Wales to be robbed of a further £2.7bn in rail funding, says academic

Martin Shipton

Wales is due to be robbed of a further £2.7bn in rail funding by the 2040s, according to a leading transport academic.

Professor Mark Barry of Cardiff University has calculated the figure based on information in the UK Government’s Integrated Rail Plan.

Our nation’s shortchanging stems from an alteration in the “Barnett consequential” factor which Westminster’s Department for Transport (DfT) has set for Wales, reducing it from 90% in 2015 to 36% in 2020/21.

The Barnett formula, devised in the late 1970s and named after the Chief Secretary to the Treasury at the time, determines how much money goes to the devolved nations and is based on percentages of money spent by the UK Government in England according to a population-based calculation. Sometimes, however, the amount allocated does not represent a fully proportional share based on population.

The Barnett consequential factor which the DfT has set for Wales changed from 90% in 2015 to 36% in 2020/21, with the reduction attributed to the high cost of funding for the HS2 rail project in England and the inclusion of Network Rail in the DfT’s spending portfolio, neither of which favours Wales.

Unlike Scotland and Northern Ireland, whose factors are currently set above 90%, Wales was assessed as meriting just 36%.

HS2

Prof Barry has calculated Wales would be receiving £4.5bn worth of funding from the Integrated Rail Plan, but currently it is predicted to only receive £1.8bn. However, that is the overall figure for the DfT budget. The issue becomes even less favourable for Wales once a calculation is done to determine how much of a Barnett consequential Wales receives for HS2.

While Scotland and Northern Ireland have a 100% consequential factor for HS2 funding, Wales receives 0%, as HS2 is considered an “England and Wales” project, despite not a single inch of track being laid down in Wales for it.

While £74m has gone to Wales of the £5.67bn spent on HS2 to 2020/21, this is only 1.3% of the benefits through funding, with England receiving 96.7%. However, even this paltry amount is counteracted, according to the DfT’s own Regional Economic Impacts analysis, by a net loss to Wales’ GDP of £150m per year caused by HS2.

Prof Barry added: “This is not actually spending or money in Wales – this is the amount of the capital spend on HS2 that is allocated to Wales when the Treasury assesses capital spending across the UK based on where they think the ‘benefits of HS2 fall’. So, the Treasury think only 1.3% of the benefits of HS2 fall in Wales – yet they also determine it is an England and Wales project and so get 0% consequential funding for Barnett purposes. This contradiction completely wipes out any benefit. On the basis of where they think the benefits fall the consequential funding for HS2 should be (5-1.3)/5 x 100 or 74%.”

This completely wipes out any benefit HS2 funding may have had on Wales – what South Wales Central MS Rhys ab Owen has called “the great train robbery” – furthering the case for having the consequential factor increased so that Wales receives fair funding for its transport services like Scotland and Ireland.

Mr ab Owen has written to the UK Government questioning how it is fair that Wales does not receive adequate funding, when HS2 and the Integrated Rail Plan have nothing to do with Wales, and in fact cause damage to the Welsh economy.

According to Prof Barry, Cardiff is one of the worst connected main cities in terms of rail in the UK, which correlates to the economic performance of the region. He has called for discussion about the devolution of rail infrastructure funding to Wales and a new joint-government plan, including boosting the number of trains an hour through the Cardiff West junction in Canton from a measly one or two, to a minimum of four.

The new South Wales Mainline Programme from Transport for Wales is suggested to have a potential £1bn in economic benefits, furthering the argument for an Integrated Rail Plan for Wales.

Rhys ab Owen said: “The Canton junction is a bottleneck. To unblock it would transform the rail network in the capital and increase connectivity with the Valleys no end.”

The MS has questioned why DfT promised to renew the junction to allow for four trains an hour in 2012 and 2015, but have yet to put the money forward, seemingly having lost interest. He added: “The answers we’re receiving back from the UK Government are becoming more and more weak, and that is to put it mildly.”

Prof Barry said: “Fixing Cardiff West is the single most important measure we can progress to augment the Core Valleys Line Metro now being developed by Transport for Wales.”

Challenged

In March Swansea West MP Geraint Davies challenged Transport Secretary Mark Harper in the House of Commons about rail underfunding for Wales.

Mr Harper said: “The UK Government is responsible for heavy rail infrastructure in Wales. Conversely, it is a devolved responsibility in Scotland, so the Scottish Government receives Barnett-based funding. That is consistent with the funding arrangements for all other policy areas that are reserved in Wales but devolved in Scotland.”

Mr Davies responded: “In other words, Wales has only had 1.5% of rail enhancement investment for the UK for 5% of the population, while Scotland gets 8% for its 8% of the population. That is why wages in Wales are something like 73% of the UK average, compared with 92% in Scotland. Will the Minister give an undertaking that Wales should get its fair 5% share of HS2 – £5bn – in the same way that Scotland will get its 8%, or £8 billion? Will he raise that with his colleagues in the Cabinet?”

Mr Harper said: “The Welsh Government has actually received a significant uplift in its Barnett-based funding due to UK Government spending on HS2. I also point out that the UK Government has committed £2bn [for Wales] for the period 2019 to 2024 – more than double the £900m invested between 2014 and 2019.”