Finance

New body to assess rail investment needs in Wales but no HS2 consequential


A new body assessing the rail investment needs of Wales is being set up, but the UK Government has rejected calls from a cross-party committee of MPs that Wales should get a Barnett Formula boost worth billions from the roll-out of high speed rail in England.

In July the Welsh Affairs Committee said the UK Government’s flagship HS2 rail project should be reclassified as an English-only scheme so that Wales receives the benefits of a Barnett Formula consequential.

While not recommending that rail investment be devolved to the Welsh Government, which the Cardiff Bay administration has called for, the committee, chaired by Tory MP and former Welsh Secretary Stephen Crabb, said a Wales rail board comprising UK and Welsh government bodies, Network Rail, the rail operators and Transport for Wales, should be set up to identify improvements and investment needed to upgrade Wales’ ageing rail network.

Read More:Welsh Office Minister says HS2 will benefit Wales

In response to the report the UK Government has confirmed it is creating a senior-level board with responsibilities including the development and delivery of railway enhancements.

It said the board will comprise director-level representation from Welsh Government, the Department for Transport, Transport for Wales, Network Rail, and other train operators serving passengers in Wales. It is intended to first meet this calendar year. Its terms of reference will cover working arrangements between Great British Railways (GBR) and Transport for Wales under rail reform proposals.

However, the new body will not be able to compel the UK Government to spend more on rail investment in Wales. Future projects will to considered for investment along with schemes across the UK for the next five year investment period.

Outside of the necessary operating maintenance and renewal costs, there is currently just £345m allocated for rail enhancement projects in Wales.

Mr Crabb said: “The UK Government’s move to introduce a Wales Rail Board is very welcome news. We heard from numerous witnesses during our inquiry that more coordination is needed to drive investment and improvements, and I hope the board will deliver this. It’s also very welcome the speed in which they will start convening, and I hope people across Wales will start feeling the benefits feed through to their railway journeys.”

The committee recommended that HS2 should be reclassified as an England only project.

It said: “Using the Barnett Formula, Wales’ funding settlement should be recalculated to apply an additional allocation based on the funding for HS2 in England. We suggest that such a reclassification would help to ensure that Welsh rail passengers receive the same advantage from investment in HS2 as those in Scotland and Northern Ireland.”

Based on a spend of £100bn over the next decade (assuming the eastern leg from the Midlands to Leeds isn’t pulled), if HS2 was barnetised it would result in a consequential for the Welsh Government of £5bn.

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As the project is not Barnetised it will mean a squeeze on the attribution factor in Department for Transport spending in devolved areas for the Cardiff administration.

With rail now taking up a much bigger slice of the overall Department for Transport budget, the attribution factor to the Welsh Government from spending in England in areas which are classified as devolved, like roads, has been revised downwards to around 34%. It had previously been 80%.

In rejecting the recommendation the UK Government said; “We have responsibility for heavy rail infrastructure policy across England and Wales, and therefore spend money on heavy rail infrastructure in Wales rather than providing Barnett-based funding to the Welsh Government in relation to heavy rail spending in England.

“This is consistent with the funding arrangements for all other reserved UK Government responsibilities and with the statement of funding Policy. However, due to the use of departmental comparability factors in the Barnett formula at spending reviews, the Welsh Government has actually received a significant uplift in its Barnett-based funding due to UK Government spending on HS2.”

The committee report also called for electrification of the South Wales Mainline to Swansea, which currently is only electrified to Cardiff, a Swansea Metro network as well as upgrading the North Wales Mainline. It also called for improved connectivity between South Wales and Bristol.

Network Rail is currently working on early stage business cases for upgrading the freight lines between Cardiff and Bristol for passenger train use and upgrading to the North Wales Mainline.

However, the UK Government said it had no plans to electrify the Great Western Mainline between Cardiff and Swansea, which was abandoned in 2017 on cost grounds.

On calls to revive the project by the committee the UK Government said: “The 2017 cancellation of the electrification of the main line between Cardiff and Swansea was due to significant increase in costs and poor value for money. A driving reason was that electrification would provide no significant journey time saving between Cardiff and Swansea, as the maximum line speed over most of the route between the two cities is 90mph.

“The full benefits of running the Hitachi Intercity Express Trains in electric mode would not be possible even with electrification, with comparable journey times regardless of whether operating in diesel or electric.”

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