. The proposals will also include improved services to Newcastle.
The investment is expected to be allocated over the next 20 years. Once projects have commenced, it is difficult for any future Westminster Government to unpick them, with funding running over a number of Treasury three-year spending review periods.
The NPR project provides a better return on investment case than High Speed 2 from London to Birmingham. Improving rail infrastructure, leading to increased frequency of service between northern cities, will also have a bigger economic impact, with reduced journey times helping to boost productivity.
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The north, on a per capita basis compared with London and the south-east of England, like Wales, has been significantly underfunded for decades when it comes to rail enhancement projects. This is not funding for maintenance of existing rail track, but for new rail routes, upgrades to existing lines and stations.
In her spending review last summer – covering the period up to 2029/30 – the Chancellor confirmed £34bn for rail enhancement projects in England, but only £455m for Wales. This is despite Wales being home to around 10% of the Wales and England rail network,
However, when stripping out things such as £90m to help develop business cases for new rail projects, £77m towards the upgrade of Cardiff Central station and upgrading the relief lines on the South Wales Main Line, this leaves around £300m for rail enhancement projects in Wales over the period. This represents a ratio of roughly 100:1 compared with England.
The allocation also includes Padeswood sidings project in Flintshire, which will consume around £30m of the pot. It also covers a £48m one-off payment to the Welsh Government for the South Wales Metro, although it will be for ministers to decide how and where that will be spent.
The five planned Burns stations between Cardiff and the Severn Tunnel, recommended by the Lord Burns Commission set up by the Cardiff administration to improve public transport following its decision not to proceed with a £1bn M4 Relief Road, would each have an estimated cost of around £70m (although less for Magor). If the required rail corridor investment for the Parkway mainline station project at St Mellons – also recommended by the Burns Commission – is added, the current settlement is nowhere near sufficient.
Through the Barnett Formula, the Welsh Government previously received a budget transfer based on changes to the Department for Transport (DfT) budget, using a comparability factor of around 90%, against a UK population share of about 5%.
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That transfer was based on changes to the overall DfT budget. The comparability factor was high because non-devolved items made up a very small part of the department’s spending, and Network Rail expenditure was excluded. However, with HS2 and Network Rail spending now included – and representing a much larger share of the DfT budget – the comparability factor for Wales has fallen to 33.5%.
This squeeze does not impact Scotland and Northern Ireland, where comparability remains close to 100% (95.6%).
The Welsh Government would not entertain taking on devolved responsibility for rail unless it was underpinned by a fair block grant adjustment, one that recognises years of underinvestment in the Welsh rail network. It would also require agreement that the UK Government, with its stronger fiscal position, retains a degree of liability for unforeseen events such as landslides.
Part of the rail network in Wales the Core Valley Lines, a £1bn electrification programme close to completion -is already devolved and owned by the Welsh Government via Transport for Wales. However, the comparability factor has not been adjusted in the Welsh Government’s favour by the UK Treasury to reflect its ownership of the Core Valley Lines network.
The funding of the £140m Cardiff Central station upgrade rubs more salt into the Welsh rail underfunding wound.
While a non-devolved rail asset, the Welsh Government is having to commit around £22m, with a further £40m coming from the Cardiff Capital Region via its £1.2bn – now nearly fully invested – City Deal jointly funded by the UK and Welsh Governments.
The station, while leased and operated by the Welsh Government’s transport body, is owned by Network Rail and ultimately the UK Government. The DfT is committing around half of the total, at £77.8m.
The Welsh Government has a track record of having to fund non-devolved rail enhancement projects. It spent £160m, which included a non-interest-bearing 50-year loan of £70m to Blaenau Gwent, to upgrade the Ebbw Vale line.
While at the time a non-devolved asset, the Welsh Government also agreed to finance the lion’s share of what turned out to be – due to inflationary pressures and delays caused by the pandemic – the £1.1bn cost of electrifying the Core Valley Lines.
This is money that could have been deployed from its block grant to support devolved spending areas such as health and education. The Core Valley Lines are now a devolved rail asset.
Wales should be receiving rail enhancement investment of between £200m and £300m annually over the next 15 years, delivering up to £4bn of new rail investment.
Transport for Wales has worked up a pipeline of well-designed rail schemes, from improvements to the North Wales Main Line to the next phases of the South Wales Metro.
The delivery of the Metro has seen Transport for Wales assemble first class expertise in-house and develop a first-class external support and supply chain. If new projects do not materialise, those skills will simply go elsewhere.
Transport for Wales will publish its rail investment priority document next month – having been signed off by UK and Welsh Government ministers and reviewed by the Wales Rail Board.
With the funding announcement for the North of England it will hopefully provide an ideal platform for the UK Government to commit significantly more funding to help realise much needed rail projects across Wales ahead of the Senedd election in May.
