All eyes will be on Chancellor Rachel Reeves next week when she delivers the º£½ÇÊÓƵ Government’s departmental spending allocations for the next three years in the comprehensive spending review.
Her fiscal headroom is tight, but for Wales it will require Secretary of State for Transport Heidi Alexander to commit funding to start addressing decades of under-investment in Wales’ rail network by successive Westminster governments.
Her settlement from the Treasury will mean she cannot please everyone, but having rightly recognised the pressing case to fund much-needed rail enhancement projects in Wales — as highlighted in a welcome joint letter with Welsh Secretary Jo Stevens back in January — she must now deliver, even if it means cutting back elsewhere within her department.
The advisory Wales Rail Board, which includes various stakeholders such as the Department for Transport (DfT), the Wales Office, Transport for Wales, and the Welsh Government, has already drawn up a detailed list of priority rail enhancement projects for Wales.
These come with a price tag of several billion pounds, including the five Burns stations between Cardiff and Magor, improvements to the North Wales Main Line and connectivity with the north west of England, and the required investment — such as a Coryton loop and a Cardiff west junction — to allow for four trains per hour on the most densely populated part of the South Wales Metro: the Coryton and City Lines running through Cardiff.
Once the DfT commits to major projects, like the £16bn rail and bus investment in the Midlands and North of England announced earlier this week, as they take more than three years to complete they will have to be funded for the long-term.
I would expect the º£½ÇÊÓƵ Government to announce on Wednesday that it will, as a starting point, deliver the five Burns stations: Cardiff East (off Newport Road), Newport West, Maindy, Llanwern, and Magor on the South Wales Main Line. In a phased investment programme, they will take around five years to complete.
The stations were recommended by the Burns Commission, chaired by Lord Burns and commissioned by the Welsh Government to explore ways to boost public transport investment in south-east Wales. This followed former First Minister Mark Drakeford’s 2017 decision not to proceed with a Labour Senedd manifesto pledge to deliver a £1bn M4 relief road south of Newport.
The stations, with a combined construction cost of £320m, first require £15m for detailed design work and £50m to upgrade the relief lines from Bristol Temple Meads to South Wales to allow for passenger services.
The business case for the Burns stations is strong. They would serve a population of around 1.2 million, 20% of whom don’t have access to a car.
Transport for Wales could bid to run a new service from Bristol Temple Meads, calling at the new stations and potentially running as far west as Carmarthen. For Newport and its growing compound semiconductor sector, the stations and increased services to Bristol Temple Meads would enhance its appeal as an investment location — a city which already benefits from being closer to London than Cardiff.
Transport for Wales could reassign its new rolling stock, deploying its tri-mode trains from the Rhymney Line, onto a new Temple Meads to South Wales service. Transport Wales, under the terms of its on order 35 tram-trains, could commission more to back fill the moving of tri-modes from the Rhymney Line and Penarth to Coryton services.
Ahead of next spring's Senedd Election, the Burns stations are something the Welsh Government needs to see delivered by the º£½ÇÊÓƵ Government, having cancelled the M4 relief road. Although little has been said recently about a promised £400m investment for roads and improved integrated public transport around Newport.
Meanwhile, the backers of Cardiff Parkway and its integrated business park project at St Mellons are revising costings for what was a projected £120m four-platform station pre-Covid. It would be a welcome addition alongside the Burns stations.
Despite accounting for around 10% of the rail network (England and Wales), Wales has received less than 2% of rail enhancement investment over the last few decades.
Over a 15-year period, Wales should be seeking a rail enhancement commitment from the º£½ÇÊÓƵ Government of £200m to £300m per annum — equating to £3bn-£4bn in total investment.
By contrast, up to 2040 the DfT has committed around £80bn for rail enhancement projects in England, including HS2 from London to Birmingham, a high-speed station at Euston, and the upgrade of the TransPennine Route.
Through the Barnett Formula, the Welsh Government used to receive a transfer from changes to the DfT budget based on a comparability factor of around 90% — set against a º£½ÇÊÓƵ population share of 5%. The transfer was based on any change to the DfT’s overall budget.
So it’s not accurate to say, as many have this week when the º£½ÇÊÓƵ Government announced the £6.6bn Oxford to Cambridge line, that Wales would have received a £360m consequential if the project was fully barnetised. If the overall DfT budget rose by £6.6bn, then yes — but savings will be made elsewhere. In the round, however, Wales has been hugely short-changed.
The high previous comparability factor was due to non-devolved items being a small part of the DfT’s budget, and because Network Rail spending was not included.
However, with HS2 and Network Rail spending now included — and comprising a much larger share of the DfT’s budget — the comparability factor for Wales has fallen to just 33.5%. The figures for Scotland and Northern Ireland remain at 95.6%.
Of the DfT’s current £37bn annual budget, around £20bn relates to high-speed rail and Network Rail. The ‘England and Wales’ classification for rail projects has significantly eroded Wales’ share.
I’m not expecting a significant uplift to the DfT budget. The Treasury’s view is effectively: if you want to do more in Wales (via DfT), you have to do so from within existing — or only slightly increased — resources.
However, the Treasury should also recognise that part of the rail network in Wales — the Core Valley Lines (CVL) — is devolved. When the £1bn South Wales Metro electrification project is completed and the new turn-up-and-go timetable is bedded in, passenger numbers could climb to around 12 million per year.
With further investment in services on the Coryton and City Lines, the aim should be to increase that figure towards 20 million.
If the CVL devolved asset were recognised fiscally by the Treasury — based on passenger numbers or track mileage — it would improve the comparability factor for Wales. The Welsh Government could then decide how to invest the resulting Barnett consequentials, potentially ring fencing them to support further CVL investment or future phases of Cardiff Crossrail.
Whether this will be addressed by the Chancellor remains to be seen. Devolution would come with a Welsh Government block grant adjustment to reflect new responsibilities and functions – and then Barnett adjustments when DfT budgets change.
The then Welsh Government’s 2004 decision to reject rail devolution — an offer extended by the then-Tony Blair government — must now rank among the worst decisions since devolution. Scotland accepted rail devolution, which has allowed projects like HS2 to be properly classified as England-only, unlocking full Barnett consequentials for the Scottish administration.
If England and Wales classified rail projects provided for fair investment in Wales then many could live with that arrangement — though I would still argue for full devolution.
The Welsh Secretary has made a strong case for Welsh investment and has the backing of Ms Alexander. Having raised expectations, they cannot afford to fall short.
