Some of you will know I am busy writing a book about the South Wales Metro (or the Cardiff Capital Region metro as it used to be called…and will again I suspect). I have devoted one chapter to the dysfunction of the UK rail industry ecosystem as regards Wales (so yes UK Government investment, Barnett, HS2, etc).
Given an impending Westminster General Election, I thought I should publish the current WIP pre-edited draft of that chapter now – with a few tweaks. I’ll probably send to Louise Haigh and Juergen Maier as part of their current review! Sorry it’s a bit long for a blog (11k words) but is a chunky book chapter.
Enjoy…..
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The failings of the Rail Industry ecosystem vis a vis Wales and investment in the Wales Route, are now much clearer to many more people than in 2010. The issues relate to the quanta and type of funding, the value and impact of HS2 on the UK and Wales, the application of Barnett formula by HMT as regards DfT spend, and what if anything UK Government can, or is inclined to do, to remedy the situation.
I know this is long 11,000 word chapter, so in summary, the current dysfunctional constitutional arrangements re: rail powers/funding vis a via Wales, have had and continue to have, three major impacts:
1 – Makes delivering coherent Welsh Government (WG) transport policy almost impossible given a major component (the Network Rail asset) of transport service delivery is the responsibility of the UK Gov at Westminster. A situation made worse given (and the data referenced below is pretty clear) that UK Government has overlooked WG rail investment priorities for decades.
2 This arrangement has cost Wales at least £3Bn in capital investment since 2000, a figure that will double without change by 2040 given plans for schemes like HS2, Norther Powerhouse Rail and the ongoing TransPennine Route Upgrade (all set out in the DfTs Integrated Rail Plan). Furthermore, the limited but welcome Welsh Government investment in rail enhancements has, by implication, impacted other devolved responsibilities given it gets no capital rail funding from Westminster.
3 Bizarrely, WG is responsible for the operational subsidy for rail services in Wales operated by Transport for Wales, but has no powers/funding to enhance the underlying infrastructure which may make those rail services more efficient to operate.
Main Chapter Content…
One can’t talk about a Metro in Wales, and especially its rail components, without some reference to the institutional and funding failings or the UK rail industry ecosystem as regards Wales over the last 20-30 years, or the story of the development, funding and eventual butchering of HS2.
Even whilst I was still trying to be a biotech entrepreneur in the 2000s, I was suspicious that Wales was not getting a fair crack of the whip. I had worked, lived and/or studied in places like Manchester, London, Milan and in the US and was convinced that there must be some institutional failings that were preventing commensurate funding for, and development of, public transport in Cardiff.
I recall back in 2007/8 doing a “back-of-a- fag-packet” calculation that, it seemed to me, clearly demonstrated that as regards rail enhancement investment, Wales was being poorly served by UK Government. With the debate on High-Speed rail just beginning at that time, I began to dig a little deeper, which perhaps precipitated my career move into transport.
As I mentioned at the beginning of this book, those earlier UK Government failings re: Cardiff Bay and the 2003 franchise (See A little history ) and my written interaction with the then CEO of NR Ian Coucher and NR, really brought home the issues for me. Today these are still unresolved, primarily because of the constitutional anomaly of rail powers/funding not being devolved to Welsh Government. Yes, Welsh Government could perhaps, have done more during the 2003-18 franchise re: some additional services and rolling stock beyond the Vale of Glamorgan and Ebbw Valley lines. However, this would only have been a sticking plaster trying to cover a more serious wound. It’s only now, in 2023, with £800m of new rolling stock for Wales and Borders services[i] on order, that we are beginning to address the fundamental failings of that 2003 decision by the SRA; but we have so much more to do.
My frustrations go back a long way, as an email from 2002 which I sent to the then Welsh Assembly Minster responsible for transport, Sue Essex, demonstrates. (See Mark Barry email to Sue Essex January 2002 ). These ongoing and growing frustrations turned to exasperation in 2011 or 2012 when I found out about an earlier Welsh Government decision.
In 2004, at the same time many more rail powers were offered to Scotland, the then Welsh Government were offered a similar arrangement by the Labour UK Government but declined (See The biggest devolution mistake? ). I appreciate the reasons/concerns re administrative capability and taking on infrastructure liabilities. However, I think that is perhaps the biggest mistake made by the devolved government in Wales; especially when one looks at how rail enhancement investment in Scotland has been transformed in the period since.
I also find the levels of disinterest and/or lack of understanding of many of our Westminster MPs (of all parties!) of this issue, and a failure to recognise the impact of relatively lower levels of investment (vs. other parts of the UK) in essential economic infrastructure like rail, deeply frustrating and disappointing. For me these manifests another weakness of the current very centralised Whitehall/Westminster system of government. This needs an overhaul, not just the rail industry. Ask anyone in Leeds, Liverpool and Manchester what they think; I suspect Manchester Mayor Andy Burnham and West Yorkshire Mayor Tracy Brabin, would both concur that radical changes are needed – especially given the decision by PM Rishi Sunak, to in effect cancel HS2 north of Birmingham in 2023[ii].
Types of rail funding
Before I get into the detail and the history of rail funding in Wales, it is probably worth setting out in simple terms how the rail industry and government typically describe different types of rail expenditure. If you would like the more complex version and the fine grain details, then the ORR maintains a lot of information on its website[iii]. Although even today there are some omissions for Wales or challenges getting clarity on relevant funding as regards Wales (or the Wales Route) vs the rest of the UK.
There are three main types of funding that fall to governments:
- Enhancements improve the capability, capacity, and reach of the rail network; so typically, an enhanced network can run more and faster trains to more places carrying more people. The limited share of such investment in Wales Vs the rest of the UK has led to relatively less attractive services, fewer passengers, resulting in lower modal share and higher subsidies
- This is different from the Operations, Maintenance and Renewal Spend (OMR) which is about maintaining the network’s safety and current capability and reliability. So, renewing the points, maintaining ballast, etc; noting a more capable and enhanced railway will require more OMR spend. So, a relative lack of enhancement investment flows into a lower longer-term allocation for OMR. For example, a set of points that support a lot of traffic will require more maintenance and need to be replaced more often than a set of points that doesn’t
- We then have operational costs – what it costs to run the trains, maintain the fleet, pay staff etc. For some routes/services (es very busy urban route in/out of London and some of the long-distance main line services) the ticket revenues cover these operational costs. However, most of the services operating on UK rail network require a subsidy to augment the ticket revenues to cover the operational costs.
This is generally very different from other European countries where subsidies per capita for rail operations (via the taxpayer) are typically higher than the UK (where more of the burden is allocated to the passenger). A 2017 Boston Consulting report[iv] also exposed a correlation between public cost and performance of rail services.
All this, for me, is reflective of the long-term systemic undervaluation of the importance of high quality, accessible public transport in the UK. The more generally held European view of public transport as essential economic infrastructure is also manifest in the availability and range of services available to passengers, as well as capacity, in Europe.
For example, in the 1970s the French Government established legislation to enable local authorities the powers to levy a payroll tax on businesses and public bodies in urban areas to fund public transport and active travel. The proliferation of light rail systems in France since then, and the massive support of public transport in Paris, is as a direct consequence of that measure, called the “Versement Transport”[v]. This more enlightened view is not shared by Westminster and Wales does not have all the statutory powers to replicate that approach.
In terms of actual rail investment in Wales Vs the rest of the UK, the analysis is pretty stark. Whilst pre 2011 figures are harder to compile as Wales was in effect invisible from a rail industry perspective (despite there being a Wales and Borders train operating company), there is some data (some of which is a little inconsistent) to draw upon in supporting an analysis. For example, one can review (as I did) various DfT “Statements of Funding Available (SoFA) and Network Rail’s “High Level Output Specifications” (HLOS). Since 2011 ORR have maintained more useful data for the Wales Route (and noting the Wales route includes section of track in England like the Severn Tunnel, the Marches Line etc) much of which can be found on the ORR[vi] website, data portal and publications.
In Wales, in 2016 The Auditor General for Wales published “Welsh Government investment in rail services and infrastructure”[vii]. Welsh Government also published its analysis of historical rail investment in Wales[viii] in 2020, which expanded and updated that analysis included in the 2018 Welsh Government Case for Investment[ix], and its calls for full devolution of rail powers[x] in 2019. The Wales Governance Centre also published its analysis[xi] submitted to the Welsh Affairs Select Committee in 2021.
Whilst all a little different in their analysis, these sources all clearly highlight the poor record of UK Government rail investment in Wales. In totality that body of work indicates that the Wales route has received (using a most generous interpretations) approximately 1~2% of rail enhancement investment and 5-6% of OMR spend. This is despite the fact that the Wales route makes up approximately 10% of the UK rail network[xii] and Wales being ~5% of the UK population (Note: the Wales Route which also include significant sections in England like the Marches Line and Severn Tunnel covers a higher percentage of the UK population.)
In terms of rail enhancement, in the period from 2001 through 2029 I estimate conservatively, that the current constitutional arrangements have cost Wales a minimum of £3Bn in Barnett consequentials (assuming that pre 2014 NR spend would have been properly barnettised) that could have been applied to rail in Wales. Beyond 2029 with HS2 from London to Birmingham, the revised IRP, etc this funding shortfall is set to persist – even with the 2023 suggestion[xiii] by the Westminster Government that they will electrify the NWML. Although following that October 2023 announcement, it has to be pointed out that the priorities for the NWML are higher line speeds and more capacity[xiv] (See North Wales ).
Also relevant, in May 2023, Network Rail published its proposed settlement for CP7 (2024-2029) for OMR[xv] which was refined with minor changes and approved by the ORR in October 2023[xvi]. The Strategic Plan for England and Wales set out £44Bn of OMR expenditure over 5 years in CP7 to 2029 (vs £40Bn in CP6) and which obfuscated how much is allocated to the Wales Route (~10% of the network). Those details were presented in an accompanying press release[xvii] which indicated the Wales Route was to be allocated £1.9Bn, or about 4.3% of the total.
As I set out earlier, in simple terms if you have more OMR £ per track mile, then you can afford to maintain/replace your points, track, etc more often, which will directly influence reliability of rail services. The simple inference is that on this basis the Wales rail network will in effect be made less reliable vs other parts of the England and Wales network. Even Network Rail themselves have admitted[xviii] the current funding settlement will result in a less reliable railway, and so they will focus resources where NR generate the most revenues. This will disproportionately impact the Wales Route.
Overall and simply put, in Wales, lower levels of enhancement investment over a prolonged period contributes to a subsequent lower share of ongoing OMR investment. This all leads to a less attractive railway, drawing fewer passengers leading to higher subsidies. It’s an unvirtuous cycle.
One has to now reflect the fact that the national rail network in Wales – so NRs Wales Route and the now “devolved” CVL is about 10% of the UK network (about 1500Km and covers ~ 6% of the England and Wales population). The recent OMR settlement relates only to NRs asset and so not the CVL for which, while operationally devolved, no funding arrangement has been agreed by UK Government (yet – and by the time this book is published it may have).
The uninitiated should be aware, that it is very easy for DfT to obfuscate and give the impression that there is no funding issue in Wales by making broad brush statement like the Wales route is mainly rural by referencing the Heart of Wales Line. To be clear by PAX Wales’s most heavily used routes are urban/high density like the Core Valley Lines; there are also huge sections of rural network in England and Scotland as well. I have also seen DfT deploy metrics like train miles, which for the Wales Route is about 5% of the UK total. Thereby trying to justify a 5% share of the OMR funding. The fact that train miles are much lower per track mile than the rest of the UK network is actually a clear indication of the lack of enhancement investment the Wales route has received relative to the rest of the UK rail network. It’s not the “gotcha” they think it is.
There is also the phenomenon of NR reducing its OMR commitments if they perceive Welsh Government enhancements funding might be available. Others may challenge my assertions, but NR is structured and remitted in Wales in a manner that encourages it to exploit opportunities to use 3rd party enhancement funding to cover some of its OMR expenditure obligations. As WG have no remit or influence over NR spending this is a problem and ORR seem disinterested in addressing it.
More strategically, WG has spent and continues to invest in the Welsh rail network enhancements (which I welcome and which UK Government have failed to do for decades). Given this is a non-devolved matter, in so doing WG has to divert funding away from departments and functions that are devolved. This is a constitutionally compromised double whammy re-funding for WG – Westminster/Whitehall know this and has done nothing to address it.
Figure 109 Illustration of Welsh Rail Funding problem (2023)[xix]
This is very different to the situation in Scotland (Route length approx. 2,700Km or 17% of the UK total), which has resulted in significant enhancement of its network since 2006 when powers and funding transferred to the Scottish Government. For example, Scotland’s OMR settlement proposed for CP7[xx] was £4.2Bn.
I also oft hear politicians say, “we get higher subsidies for rail services in Wales”. Yes, this is true and as a direct consequence (in the main) 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 & especially London and SE England) your operations become less efficient, less reliable, 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 just pointing at “high” subsidies for rail services (which in Wales are the responsibility of Welsh Government) 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!
It is a sub-optimal constitutional arrangement (and certainly not how you run a business) where a party has responsibility for the operational costs (and subsidy), but not for investing in the underlying capital equipment (the track) upon which efficient operations are dependent (So the Enhancements and OMR). This is the situation Welsh Government finds itself in as regard Welsh rail infrastructure and services.
We need to do far more, and if UK Government is serious about rebalancing the UK economy and driving further investment in infrastructure, then they need to engage with and support WG and not just throw around “levelling up” rhetoric. As I have stated elsewhere, this issue does not just impact Wales, the regions of England are also poorly served by the current over centralised and Whitehall/London focussed arrangements.
The constitutional dysfunction
Questions related to policy, strategic objectives, sustainability, economic development, etc and how they should influence transport policy, including rail, from a Welsh perspective are or should be the responsibility of the Welsh Government.
The fact that matters relating the NR rail asset in Wales are primarily dictated by Westminster with little or no recourse to wider Welsh policy priorities and/or objectives in respect of other transport policy (bus, active travel, etc) and especially as regards decarbonisation policy, is part of our problem and a constitutional dysfunction which needs to be addressed.
Wales voted for devolution in 1997; yet the current failed institutional arrangements for investing in and managing the rail network, in Wales have not been amended to reflect that democratic decision. Why?
The rail network is a fundamental part of Wales’s economic infrastructure and should have been treated like the road network and included in the devolution settlement. This is an anomaly that has resulted in Wales rail investment falling “between the cracks” at the DfT and which has cost Wales £Bns in rail investment over the last 30 years.
Disappointedly, I think many in the UK rail industry are subconsciously not well disposed to and have a rather dismissive attitude (and often ill-informed in respect of Wales’s rail priorities) toward the reality of constitutional devolution and what that means for how the rail industry should be organised on this island. The Wales and West division of NR, and a Rail Network Enhancements Pipeline (RNEP) ecosystem that has systematically overlooked Wales, are suboptimal manifestations of this mindset. To exemplify the RNEP pipeline in 2019[xxi] had over 50 projects totalling over £9Bn – but with only 3 (2 had been stalled following publication in 2019) with a total value of less than £300M, in Wales.
I am not saying the DfT, NR or the ORR don’t have the capability to properly act as custodians for Wales’s rail network (they clearly have a huge amount of capability). It’s just that they have not been organised or remitted in any way that could be described as effective from a Welsh perspective – nor could they, viewing Wales as they do, through a Whitehall lens.
To exemplify further, the obvious question is, why is that NR/DfT over the last 20 years were never able to bring forward some of the positive schemes that WG/TfW have developed in the last 5 years, including most of those set out in The priority transport schemes in Wales to 2040 For, me this is a manifestation of the systemic failure of the UK rail industry ecosystem as regards Wales.
It is clear to me, that Wales is and has always been, at the periphery of Whitehall thinking. That is why devolution was and is even more required. We are talking about a National Government in Cardiff, not a parish council; WG already manages significant issues and liabilities(e.g., the road network in Wales). To suggest that Wales “was or is unable” to manage the issues related to rail infrastructure is frankly patronising given how poorly those responsibilities in Wales have been discharged by Westminster for the last 30 years. The same case can be made more broadly in terms of energy infrastructure, the role of Crown Estates, etc. The issue is really a Whitehall one, in that it struggles to see how it could work more collaboratively where interests align, with a devolved nation with full responsibility over such matters.
I think one could make the same argument vis a vis Transport for the North, etc. The UK is too centralised and the decision in 2021 by DfT to take control of NPR from TfN is perhaps a manifestation of this problem (although perhaps such powers are better vested in the established regional bodies like Transport for Greater Manchester). Great British Railways (GBR)[xxii] needs to deal with this inequity in its organisation, funding and governance, else it will do nothing in respect of Wales’s major issues.
It is also important, to address the spurious and oft used assertion that because of the degree of cross border interaction and cross border infrastructure between England Wales it makes no sense to “devolve rail powers to Wales”. On that, three points:
- As per above – this a constitutional anomaly and democratic failing given the 1997 vote; it is now abundantly clear that the current arrangements have failed Wales
- As I set out in The biggest devolution mistake? plenty of other countries manage cross border infrastructure in an equitable and even-handed way; in fact, this is normal, just look at the rail network in Europe. In nearly cases all cases, each country has an equitable involvement in how cross border infrastructure and services are managed and/or enhanced. In contrast, Wales has limited influence on decisions related to investment of the rail asset in Wales (apart now from the Core Valley Lines) with all major decision and funding made in Whitehall – often with little or no dialogue with Welsh Government
- From a Welsh perspective, the biggest challenge is to decarbonise intra city and intra-regional movements which from commuting stats[xxiii] (pre-covid) made up over 80% of trips in Wales. Cross border trips whilst important (and esp. SWML into Bristol and NWML to Chester/Cheshire) are LT 10% of the total.
So, the rail industry ecosystem which only formally recognised the Wales Route (which includes significant sections in England like the Marches Lines and the Severn Tunnel) in 2010, has and continues to fail Wales.
As an example, in 2012/13 work on the CASR project in/around Cardiff de-scoped the important requirement to enhance the “Cardiff West junction” to enable 4tph on the City Line in Cardiff. This is a problem that today inhibits the potential impact of the South Wales Metro and in effect dumps a liability into WG (TfW) given it restricts operational capacity, flexibility and reliability of CVL services.
Similarly, the welcome relief line upgrade proposals now or about to be confirmed by the DfT is only one part of the bigger package of measures required along the SWML and so on its own it delivers no passenger benefits whatsoever. Whilst this scheme is in the RNEP, the necessary additional SWML stations and services are not. Similarly, in North Wales calls for measures on the Borderlands Line and at Chester Station are not new but still seem low priorities from an England/Wales rail industry perspective. These matters are peripheral issues when viewed on an England and Wales basis – but are priorities from a Welsh perspective.
As Welsh Government also found[xxiv]:
“Although rail investment decisions are ultimately taken by politicians in Westminster, systematic underinvestment is also built into, and magnified, not only into the scheme prioritisation process, but also by the analytical framework which the UK Government rely upon to produce business cases and value for money assessments . The industry’s forecasting approach (via PDFH) has significantly overestimated demand for schemes in London (by as much as 50%) and underestimated demand for those elsewhere in the UK (by over 50%), including Wales. Higher passenger forecasts mean more time savings (bigger benefits), increased revenue forecasts (lower costs), and better value for money cases”.
The fact that public spending per head in the UK is highest in London (current and capital)[xxv] is relevant in this regard. The figures for capital spending alone are also illuminating with Wales (on £1,333 per person) being the 2nd lowest of the four nations just above Northern Ireland (on £1,325). In fact, the figures for Wales in Figure 110 are overstated somewhat as they include WG spend on non-devolved areas like rail enhancements and an allocation of some of the costs for HS2 (See What do the treasury think about HS2 benefits to Wales?).
Figure 110 Capital Spending per head by region/nation 2021)
There are also “issues” related to the transfer of the Core Valley Lines from Network Rail to Welsh Government and Transport for Wales earlier in 2020. Remember the CVL network was and is already a publicly owned asset, in Wales. When similar transfers have been transacted in the past (e.g., when Manchester Metrolink or Tyne and Wear Metro were established) I believe a nominal charge of £1 was levied to transfer them from BR.
However, the NR/DfT price tag for the CVL of ~£400M ( I dont know the exact figure) reflects a bizarre and frankly challengeable valuation based on Network Rail’s Regulatory Asset Base(RAB)[xxvi].
The RAB was established in the 1990s post privatisation, to allow Railtrack to issue bonds to fund further rail enhancement – primarily the £9BN WCML upgrade. However, whilst the debt related to the RAB was spread evenly across the network to “value” the asset, the funds generated through the bond sales were not (and Wales has received very little of that despite its network being apportioned the debt via the RAB ).
This “suspect” accounting practice still survives and is very crudely: network valuation = last year’s network value -depreciation of asset + apportioned enhancement spend (irrespective of where those enhancement actually were); discounted cash flows for income received from the asset (e.g. Track Access charges) are also used in valuations.
If one looks at the details and notes of NR’s 2018 accounts[xxvii] for example, one can see that the practice was really retained to support valuation of NR asset and specifically its investment portfolio that could be sold to private companies. It should not have been applied to transfer of an operational rail and public asset between governments. Remember NR dont own the track (despite some at NR behaving as if they did), they are custodians of a public asset in Wales and so “owned” by Welsh taxpayers.
In reality, WG should have paid (as had been done in the past) £1 and perhaps been in receipt of a large capital sum to reflect its depreciated state Vs rest of the UK network and long-term liabilities. Whilst I understand WG were held harmless financially by UK Treasury, we now have a precedent set for such asset valuations which I think merit challenge – especially as regard potential future transfers of NR land asset in Wales.
It is also relevant to note that in 2014/15 all NR debt was in effect taken back onto UK Government’s balance sheet and NR costs formally included in the DfT’s overall budget. This negatively impacted all subsequent DfT Barnett transfers to Wales See The Barnett formula, Wales and Rail .
All of the above bring into question whether the long established legal and accounting principle of “true and fair” has been applied? I think not.
In summary, and as I have presented evidence to Westminster Committees on multiple occasions over the last ten years[xxviii], I am adamant that rail powers and funding need to be devolved to WG if we want to see more investment in Wales’s rail network. So, any DfT led industry re-organisation via GBR or whatever the next Westminster government decide to call it, has to address this issue head on. As I set out elsewhere the current failings also impact some of the regions of England as well as Wales.
HS2 and Wales
The perversity of HS2, let alone NR Enhancements, being defined by HM Treasury[xxix] as an “England and Wales” scheme Figure 118 really pains me. Some still argue that even after the Rushi Sunak cuts, it benefits Wales. I am clear (as is the formal data and evidence produced by the DfT) that in totality and at the large macro scale, it does not (more especially in its reduced form) and never did.
The original scope of HS2 did enable some potential localised (esp. in northeast Wales) benefits. However, in most cases these were subject to uncosted and unfunded further local infrastructure enhancements; and outweighed by the disbenefits and the especially the opportunity cost of so much £ being allocated to HS2 at the cost of other more important (from a Welsh perspective) rail enhancement in Wales. The truncation of HS2 to just being a link from London to Birmingham removes any pretence of benefit to Wales.
This was even more of an issue in 2023 given how much HS2 was squeezing the DfT budget which reduces both the Barnett comparability factor (see later) for Wales and the amount of funds available for rail enhancements in “England and Wales”. The recent announcement to in effect cancel HS2 north of Birmingham and allocate perhaps £1Bn to the NWML does mitigate in the margins, but still leaves Wales £Bns short of a fair funding settlement.
So, today with the rump HS2 scheme, being generous perhaps 0.5% of the transport user benefits of HS2 could benefit Wales; but 5% of the costs are still in effect allocated to Wales. We also know from the DfT’s own analysis, HS2, even the reduced scope first via the Integrated Rail Plan[xxx], later by the further delays announced in March 2023[xxxi] and finally in its cut back form announced in October 2023, will still negatively impact Wales’s economy.
It is also worth acknowledging, that like in 2002/3 with the cost overruns of the WCML upgrade impacting investment decisions in Wales, the cost overrun on HS2 is having exactly the same impact today.
So, I am going to break this down, first by looking at the HS2 back story; and then in summary (as others have written in more detail than me on this subject) how its scope, costs (and benefits) have changed – and continued to do so right up to the cancellation of all the northern branches in October 2023 by PM Rishi Sunak. Then I will address in summary claims of how it benefits Wales by looking at transport user benefits, economic benefits and freed up capacity and some of the whataboutery that surrounds this subject. I presented a summary of actual Welsh rail investment priorities and a possible future for HSR in the UK in The priority transport schemes in Wales to 2040).
My analysis is based in the main, on the formal data, business cases and supporting documentation, etc commissioned and published by the Department for Transport. Whilst there has been some criticism of the approach to UK Government’s Full Business Case for HS2 vis a vis assessing its full benefits, it is the basis upon which the UK had committed to deliver the biggest public transport investment in its history. Any critique of HS2 including vis a vis Wales, has to be intellectually honest and based on official reports, studies and business cases. To be clear, I support more rail services and capacity across the UK, and yes HS2, or variants thereof.
But first a little of the HS2 back Story
Now this for me is a long story and is interweaved with the story of the electrification of the GWML.
Following (see earlier) my initial dialogue with then NR CEO Ian Coucher with regard to rail funding in Wales back in 2008, I became aware of the growing debate in the UK about High-Speed Rail. Politicians like Lord Adonis were articulating the case for more intercity rail capacity – and noting the development of high-speed rail networks in places like France. Groups like Greengauge 21 led by Jim Steer and supported by Julie Mills did much of the strategic advocacy at that time through reports like Fast Forward[xxxii] in 2009.
In 2010 the UK Government, through Gordon Brown and Lord Adonis, published the HSR Command Paper[xxxiii], setting the foundation for HS2 following the establishment of HS2 in 2009. Its complementary report recommended that a London-Birmingham section as a first as part of larger “Y” network with an estimated cost of £30Bn.
Interestingly, in parallel NR were conducting their own New Lines Study culminating in a report[xxxiv] in 2010. In fact, there was a large body of reports, studies and advocacy from the rail industry and advocacy groups. I am barely scratching the surface here.
I was also particularly taken with the Bow Group’s report ,”The Right track”[xxxv] which could see the way the wind was blowing re HSR and the north-south focus on HS2 and set out the case for a strategic upgrade of the GWML/SWML for 140 mph operation and better links to Heathrow.
So, I speak with some knowledge; I actually gave evidence to the Westminster Transport Committee and their review of High-Speed Rail (HSR) in 2011[xxxvi]. Having followed the work of Greengauge 21, I was concerned at that time of the limited awareness of both Welsh Government and Welsh Civic society of the emerging High Speed Rail programme. There were some groups active in this space, for example the Great Western Partnership (set-up partly due to my “encouragement”) involving local authorities such as Cardiff, Newport, Bristol, Swindon, SEWTA and Business Groups like the Cardiff Business Partnership (which I represented). These groups did collectively act to promote the need for further investment in the Great Western Line (GWML) and South Wales Mainline (SWML) given plans for HSR across the UK; but outside this core group there as not much chatter and the media were generally not engaged with the issue at that stage.
The day I gave evidence to Transcom in 2011 in particular stands out ( See What were UK Government doing? ); I recall appearing on Radio Wales AM news before my trip to Westminster to give evidence on High-Speed Rail. There was clearly little awareness in the media in Wales of the issues. Something my brother Sion would help address and later Will Haywood also of the Western Mail to help bring the issues to the attention of a larger audience. In the last few years, MPs like Jonathan Edwards, Liz Saville Roberts, Geraint Davies and Christina Rees have made multiple representations and speeches at Westminster to raise the profile of this issue.
Over the last few years, I have also shared my musings[xxxvii] on the subject, formal and informal in press articles, on radio/TV and via my blog site. In fact, nearly ten years after my first foray into this subject, I was again making very similar submission to Westminster Committees, this time the Welsh Affairs Select Committee as part of its review of Rail Infrastructure Investment in Wales[xxxviii]. The evidence submitted by the Wales Governance Centre[xxxix] at the same time presented a very similar analysis to my own. Subsequent to those sessions I have prepared a number of videos and “articles which I think help to explain the issues and the opportunities[xl].
The major benefit of HS2 was to deliver more rail capacity to the “UK” rail network, not speed. In general, I think the UK does need more rail capacity. Perhaps it should have been called “High Capacity 2” and not “High Speed 2”?. The original vision was clear that the major benefits would be realised through more capacity and faster services in the north of England and especially taking pressure of the WCML.
In reality, perhaps the focus on speed and the DfT guidance to go faster to try and secure more “formally calculated” transport user benefits are the main reason costs are blowing the affordability envelope (2022/2023 inflation difficulties noted). Specifying speeds of 180~200 mph would have been fine; we know how to do that (TGV, HS1, Rolling Stock, etc). Going 230 mph or more needs new engineering, operating kit and standards for OLE, ballast, tunnels, etc. The need to access city centres (esp. Euston vs Old Oak Common) and a tunnel through the Chilterns is also a challenge. Collectively these requirements were adding £Bns to the costs as highlighted in the Berkeley Report[xli], which countered the official report by the Oakervee review[xlii] into HS2 (of which Lord Berkeley was Deputy Chair).
Current cost and commitments of UK Government for HS2, IRP, etc
In November 2021 UK Government effectively cut the original HS2 plans, and emerging plans for Northern Powerhouse Rail (NPR) and replaced them with the combined “Integrated Rail Plan” for the north and midlands of England[xliii].
The long planned for “Y” network had been cut with a focus on a route to Manchester – and a range of other measures, including Northern Powerhouse Rail, Trans Pennine Route Upgrade (now with a £11.5Bb budget expectation[xliv]), etc to mitigate the loss of the Eastern branch of HS2.
Figure 111 Excerpt from IRP Nov 2021 – cut back again in October 2023
The shifting sands of HS2 costs and scope, make comparisons with Wales more difficult. So, I started to focus on using the IRP as a comparator, rather than the costs only for HS2 (set out in the Full Business Case for HS2 April 2020[xlv] but now superseded by the IRP, which actually reduced the scope of HS2) .
In January 2022 DfT updated the HS2 SOC which focussed on Phase 2b from Crewe to Manchester[xlvi] to reflect recent changes and the IRP. Interesting to note the BCR and VfM assessment in that updated SOC discounted £6Bn of sunk costs.
“Compared to the Phase One FBC, there has been a £6Bn reduction in total costs (2015 prices). This is mostly due to increased sunk costs and lower construction cost inflation assumptions. This has more than offset the decrease in net transport benefits and revenues of £1Bn and £2.8Bn respectively, that has occurred through weaker OBR forecasts. However, WEIs have increased due to an increase in agglomeration benefits due to reduced generalised travel costs”.
In March 2023[xlvii] the DfT “signposted” further delays to HS2 and potential further “cuts” to its scope, primarily the removal of the Goldbourne Link and the timing of the full connection to Euston.
By October 2023 the scope has been reduced again with just the London-Birmingham section remaining– but with perhaps a reprieve for Euston. Now with these more dramatic cuts we are left with a rump project that is a grossly scaled down version of the original vision that leaves the UK with 80% of the costs but perhaps only 20% of the benefits.
The negative impact on overall English rail network capacity cannot be understated as most of the benefits were associated with the extra capacity and journey time reductions from Birmingham to Manchester, Leeds, Liverpool, etc. Most of the costs are associated with the ridiculous need to tunnel a new High-Speed line through the Chilterns!
Figure 112 Updated BCR from 2022 Updated SOC for HS2
Figure 113 From Phase 2b Crewe-Manchester Updated SOC
So, what does that mean for Wales?
Even with the “cuts” to HS2, the DfT is still committed to over £100Bn of rail enhancement to the rail network in England Figure 111; which are all defined by HMT as “England and Wales” schemes. .We should get some clarity from a revision of the IRP likely to be published sometime 2024 (and not from the hurriedly assembled Network North document!). Although given the current status of the UK Government we may have to wait for a new Westminster administration. Worth noting the establishment of the “Maier Commission”[xlviii] by UK Labour’s Shadow Transport Minister Louise Haigh in December 2023 – I think this book might be a useful contribution to that process!
As a comparison, in the period 2019-2029, the UK Government has committed approximately £350M to rail enhancement schemes in Wales (which is not a devolved responsibility ) which also includes a welcome contribution to the Core Valley Lines Transformation, Metro Central and the Global Centre of Rail Excellence.
We now also have some potential commitment (although there is glaring lack of detail and no timelines) for a £1Bn for electrification of the NWML[xlix]. However, we need to acknowledge that this is not the priority investment needed on that corridor.
First we need faster line speed and more capacity to enable more local all stopper and faster long-distance services (See North Wales ). Having, at best, a train every 60 mins (and often longer) from Conway or Abergele, for example, is never going to be a better option than the car – whether it is electrified or not! Improving service frequencies at those stations is clearly more of a priority than electrification.
More stark is that we are, in effect, still dealing with “Victorian signalling” west of Llandudno junction as well as major capacity and operational constraints at Chester. If Rishi Sunak had properly engaged the DfT before making his announcement he would have known that Welsh Government(WG) via Transport for Wales (TfW) and its North Wales Metro Programme (of which DfT, NR and others are part) ably led by Ruth Wojtan, had worked up business cases for a range of priority interventions on the NWML to enable faster and more frequent services (inc. new local all stopper services).
So, if one includes the £1Bn for NWML (And we don’t really know if or when this will be available) the ratio between UK Government rail enhancement commitments in England V Wales is approximately 66:1 (I had presented a ratio of 200:1 in a 2022 blog[l]). Compare that with the population ratio of approximately 20:1; and the route length just 10:1. That is completely undefendable.
Also, worth repeating that overall HS2 expenditure has squeezed NR’s enhancement budget Figure 114 and is now the major component of overall rail enhancement spending in the UK. This will clearly impact rail investment in Wales by UK Government, as cost overruns on the WCML upgrade also did 20 years ago.
Figure 114 HS2 V NR Rail Enhancement Spend
Transport user benefits of HS2
The largest component benefits in any formal WebTAG or WelTAG business case is typically derived from Transport User benefits. This is based on a calculation of the improvements in “economic value” terms resulting from enhanced journey times and/or increased demand/capacity. In simple terms it equates to numbers of people benefiting from the new service/infrastructure, multiplied by time saved per persons using it via a DfT/HMT “value of time” factor. The process and calculation are actually a little more complex and is modelled using a range of trips between a large number of Origin and Destination (O/D) points that benefit from the investment.
We also need to be aware of the risks of aggregating 000s or even 000,000s of small changes over a long period to make a big number (See Value of time). Whilst often mathematically correct the resulting number may in some circumstances have limited real world impact.
In the 2020 HS2 Full Business Case[li] set out that the primary benefits of HS2 derived from the new and faster train services and capacity proposed from London to/from Birmingham, Manchester, Liverpool, Scotland, etc. There were no services planned or modelled to/from Wales.
So, one can conclude that there were no substantive Transport User benefits to Wales resulting from direct HS2 services to/from Wales. For the sake of accuracy, that is NO transport user benefits for direct HS2 services into Wales. There could have been some marginal benefits from O/D (origin/destination) points in Wales that resulted in interchange to HS2 services at places like Crewe. This is in the margins and does not materially impact the general conclusion that HS2 would not have materially benefitted Wales in this regard.
The further 2023 cutbacks to HS2 to leave only a London-Birmingham section removes any pretence of any material transport user benefits to Wales.
Economic benefits, BCR and value for money of HS2
KPMG originally did a review of economic and employment impacts for Greengauge in 2009/10[lii], which I quoted in my evidence to Westminster in 2011. That work was updated by the DfT (Again using KPMG) in 2013[liii]. They presented an overall annual economic agglomeration benefit to the UK of £15Bn, part of an overall £20Bn in Wider Economic Impacts (WEI). However, this update analysis omitted to provide more granular local details like those presented in the earlier Greengauge report.
In 2013, an FOI request from Newsnight[liv] uncovered these more granular details[lv], which were in line with the original KMPG work for Greengauge in 2010 and found an overall negative economic impact on Wales’s economy of over £150M per year). There were similar disbenefit calculated for Bristol and southwest England.
Those WEI had reduced to £13.3Bn based on the analysis presented in the 2022 SOC update for Phase 1, 2a and 2b, but not material in respect of determining whether there are any benefits/disbenefits to Wales. If anything, the scale of the disbenefits to Wales calculated in 2013 is probably reduced a little – but still a disbenefit.
The BCR for the full scheme also included these “Wider Economic Impacts” which in the past the Treasury was disinclined to include in formal BCRs. However, because of the escalating capital costs it appears that it had become necessary to include the WEI in total scheme benefits Figure 112. On the basis of the 2019 FBC, the BCR for the entire “Y” network (now cut) and including the more variable WEI, was 1.5 and so higher than that now presented for Phase 1, 2a and 2b. A large proportion the benefits of the full scheme were, in fact, associated with the Eastern branch from Birmingham to Leeds.
However, the decision to cut the eastern branch of the “Y” network, as part of the Integrated Rail Plan was no surprise to me as the benefits claimed for that section of HS2 were abstracting some of the same benefits being associated with Northern Powerhouse Rail which could, when combined with HS2 to Manchester, also reduce Birmingham/London – Leeds journey times. However, this decision has also left the remaining HS2 sections with a very challenging VfM assessment. These were under even more pressure given the increasing costs which were set out at £66Bn in the 2022 SOC update Figure 112, with a BCR, excluding WEI, of 0.9 ( including WEI takes the BCR to 1.2 – and this 2022 analysis over £6Bn of costs had been ignored and treated as sunk costs).
The continual salami slicing of the project has further diminished its Value for Money assessment. For example, the cuts to the Euston[lvi] link and now the cut back to Birmingham and the resulting reduction in benefits, bring into question the overall case for the scope that remains, and which will be built. The real value of HS2 would have been, when combined with NPR, radically enhanced connectivity across the north of England.
Freed up capacity resulting from HS2
In principle yes, the original concept for HS2 would have freed up more capacity on the existing network and allow new and more local services to be back filled along, primarily, the WCML corridor. The recent decision to cancel HS2 north of Birmingham though severely impacts these benefits, so what follow is an assessment based on the original plans for HS2.
Based on the original plans, some pathways could have been allocated on the WCML for additional services to the North Wales Mainline (NWML) or Cambrian line. However, these were not modelled in the business case and no commitments were made to safeguard such pathways for Welsh services into England. In fact, it is likely that other services in England would have secured those pathways before any Welsh services were considered. Such new Welsh services would also have required further infrastructure (e.g., double track/loops on Cambrian line and electrification of some/all of the NWML, more capacity through Chester to Crewe, etc) – none of which were costed or included in the original HS2 business case.
It’s a key rule of “business cases” that you can only associate the benefits with the infrastructure related to the business case. One can’t just claim a range of unspecified potential future benefits for as yet uncommitted and un-costed further infrastructure and services.
The DfT published a summary analysis of freed up capacity in the DfT Full Business Case for HS2[lvii] in summer 2020. This clearly showed, as one would expect, the major benefits were anticipated along the existing WCML and ECML corridors in England, with very few if any benefits to Wales; and the key Crewe Chester link was shown explicitly Figure 115 with no capacity released. In fact, the need to improve the rail network between Crewe-Chester-NWML is long standing and merits measure to address with or without HS2.
Figure 115 DfT HS2 FBC Free Up Capacity
DfT also commissioned the Steer, “Freed Up Capacity” Study[lviii] which broadly drew the same conclusions. Primary benefits are the provision of new all stopper urban, interurban services along the existing WCML, ECML and MML corridors, and new freight paths. There was the potential to allocate “space” to an hourly NWML services from London to Holyhead (vs the current 6tpd) and perhaps to Wrexham (again subject to further non HS2 and unfunded infrastructure enhancements) Figure 116; but one has to ask what is the likelihood these paths would have been made available Vs other competing options with likely higher transport user benefits.
Figure 116 Steer Study re WCML service enhancements post HS2
So, the arguments that claim HS2 would have freed up capacity and allow more services to places like Holyhead and Aberystwyth (which is a single-track line) failed on that basis. To be repeat, the original HS2 FBC made no provision for the additional necessary infrastructure required; furthermore, the services modelled for the full Y network, or the scaled back IRP version did not provide for any classic compatible services to operate onto the NWML. Those arguments fell into the trap of trying to view Wales rail priorities through the lens of HS2 or from a desk at the DfT in London. On a list of priority rail enhancement for Wales, those additional services would struggle to make page 2 or 3; See The priority transport schemes in Wales to 2040.
It also seems to me that there may also be misunderstanding re: the link between freed up capacity and transport user benefits. The latter is essentially an aggregate of a range of trips between different origin and destination points with the benefits calculated broadly by adding their journey times * value of time.
For any new service pattern, its transport user benefits are compared to the baseline – typically the current service pattern. My assumption is that in the FBC the new HS2 service were modelled, and their transport user benefits added to an unchanged baseline or some modification to that baseline ( e.g., more all stoppers on WCML, etc).
The reality is that any recast services based on the use of freed up capacity on the existing infrastructure will likely generate LESS Transport User benefits than the current WCML, etc intercity services (mainly because they will be slower given increased number of stops). This would have the effect of reducing the overall benefits of HS2. This may be a questionable methodology – but it is the one used to develop the business case.
As I said the more dramatic cuts to HS2 in October 2023, renders this analysis largely academic. Wales did not and does not materially benefit from HS2.
What do the treasury think about HS2 benefits to Wales?
I have used the official documents provided by DfT in its FBC for HS2 above. Now I want to explore what HM Treasury think. We know that they currently define by default rail enhancement and OMR spend in England (and Wales) as “England and Wales”. So HS2, NR enhancements, NPR, etc are defined as “England and Wales” for Barnett purposes despite having no meaningful impact in Wales. Strangely, Crossrail was not , and nor is “East – West rail” and as Ben Lake MP found in July 2023[lix], the Chief Secretary to the Treasury, Oliver Dowden MP was unclear as to why such schemes are treated differently. Given the very major impact such decisions have on WG funding this really is not good enough.
HMT have also, probably without really considering the implication, set out their view of where the benefits HS2 fall across the UK. This is manifest in HMTs annual Country and regional analysis (CRA) publication[lx]. This is a purely a statistical exercise and reports on how past spending breaks down between the countries and regions of the UK. It allocates spending to countries and regions on a “who benefits” basis, rather than on the location of the spending.
HS2 gets its own line in this spreadsheet, which says that its capital spending was allocated to regions using the “HS2 Regional Benefits allocation from the Phase 1 Economic business case”. This seems to suggest from the most recent edition of the CRA in 2021/2 that 1.3% of the benefits of HS2 fall to Wales Figure 117 (based on an allocation of £74M out of a total capital spend in 2021/22 of £5.7Bn or ~ £25/capita). This is a long way short of a more proportionate 5% Barnet population share.
Figure 117 HMT allocation of HS2 Capital based on “where benefits fall”
In my discussions with politicians at Westminster and especially Ministers (and I have met one-to-one several UK Rail Minister over the last few years, including Jo Johnson and Huw Merriman), there is an increasing recognition that Wales has a problem. But no one seems able to provide any remedy – probably exacerbated by current Westminster funding challenges and the increasing scale of the HS2 budget Vs the DfT’s capital envelope. It also seems to me that given high staff turnover at HMT, no one can actually remember why things are the way they are! I have observed that government organisations often have a very short institutional memory.
Seems to me that history is repeating itself and the impact HS2 escalating costs on funding for the Wales rail network mirrors the situation in 2000-2003. At that time the cost overruns of the WCML upgrade negatively impacted the award of the 2003 “no-growth” Wales and Borders franchise I mentioned at the start of this book. Groundhog Day.
The Barnett formula, Wales and Rail
This neatly leads into the Barnett formula and Wales re rail. It is not straightforward. There is the simplistic headline of “Wales should get its £5Bn share of the £100Bn” for HS2. Yes, it makes a good headline but is not entirely accurate. Barnett is more complicated than it appears, and I have to thank first Gareth Evans and then Julian Revell for explaining it to me.
For details of how any Barnett allocations are calculated you have to look at the Treasury Statement of Funding Policy[lxi] . A key principle is that in most circumstances it is a change to the Department of Transport Budget that triggers a Barnett allocation; and such allocations are calculated at Department level by applying two factors.
One factor is population share, which for Wales is approx. 5% on a UK basis or 6% when looked at Vs England and Wales. The other is the Comparability Factor; each budget line for the DfT is flagged as to whether the spend is “England only” or “England and Wales” (the former is typically for matters that are devolved; the latter for non-devolved matters like rail). So, each project re Wales in effect has a factor of 0% or 100%. To determine the comparability factor for the Department, one has to aggregate all the factors from each of the budget lines weighted by their individual proportion of the overall departments budget.
For Wales the comparability factor is now 36% as shown inFigure 118. It is instructive to note, that back in 2015 this factor was over 90%; as Network Rail (NR) spending was not included in the overall DfT budget (it is now) and HS2 spend was relatively small when compared to the overall DfT budget. At that time any change to the Department budget (from any of the budget lines) generated am approximate 5% * 90% Barnett allocation Figure 119 .
Today the calculation is 5% * 36%. This is a huge difference mainly because HS2 and NR spend make up an increasingly large proportion of DfT expenditure, so squeezing the CF for Wales. This impacts the Welsh Barnett allocation resulting from any change to the DfT budget (regardless of which projects contribute to that change – devolved or non-devolved).
In contrast, the Comparability Factors for Scotland and Northern Ireland are still over 90%. I am not sure how anyone can defend this – especially as Scotland does get some quantified benefits (transport user and economic) from HS2.
Figure 118 Excerpt from HMT Statement of Funding Policy 2021
Figure 119 From HMT Statement of Funding Policy – Barnett Formula calculation
Example of Barnett allocation:
Applying that process, for example, to an assumed change to the DfT budget of £100Bn to accommodate the Integrated Rail Plan, which includes HS2, Northern Powerhouse Rail (NPR), and the £11Bn TransPennine Route Upgrade (TRU) etc then using this formula the Barnett allocations would be, approximately :
Scotland = £100Bn * 92% * 10% = £9.2Bn
NI = £100Bn * 95% * 3% = £2.9Bn
Wales = £100Bn * 36% * 5% = £1.8Bn
If the attribution factor for Wales was 95% (which if rail was fully devolved it would be) then Wales would get £4.75Bn, £2.95Bn more than under the current arrangements.
One could apply the same to NR Enhancement funding not included in the IRP, which is calculated the same way and similarly disadvantages Wales.
So, in effect, costs for HS2 and rail enhancement in England are being allocated to Wales, despite very few, if any, of the benefits applying to Wales (I estimate less than 0.5% being generous Vs the HMTs 1.3% assessment). This is the same perverse situation as the debt associated with NR’s Regulatory asset Base (RAB) where the debt accrued for the rail enhancements since 1997 have nominally been spread evenly across the network whereas the actual investment was not. This is, at best, a very questionable accounting practice and certainly a constitutional dysfunction.
Some of the misinformed political statement re HS2
Given the above, it is very disappointing to note how misinformed many politicians are, or appear to be, on the subject (as are some in the trade press). I suspect that many are happy to regurgitate briefing notes from the DfT without critique, others are, I suspect, unaware of the underlying issues.
Here are some examples…
When asked in a PQ[lxii] (78479, 25 November 2021), what the DfT’s “latest assessment is of the economic benefit to Wales of the proposed HS2 route”, the then Rail Minister Andrew Stephenson said:
“By improving regional connectivity, the Integrated Rail Plan will unify labour markets, so that people can access a much wider range of jobs; bring businesses closer together; and improve access to key international gateways and markets so they become even more attractive locations for business investment. Crewe Northern Connection would improve connections from North Wales to the HS2 network, potentially bringing many passengers within 2 hours 15 minutes of London. Work to progress options on completing the Midlands Rail Hub could give passengers from South Wales easy access to the HS2 network at Birmingham Curzon Street.”
In the Lords in November (HL Deb HS2: Wales, 8 November 2022[lxiii]) the Transport Minister, Baroness Vere, said:
“it is the case that Wales does not receive Barnett funding from HS2, as the UK Government remain responsible for heavy rail infrastructure in England and Wales, but the use of departmental comparability factors in the Barnett formula at spending reviews means that the Welsh Government have received a significant uplift in Barnett-based funding.”
When asked exactly how much Wales has received in Barnett consequential as a result of this project, Baroness Vere (Nov 22)she said:
“the Government take an overarching approach, as heavy rail infrastructure is the responsibility of the Government in England and Wales. But if one looks at rail investment in Wales, one can see that we are investing record amounts already. In CP6, we have invested £2 billion in Wales alone, which includes £1.2 billion in renewals and upgrading infrastructure and £373 million for rail enhancements.”
There are many more like this…..
I’d also like to highlight some of the broader “Whataboutery” we have to put up with in Wales. For example, yes, we now have electrified rail services into Cardiff from London (though not to Swansea), and yes very welcome small reductions in journey times to London (comparable to the 1980s fastest services). However, the vast proportion of the benefits associated with the Great Western Electrification Programme (GWEP) investment accrue to passengers along the GWML in England from the Thames valley through Swindon to Bristol. Even with wires to Cardiff, once through the Severn tunnel the SWML is stuck with Victorian line speeds and capacity Figure 120. Talk of a Wales and Western Powerhouse is frankly unrealistic until such time the SWML can operate like the “main lines” elsewhere in the UK. For me the SWML is a metaphor for the state of Wales rail network Vs the rest of the UK.
I have also heard assertions that the majority of rail services and passenger benefits to Wales are fundamentally dependent on services and capacity at/through major English stations like Crewe, Birmingham New Street and Piccadilly. Similarly, others point at rail investment in England that will benefit people in Wales. Clearly there is some dependency and some benefits, but again this is in the margins when compared to current passenger flows and demography in Wales and Wales’s own rail enhancement priorities. In fact, I could make the reverse statements and claim that people from Bristol/London travelling to parts of Swansea/Neath would benefit from the first phase of a Swansea Metro and SWML upgrade. It’s not very helpful in addressing the fundamental issues and addressing Wales rail investment priorities.
We also have to be cognisant of the data; approximately two thirds of the Welsh population live along the SWML corridor between the Severn Tunnel and Milford Haven (with perhaps less than a quarter that are directly served by the NWML and Cambrian lines). The primary rail services/movements are urban (in Swansea Bay and the Cardiff Capital Region) and interurban – especially to/from/between Swansea, Cardiff, Newport London and Bristol.
There is just one train per hour from Cardiff to both Birmingham New Street and Manchester via Crewe – none of the earlier HS2 freed-up capacity scenarios envisioned any material changes to those services. I acknowledge that HS2 measures at Crewe and the HS2 link into Manchester (if it had survived) could have delivered some modest north Wales benefits. However, in so doing we can’t risk the reliability of the current Cardiff Manchester service. Aside from retaining platform capacity at Piccadilly, the Marches line also needs a significant upgrade to enhance signalling, line speeds and capacity to enable substantive enhancement to the Cardiff Manchester service – esp. journey times
As stated, in northern Wales we are grappling with the issues of high car dependency for many shorter local trips. The primary need (as it is in south Wales) is for more local “commuter” rail services and stations integrated with local bus services to begin to address our decarbonisation obligations.
Figure 120 GWML Line Speed (source Arup)
The above statements all either obfuscate, deliberately conflate enhancements, OMR spend and subsidy (which WG pay), make unsubstantiated assertions and/or misrepresent data.
Busy politicians need to recognise, that if your briefing re Wales, HS2, rail investment and benefits thereof, comes from the DfT, the organisation whose budget will be most reduced if projects like HS2 are defined by HM Treasury as “England only” is, the DfT. I suspect that HMT is less bothered if they are “held harmless” but such a matter is more of distraction to a busy London Civil Servant and so not likely to appear at the top of any “To Do “ list.
The repetitive nature of UK rail reviews
In looking at rail in Wales one can’t ignore the multiple attempts from London to analyse the failings of the UK rail industry ecosystem and to develop a commensurate plan to address them. It seems clear to me that the repetitive soul searching re the organisational and structure of the rail industry in the UK, for the most part completely ignores Wales primary issue, that being the need for more investment, and instead leans toward repetitive naval gazing.
So, the current moves toward a “Great British Railways”, risk being just a further exercise in asking some, yes important, but oft repeated industry questions that have probably been covered in whole, or in part, in earlier reviews and studies.
In the last twenty years we have had McNulty (Rail industry efficiency)[lxiv], Laidlaw (WCML franchise failure)[lxv], Brown (post Laidlaw rail franchising and risk)[lxvi] & Shaw (The Future of Network Rail)[lxvii]; before that the now archived Eddington Transport Study[lxviii], took a more holistic look at UK Transport and produced a very good report which stressed the economic important of intra-city/region connectivity. There are probably others.
We also have the framework for rail in the UK set out by the DfT in their vision paper in 2017[lxix]. Then we had Williams/Shapps review [lxx] leading to the 2021 White Paper[lxxi] whose perhaps narrower remit focussed on organisational and commercial frameworks but not planning, infrastructure & services and so overlooked a more important issue for us in Wales, integration with wider transport and economic policy and enhancement investment or lack thereof[lxxii].
I have no doubt there are weakness in the current rail eco system and the UK Governments White Paper and emerging plans for GBR do bring forward some sensible proposals, especially vertical integration and fiscal/powers devolution. However, the biggest problem perhaps (in addition to the constitutional weakness) have been failings in execution; specifically: specification, procurement and contract management. Unless we address the underlying causes of this phenomena, we will still have a problem no matter how we are organised and incentivised via GBR (or alternative thereof) or whether operations are via public or private companies.
It is also worth restating one of the priority findings of the 2006 Eddington transport study in that most of our mobility challenges and issues are intra-regional…
“…On this basis, the strategic economic priorities for long-term transport policy should be growing and congested urban areas and their catchments….”[lxxiii]
My observations on all this analysis, is, yes, we certainly know how to ask questions in the rail industry. It seems less clear and obvious if we can actually apply and/or implement any of the answers to those questions.
In November 2023, the King’s Speech[lxxiv] indicated further pre-legislative work on rail reform. The stark reality is that we are going to have wait for a new UK Government to deliver real change.
In summary
To conclude this section there is a glaring Question and Answer. That being if one wants to improve rail services and capacity in Wales is the answer really spending £100Bn+ on railways in England. If I want to improve capacity on the Cambrian line or improve access from the NWML corridor to London, I am pretty sure one could develop a range of schemes/options not requiring a £100Bn of rail enhancements in England!
In fact, there are a range of many higher priority schemes in Wales (See The priority transport schemes in Wales to 2040 ) that continue to get overlooked when we lose ourselves in the Wales and HS2 debate. If rail powers and funding were properly and fully devolved this debate would not be happening.
The priorities for Welsh rail investment have been set out and are being developed by WG and TfW. These are focused on the vast majority of trips (over 80% ) that are within Wales. They also include the smaller but important, cross-border Cardiff to/from Bristol and NE Wales to/from Chester/Cheshire/Merseyside/Manchester.
The only equitable and effective resolution is to fully devolve all rail powers and funding to WG and ensure that projects like HS2, NPR, IRP, Network Rail enhancements in England etc. are designated as England only projects by HM Treasury rather the “England and Wales”. Even the Welsh Affairs Select Committee came to the same conclusion re: the designation of HS2[lxxv].
If this is good enough for Scotland and Northern Ireland there should be no issues in making the same provisions for Wales. I also think similar arrangement for the allocation of capital funding across the regions of England need to be established – and decision on what projects and how much are vested locally as well.
In addition, and in advance of a comprehensive devolved settlement for all rail in Wales, as a bare minimum there needs to be an adjustment made to Barnett to reflect the fact that the Core Valley Lines is now devolved to and owned by Welsh Government This in effect reduces the costs and liabilities due to NR/DfT to undertake OMR etc. However no formal changes have been made by HMT to adjust to the WG block grant. Again, the most effective and fair solution, would be to assign all English rail spend say a 50% CF (to reflect that CVL is perhaps half the Wales Rail network in terms of PAX). This still leave DfT/NR responsible for the rest of the rail network in Wales.
I am also convinced that if Wales did have full rail powers, WG would have worked with colleagues in Chester, Cheshire and Merseyside to bring forward measure to enhance both Borderlands and NWML services a long time ago. Similarly, a properly empowered and funded sub national transport body in the southwest of England would have worked with WG a long time ago to deliver enhanced rail connectivity between Bristol/SW England and Cardiff/ South Wales.
So, one can argue about marginal freed up pathway benefits of HS2, some minor GDP benefits in NE Wales, GWML electrification to Cardiff, etc. However, that misses the big picture, which is that Wales has had very little UK rail enhancement funding over decades. The scale of UK Government rail enhancement commitments to Wales is frankly embarrassing. It’s worth noting that even the South Wales Metro, which should be mainly funded by UK Government in my view, only has £125M of the now £1Bn+ costs, from DfT. Having said that, hats off to Welsh Government, as without them taking on the project (despite rail infrastructure being non-devolved) it would not be happening. I was in the machinery of government and know there is no way the DfT would have progressed it; there was a reluctance to support the original electrification programme which eventually fell foul of expanding costs for a traditional 25Kv approach.
To conclude, major changes are need; the current arrangements are not fit for purpose and are a major impediment to achieving WG’s NZW mode shift targets.
[i] Transport for Wales, First brand new Transport for Wales trains unveiled (tfw.wales)
[ii] UK Gov, No10, DfT October 2023, PM redirects HS2 funding to revolutionise transport across the North and Midlands – GOV.UK (www.gov.uk)
[iii] ORR Home page | Office of Rail and Road (orr.gov.uk); Rail Industry Finance (UK) – 2020-21 (orr.gov.uk)
[iv] BCG, The 2017 European Railway Performance Index (bcg.com)
[v] Jon Stone, Independent, 2022 To fix public transport in Britain, we should copy France | The Independent
[vi] ORR Home page | Office of Rail and Road (orr.gov.uk)
[vii] Audit Wales, 2016, Welsh Government investment in rail services and infrastructure (audit.wales)
[viii] Welsh Government, 2020, Historical investment in rail infrastructure enhancements [HTML] | GOV.WALES
[ix] M Barry, Welsh Government, 2018, The Case for Investment, The Rail Network in Wales (gov.wales)
[x] Welsh Government, 2019, A railway for Wales: the case for devolution | GOV.WALES
[xi] Guto Ifan, Luke Nicholas & Ed Gareth Poole, Wales Governance Centre, Cardiff University, 2021, “ Railway Infrastructure in Wales Written evidence submission to the Welsh Affairs Committee” WFA_evidence_rail2.pdf (cardiff.ac.uk)
[xii] The Case for Investment in 2018, set out that of the total England/Wales rail infrastructure, the Wales Route represents about 11% of the route length (1490km) and 9 % of the track length (2,458km). Figures derived from: ORR Annual Efficiency and Finance Assessment 2014-15 | Network Rail – Wales Route Plan 2014-2019 16 Network Rail Regulatory Accounts – 2011-2016
[xiii] DfT Oct 2023, PM redirects HS2 funding to revolutionise transport across the North and Midlands – GOV.UK (www.gov.uk)
[xiv] M Barry, blog 2023, The butchering of HS2…and Wales – Mark Barry (swalesmetroprof.blog)
[xv] Network Rail, May 2023, England and Wales Strategic Development Plan , England and Wales CP7 Strategic Business Plan (networkrail.co.uk)
[xvi] ORR, October 2023, Periodic review 2023 of Network Rail: final determination
[xvii] NR Press Release re Wales & West Region and Wales Route CP7 OMR allocations, Network Rail’s Wales and Borders route puts passengers and freight at the heart of a new five-year plan for the railway (networkrailmediacentre.co.uk)
[xviii] BBC News, May 2023, Network Rail says infrastructure will get less reliable – BBC News
[xix] All figures approximate, from multiple sources, including:
Our CP6 Targets and Fonancials – April 2022 update (networkrail.co.uk)’’
Integrated Rail Plan for the North and Midlands – GOV.UK (www.gov.uk)’
Historical investment in rail infrastructure enhancements [HTML] | GOV.WALES
Rail Network Enhancements Pipeline (publishing.service.gov.uk)
[xx] RIA Scotland welcomes the publication of rail funding for CP7 (globalrailwayreview.com)
[xxi] DfT, 2019 Rail Network Enhancements Pipeline (publishing.service.gov.uk)
[xxii] GBR “Great British Railway” is the new body intended to replace Network Rail in a reconfigured rail industry. However primary legislation has yet to come forward and it is unclear if/when this process will be concluded.
[xxiii] Stats Wales Commuting Statistics by Local Authority, Commuting (gov.wales)
[xxiv] Welsh Government, 2020 Historical investment in rail infrastructure enhancements [HTML] | GOV.WALES
[xxv] House of Commons Library, Public spending by country and region – House of Commons Library (parliament.uk)
Detailed Report – SN04033.pdf (parliament.uk)
HMT Country and Regional Analysis 2019
[xxvi] I am not sighted on the details or other matters and/or considerations that will have influenced this process. So, I am happy to be corrected on any of the above in respect of RAB valuation. Nonetheless I think my general points and observations apply..
[xxvii] Network Rail Annual Accounts 2018, P90 , P111 2018-Network-Rail-Limited-Annual-Report
[xxviii] House of Commons, Transport Committee
https://committees.parliament.uk/writtenevidence/19482/html/
https://committees.parliament.uk/writtenevidence/23936/html/
https://committees.parliament.uk/writtenevidence/22844/html/
House of Commons – Transport Committee – Written Evidence (parliament.uk)
[xxix] HMT, 2023, Statement_of_Funding_Policy_update_Feb_2023.pdf (publishing.service.gov.uk)
[xxx] DfT, 2021, “Integrated Rail Plan for The north and midlands (of England), Integrated Rail Plan for the North and Midlands – GOV.UK (www.gov.uk)
[xxxi] DfT HS2 delay, March 2023 Record investment plans for transport network – GOV.UK (www.gov.uk)
Parts of HS2 to be delayed or cut as ministers prepare to reveal rising costs | HS2 | The Guardian
[xxxii] Greengauge 21, 2009, Fast Forward: A high-speed rail strategy for Britain – Greengauge 21
[xxxiii] UK Government, DfT, 2010 HSR Command Paper? High Speed Rail Cm 7827 (publishing.service.gov.uk)
[xxxiv] Network Rail , 2010, New Lines Programme, Options Development Report, High Speed Rail (parliament.uk)
[xxxv] The Bow group, 2010, “The Right Track”
[xxxvi] Mark Bary (CBP), Evidence to Transcom 2012 House of Commons – Transport Committee – CBP en Evidence
[xxxvii] Mark Barry, 2001, A Metro For Wales’s Capital City Region – Institute of Welsh Affairs (iwa.wales)
Mark Barry, Rail Technology Magazine, June 2011, “A Greater Great Western Line” Greater GWML
House of Commons – Transport Committee – Written Evidence (parliament.uk)
HS2 ‘losers’ revealed after report omitted figures – BBC News
Government should now fund Welsh rail electrification – Institute of Welsh Affairs (iwa.wales)
[xxxviii] Westminster Welsh Affairs Select Committee 2021,
https://committees.parliament.uk/writtenevidence/19482/html/
Railway Infrastructure in Wales – Committees – UK Parliament
https://committees.parliament.uk/oralevidence/1574/html/
[xxxix] https://committees.parliament.uk/writtenevidence/23492/pdf/
[xl] Mark Barry selected articles, blogs and videos re rail investment in Wales
(3) Mark Barry re Welsh Rail investment May 2021 – YouTube
(3) Summary of Welsh Transport Priorities….and relative importance of HS2 – YouTube
(3) Wales, Barnett and HS2….. – YouTube
200 to 1: English Rail Investment V Wales Rail Investment ! – Mark Barry (swalesmetroprof.blog)
Levelling Up, Working Together? A Transport Enhancement Programme for Wales
[xli] Lord Berkley independent review of HS2
SLMFD02620022518420 (tonyberkeley.co.uk)
HS2 costs out of control, says review’s deputy chair – BBC News
[xlii] Oakervee Review of HS2, DfT, 2020, Oakervee Review of HS2 – GOV.UK (www.gov.uk)
[xliii] DfT. 2021, Integrated Rail Plan for the North and Midlands – GOV.UK (www.gov.uk)
[xliv] DfT News Transport update: Transpennine route upgrade – GOV.UK (www.gov.uk)
Service announcement: £3.9 billion boost for more reliable train journeys in the North – GOV.UK (www.gov.uk)
[xlv] DfT HS2 Phase 1 FBC, 2020 Full business case High Speed 2 Phase One (publishing.service.gov.uk)
[xlvi] DfT HS2 SOC Update (Crewe – Manchester), 2022 HS2 Phase 2b Western Leg: Crewe to Manchester
[xlvii] DfT News, March 2023, Record investment plans for transport network – GOV.UK (www.gov.uk)
[xlviii] Rail Business Daily December 2023, Juergen Maier CBE appointed to lead Labour rail infrastructure review
[xlix] M Barry Oct 2023 The butchering of HS2…and Wales
[l] M Barry, July 2022 200 to 1: English Rail Investment V Wales Rail Investment !
[li] DfT, April 2020 HS2 Phase One full business case – GOV.UK (www.gov.uk)
HS2 economic case: update – GOV.UK (www.gov.uk)
[lii] Greengauge 21, Consequences for employment and Economic Growth Consequences for employment and economic growth – Greengauge 21
House of Lords – The Economics of High Speed 2 – Economic Affairs Committee (parliament.uk)
[liii] DfT, KPMG, 2013 High Speed Two (HS2) Limited, HS2 Regional Economic Impacts
High_Speed_Rail__Transport_Investment_and_Economic_Impact.pdf (publishing.service.gov.uk)
[liv] HS2 ‘losers’ revealed as report shows potential impact – BBC News
[lv] BBC News, 18_10_13_newsnight_hs2.pdf (bbc.co.uk). FOI details found negative GDP impact in South Wales could be over £200M with small benefits of up to £50M in NE Wales
[lvi] New Civil Engineer, HS2 | ‘Reset’ needed at Euston as station is £2.2bn overbudget and could worsen with construction pause | New Civil Engineer
[lvii] DfT 2020, Full business case High Speed 2 Phase One (publishing.service.gov.uk)
[lviii] DfT, 2017 High Speed Two Phase Two strategic case appendix: HS2 released capacity study summary report (publishing.service.gov.uk)
[lix] Nation Cymru, 2023 , UK Government challenged over allocation of rail infrastructure funding to Wales
[lx] HM Treasury, 16 November 2022, Country and regional analysis: 2022,
[lxi] HM Treasury, Statement_of_Funding_Policy_update_Feb_2023.pdf (publishing.service.gov.uk)
[lxii] HoC, Written questions and answers – Written questions, answers and statements – UK Parliament
[lxiii] HoC, HS2: Wales – Hansard – UK Parliament
[lxiv] UK Gov, 2011, “The McNulty Report”;
https://www.gov.uk/government/publications/realising-the-potential-of-gb-rail
[lxv] UK Gov, 2012, The Laidlow Enquiry”;
https://www.gov.uk/government/news/west-coast-main-line-final-report-of-the-laidlaw-inquiry
[lxvi] UK Gov, 2016, “The Shaw Report”; https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/49453/cm-8526.pdf
[lxvii] https://www.gov.uk/government/publications/shaw-report-final-report-and-recommendations
[lxviii] UK Gov, 2006, The Eddington Transport Study; [ARCHIVED CONTENT] Department for Transport – The Eddington Transport Study (nationalarchives.gov.uk)
[lxix] DfT, 2017 “Moving Britain Ahead”; https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/663124/rail-vision-web.pdf
[lxx] UK Gov re Williams Review, 2020, https://www.gov.uk/government/groups/rail-review
[lxxi] DfT, May 2021, Williams/Shapps Plan for Rail) Great British Railways
[lxxii] Welsh Government, 2020, Historical investment in rail infrastructure enhancements [HTML] | GOV.WALES
[lxxiii] DfT 2006, The Eddington Transport Study: The Case for Action [ARCHIVED CONTENT] (nationalarchives.gov.uk) P6
[lxxiv] Rail Business Daily, November 2023, Draft Rail Reform Bill in the King’s Speech
[lxxv] Welsh Affairs Select Committee 2021, Railway Infrastructure in Wales (parliament.uk)
Mark Barry 