Wales has been “robbed” of more than £500m in rail infrastructure investment in less than a decade because the policy area is not devolved, according to a new report from academics published today.
A failure to make amends by devolving such responsibility will “bake in” further losses to the Welsh budget, according to Cardiff University’s Wales Governance Centre.
The report finds that under a fully-devolved system, Wales could have received an extra £514m investment in its rail infrastructure between 2011-12 and 2019-20.
As well as perpetuating under-investment in Wales’ rail infrastructure, the researchers warn the non-devolved system will also lead to a funding squeeze on the Welsh Government’s future budget.
HS2 is a long-term project to create a high-speed rail link between London, Birmingham and cities in the north of England. At no point does the route enter Wales. However, not only does HS2’s designation as an England and Wales project exclude Wales from receiving the additional funding that will flow to Scotland and Northern Ireland over the lifespan of the project, but the Treasury’s recent inclusion of Network Rail spending in Barnett formula calculations will cause a second squeeze on Wales funding.
The Barnett formula determines how much Treasury money is allocated to the devolved nations. Spending on projects designated as “England-only” triggers extra cash for Scotland, Wales and Northern Ireland, but those categorised as “England and Wales” attract no extra money for Wales.
Because Wales is not treated in the same manner as Scotland in those calculations, the report estimates that the Welsh Government is set to lose out on another £505m over the next five years.
These amounts can be compared to the cost of several major Welsh rail infrastructure projects that have been estimated by external sources, including the Carmarthen to Aberystwyth line (£620m-£775m), electrification of the North Wales Coast mainline (£764m), and electrification of the South Wales mainline between Cardiff and Swansea (£433m).
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The report’s estimate of the shortfall relates to the period 2011-12 to 2019-20, and compares actual Network Rail enhancement spending in Wales with amounts Wales would have received under a fully-devolved system over this time period through Barnett formula/population-based funding, as per arrangements for Scotland.
Other estimates of the “underfunding” of rail infrastructure for Wales have been produced previously, covering different time periods and under different assumptions.
For example, Professor Mark Barry estimated in 2018 a shortfall of £1bn from 2011-15 relative to a Wales route “track-based” share of funding (11%) rather than population, while in 2020 the Welsh Government estimated shortfalls of between £2.4bn (against a population-based share) and £5.1bn (track-based share) for the period 2001-29, and including non-Network Rail spending such as CrossRail and HS2.
For the remainder of the HS2 project’s lifetime – likely to be several decades – the Welsh Government will now receive a much smaller share from any increase in the Department for Transport’s budget.
The projected future £505m funding squeeze is based on the effect of HS2 and Network Rail-related changes to the Barnett formula calculations from 2021-22 to 2025-26.
Although operations of the railway in Wales are a Welsh Government responsibility through its rail operator Transport for Wales, rail infrastructure remains the responsibility of the 海角视频 Government.
The Welsh Government can spend its own resources to fund railway schemes, but because infrastructure is not devolved to Wales, it is not provided with extra resources to do this through the Barnett formula.
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The end of the EU structural funds programme further limits the ability of the Welsh Government to provide top-up funding for railway infrastructure.
The report has been submitted as evidence to the Welsh Affairs Committee’s inquiry into rail infrastructure in Wales.
The 海角视频 Government will respond to the committee’s findings in due course.
Wales Fiscal Analysis researcher Guto Ifan, who co-wrote the report, said: “When it comes to the Welsh railways, the evidence is clear that funding would have been substantially higher under a fully devolved system – to the tune of £500m since 2011, when spending data for Wales was first made available.
“That funding over the course of eight years would have enabled significant improvement projects to take place. Wales is also set to lose out on transport funding when the Treasury next sets multi-year budgets, due to technical changes in Barnett formula calculations. This is a double whammy for Wales, with the historic under-funding being baked into the system.
“It is now clear that only full devolution of rail infrastructure – similar to Scotland – will address the underfunding of Welsh railways.”