Interest on £70 million railway loan must be repaid to Welsh Government

Elgan Hearn, local democracy reporter

Interest accrued on a £70 million loan used to improve the railway between Newport and Ebbw Vale  will need to be paid back to the Welsh Government, councillors have been told.

At a meeting of Blaenau Gwent County Borough Council on Thursday (March 27) the £70 million infrastructure loan for the upgrading the railway between Newport and Ebbw Vale was brought up during discussion on a treasury management report.

The upgrade on the line was completed over a year ago.

Underwritten

The loan which is supposed to be paid back over 50 years is underwritten by the Welsh Government and Transport for Wales and would be paid back through the train fares of people using the line – which is known as the cash or fare box.

Cllr John Hill of the (Independent group) said: “We’ve made quite a bit of interest on that loan, and it was thought at one time we could have that and put it into Blaenau Gwent’s coffers.”

Director of corporate services and s151 officer Rhian Hayden said: “We’ve had notification that Welsh Government will be asking for the interest back, and they will be invoicing us.

“As you know we set that interest aside into a reserve to prepare for this eventuality.”

Cllr Hill said; “That’s a bit of a shame, it would have been nice to have been recompensed in some way.”

Independent group leader, Cllr Wayne Hodgins said: “I’d like to see an annual report on the railway loan and see where we are with paying that off.

Cash box

Council leader Labour’s Cllr Steve Thomas said: “I see no harm in an annual statement or briefing for member to understand exactly with the rail loan and what’s happening with the cash box.”

Ms Hayden added: “There will be no impact on this council regardless of the fare box income.

“Whether or not the income to Transport for Wales increases through additional train journeys we are guaranteed to receive the appropriate annual funding to pay the loan.”

She assured councillors that: “there is no risk to this council with regard to the loan arrangement we have with the Welsh Government.”

The Ebbw Vale line reopened in 2008 after being closed for 40 years.

The £70 million upgrade was made to allow hourly trains services between Ebbw Vale Town and Newport to take place.

A huge programme of work was conducted along the entire length of the line including:

Managing vegetation alongside the railway

Setting up site compounds and access points near to the railway which will be used throughout the duration of the project

Laying approximately two miles of new track between Aberbeeg and Crosskeys to create a seven-mile passing loop

Building new platforms at Llanhilleth and Newbridge – just over the border in Caerphilly County – stations and extending the existing platforms so that they can potentially accommodate longer trains in the future.