200 to 1: English Rail Investment V Wales Rail Investment !

PS October 2023. Given PMs announcement cancelling HS2 north of Birmingham and a suggestion of £1Bn for OLE on the NWML I was going to update the ratio below (to something like 60:1). However, as I set out, there is no firm commitment on rail funding or timing thereof for Wales, so the issue has not gone away (esp given some of the backtracking on commitments since the PM announcement!). So I’ll leave as is for now!

PS March 2023 Here’s a link to presentation I gave at a conference on this subject.

As a kind of addendum to my blog earlier re: my parents trip to Taffs Well depot to see the CVL Transformation work in progress…I think I’d also like to repeat a more serious point to UK Government.

You can’t level up with words or hand waving rhetoric…and a 200:1 ratio between UK Government’s rail investment (which is non devolved) in England V Wales is a constitutional outrage . 

Let me explain…

The DfT’s ~£180M (I think)  contribution to the CVL transformation now being delivered by TfW, is part of a UK Government total forward commitment to rail enhancement investment in Wales of less than £500M (which also includes a welcome  contribution to Metro Central and the Global Centre of Rail Excellence).

In contrast, there are well over £100Bn of rail enhancements set out by DfT in England. Specifically, the Integrated Rail Plan[i] Figure 1  (which includes £70Bn for HS2, now, as announced this week, over £10Bn for  the Trans Pennine Upgrade[ii] and nearly £20Bn for Northern Powerhouse Rail (NPR).

So, the ratio between UK Government rail enhancement commitments in England V Wales is  approximately 200:1.  I’ll repeat that,   200 to 1 ! 

(Compare that with the population ratio of approximately 20:1…and the route length just 10:1!!!)

That is staggering and completely undefendable;  I suspect some politicians have fallen for the Father Ted “near/far” illusion in trying to defend this situation! 

To exemplify, if your answer to the question “What is the best way to improve public transport capacity including more rail services, in Wales?” is “Lets spend £100Bn on railways in England” then I think you have a problem with reality!

Figure 1 IRP (inc HS2) costs from IRP 2021

Figure 2 From HMT Statement of Funding Policy Oct 2021[iii]

It is also instructive to note that both HS2 and NR enhancements (so all the IRP) are defined  by the UK Treasury as “England and Wales” expenditure!  HMT has now determined the DfT comparability factor for Barnett consequential to Wales is now just 36% (vs over 90% in 2015)Figure 2 . This applies to any barnettisable change to  the DfT’s budget – not just rail.

As I have stated before, the Wales network (which also include the Marches line, Severn Tunnel, Chester, etc) has received approx. 1-2% of total UK rail enhancement investment over the last 20 years[iv]; 5-6% of the Operations, Maintenance Renewal(OMR) investment[v] (noting a more capable and “enhanced railway” attracts more OMR investment) despite the Wales Route network being ~10% of the UK & Wales having 5% of its population . See Fig X below

I also oft hear politicians say, “we get higher subsidies for rail services in Wales” (which Welsh Gov pay – not UK Gov).  Yes, and this is as a direct consequence of decades of depreciation of the underlying asset Vs the rest of the UK network.  If you don’t invest in your network to expand capacity,  reduce journey times and improve reliability (as has happened elsewhere in UK, esp. London and SE England) your operations become less efficient, more costly and so attract fewer passengers Vs those parts of the network that have been in receipt of such investment.  The impact, yes, subsidies go up and the “case for investment” for enhancement appears weaker Vs those places on the investment conveyor belt.

So please do not point at subsidies…. it shows a lack of understanding of the long-term link between capital investment and operational efficiency and demand.  This is also true of the wider economy – if you let places wither on the vine then over time your welfare costs go up…Doh!

fix X – Illustration of Wales Rail Funding Problem!

It is clear, as I set out in my evidence to the GBR consultation[vi], that the rail industry and associated DfT ecosystem via its Rail Network Enhancements Pipeline (RNEP) process,  and HMT Barnet policy re: Wales, rail and HS2, continues to systematically fail Wales. 

Without being overly dramatic, Wales has[vii] and continues to lose out on £Bns of  necessary rail investment; that broad brush ratio of UK Gov rail enhancement investment commitments in England v Wales of 200:1 is politically, constitutionally, economically  and environmentally,  unacceptable.

I have been trying to make this point since I first gave evidence to Westminster’s Transport Committee back in 2011[viii]…with clearly limited success!  I have no hesitation in asserting the Westminster/Whitehall government has been and continues to be, dysfunctional in this regard.

More strategically, the focus and argument re: HS2 and Wales means that many more important and clearly higher priority schemes for Wales are not being progressed.  Collectively,  whilst there are clear benefits to parts of England  of the current rail funding ecosystem and projects like IRP/HS2 – it is also very much clearer that this arrangement levies a very significant opportunity cost on Wales,  its rail network and especially its economy.

Postscript:- HS2, even in its reduced form as part of the £96Bn Integrated Rail Plan for the North and Midlands of England (IRP), will still cost over £70Bn; the IRP also sets out £5.4Bn for an upgrade of the Trans Pennine line (now up to £10Bn ) and £17Bn for NPR. Based on DfTs own figures via the HS2 Full business case High Speed 2 Phase One (publishing.service.gov.uk) (and some of the unpublished appendices secured through FoI requests), it is clear there are only very limited potential benefits to Wales which are more than offset by the much bigger disbenefits – especially economic. Some of the potential future benefits to Wales often asserted, are also dependant on uncosted further infrastructure and the presumptive allocation of minimal network capacity freed up by HS2 (at places like Manchester and Birmingham) being allocated to Welsh rail services,  which, based upon recent history, is unlikely. And Wales has many other higher priorities!

Furthermore the only quantitative analysis of economic benefits to Wales can be found in DfTs regional economic analysis which whilst finding small benefits in NE Wales identified a gross economic dis-benefit to Wales of £150M per annum.

The only other official assessment of HS2 benefits to Wales comes via HMT’s allocation of HS2 capital spend across the nations/regions of the UK. This is done based on assumptions of “where the benefits” fall – Fig Y below. I don’t agree with their analysis – but even that calculation (and I can’t find the underlying source data) only found just 1.3% of the benefits of HS2 fall to Wales (vs 5% of the population so a 3.7% barnettable shortfall?).

Any other claims for HS2 benefits to Wales are without source, quantification and certainly not formally acknowledge by DfT/HMT.

Fig Y – From Treasury’s Country and regional analysis.

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Fig Z – The Wales HS2 Barnett problem!

More generally in the UK, there has and continues to be an imbalance in capital funding with the overwhelming majority  of funds  Figure 3 directed to London and SE England[ix] over decades (As above the figures for Wales are overstated a little as HMT will have allocated Wales a proportion of  the England & Wales capital spend for rail enhancement and HS2 – those figures also includes WG investment in rail which contributes to overstating UK spend when looking at such graphs).  It is little surprise that  the economy of the SE England has done relatively better than other parts of the UK over the last 50 years. 

This is not just an issue for Wales, but much of England as well. Scotland, given a more generous Barnett treatment from HMT, has secured capital funding levels closer to that of London than the remainder of Wales and England. 

So, for me, levelling up has to seriously address long term allocation of capital funding for essential economic infrastructure like rail. More broadly, in my view,  the current “levelling up “mantra can only be realised with a major constitutional overhaul; it will never work if based on a little more cash being dispensed though politically compromised Westminster largesse. A handout economy and a handout constitution based entirely around Westminster and Whitehall, has not and can never really work for everyone and every place on this island, especially in Wales.

Figure 3 HM Treasury Cap Spend per person by county & region 2021

In conclusion, the current industry arrangement where WG is responsible for the rail  subsidy but not for investment in the underlying asset and its capacity/capability (which will directly impact the subsidy) is not just constitutionally dysfunctional,  it is a very inefficient  application of public funds. The fragmentation of rail powers is also stymieing WG and regional efforts in Wales to develop fully integrated public transport networks (rail and bus), fares and ticketing (which has been a more challenging task outside London since the deregulation of the bus industry in the 1980s).

So, until rail is fully devolved and whilst the schemes above are defined by HMT as “England Wales”, then we in Wales need UK Government to step up and make  a major contribution to investing in Wales rail network.

The forward programme of £3~4Bn TfW have developed for Welsh Government into the 2030s (including some of those I set out in my Metro Summary[x] earlier this year and now in WG’s National Transport Delivery Plan consultation[xi] )  includes enhancements to the SWML, Borderlands & NWML, a Swansea Bay Metro, as well as more Metro in South East Wales (inc “Cardiff Crossrail“). These programmes will have major economic and decarbonisation benefits.

However, the stark reality is that most of these projects will go nowhere without UK Government support; more concerning is that Welsh Governments challenging Net Zero targets for mode shift[xii] will likely also fail without such support.  

200 to 1 is not sustainable!!

Mark Barry, July 2022.

PS December 2022 – these brief video explainer may help re rail funding, Barnett and Wales transport priorities

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[i]        UK Gov, DfT, Integrated Rail Plan for the north and midlands (of England), 2021 Integrated Rail Plan for the North and Midlands – GOV.UK (www.gov.uk)

[ii]       Transport update: Transpennine route upgrade – GOV.UK (www.gov.uk)

[iii]      Statement of Funding Policy 2021 (publishing.service.gov.uk)

[iv]      Historical investment in rail infrastructure enhancements [HTML] | GOV.WALES

[v]       The Rail Network in Wales (gov.wales)

[vi]      GBR – WISP Consultation. My response…Jan 2022 – Mark Barry (swalesmetroprof.blog)

[vii]      Welsh Rail Infrastructure Investment – Mark Barry (swalesmetroprof.blog)

[viii]     House of Commons – Transport Committee – Written Evidence (parliament.uk)

[ix]      Public spending by country and region, 2021, SN04033.pdf (parliament.uk)

[x]       Wales’ Metros – Update Feb 2022 – Mark Barry (swalesmetroprof.blog)

[xi]      National transport delivery plan: 2022 to 2027 [HTML] | GOV.WALES

[xii]      Net Zero Wales | GOV.WALES  PT increase  from 5% to 7% by 2030 and to 13% by 2040; AT to 33% by 2030 and 35% by 2040; with car use falling to 60% by 2030 and ~50% by 2040.