Saturday, 5 April 2014

Whitehall Wonga - Line, Dot, Electric Shock

Wales being Wales, if something sounds straightforward you can
guarantee events and double-dealing will conspire to screw it up.
(Pic :

A deal to secure electrification of the south Wales mainline and Valley Lines looked done and dusted, but as you probably already know, throughout March an increasingly fractious row bubbled between the Welsh and UK governments over who would foot the bill.

"Clear as a bell"

Back in January 2013, Network Rail included south Wales electrification in their Strategic Plan until 2019. The total cost of Great Western electrification (from London to Swansea) is around £850million, while the cost of Valley Lines electrification was, at the time, estimated to be £350million. Since then, the cost of Valley Lines electrification has ballooned for unexplained reasons and now stands at £588million.

At his monthly press conference on March 17th, the First Minister said he was "seeking clarification" on the funding arrangement for electrification, despite there being apparent agreement. An agreement is needed so Network Rail can start work, while the First Minister said he was, "concerned about the UK Government's intentions."

Due to the confusion, Shadow Transport Minister, Byron Davies AM (Con, South Wales West), asked an urgent question in the National Assembly on 18th March, believing the funding arrangement was already set it stone.

David Cameron has said several times that the UK Government were funding electrification - and he was telling the truth. Carwyn Jones even told the Senedd that the Prime Minister's statements on funding were, "Clear as a bell".

There was, however, a massive caveat that hadn't been revealed.

Byron disclosed correspondence from July 2012 between the ministers with responsibility for transport at the time - Carl Sargeant (Lab, Alyn & Deeside) and Justine Greening. In it, it's claimed the cost of electrification of the Valley Lines and mainline between Cardiff and Swansea would be reclaimed through access charges – paid for by the Welsh Government as they subsidise the Wales & Borders rail franchise.

The UK Government would – basically – "lend" Network Rail the money to carry out the electrification work now, then claw the money back from the Welsh Government after the works are completed, which could cost up to £20million a year over 30 years. So in the end it wouldn't cost Whitehall anything, electrification can still go ahead and the Welsh Government would pay for it in chunks.

Now that sounds straightforward enough. The issue here is that the Welsh Government have no constitutional obligation to pay for any major rail infrastructure projects in Wales as it's completely non-devolved - though Silk II has recommended its devolution in line with Scotland.

Until this row, nothing has been mentioned publicly about Whitehall clawing the money back, just that they were paying for electrification. So although nobody in the UK Government has lied, they haven't been completely upfront with us - neither have the Welsh Government or Network Rail.

The Welsh Government haven't confirmed if they formally agreed to those terms – something both Rhun ap Iorwerth AM (Plaid, Ynys Môn) and Eluned Parrott AM (Lib Dem, South Wales Central) pressed for an answer to on 18th March.

They didn't get an answer, so I suspect the answer might be "yes".
That would mean the Welsh Government have agreed to pay for something when they didn't need to.

he Welsh Government could also have interpreted the correspondence a being a "letter of intent", not a formal, finalised agreement. That's believable, as I doubt major capital expenditures are sorted though letters and e-mails.

So it's a mess, all because of the good ol' Government of Wales Act 2006. Peter, we're in your debt once again.
Schedule 7, Part 10

Exceptions -
Provision and regulation of railway services, apart from financial assistance which—
(a) does not relate to the carriage of goods,
(b) is not made in connection with a railway administration order, and

(c) is not made in connection with Regulation (EC) No 1370/2007 of the European Parliament and of the Council on public passenger transport services by rail and by road.
"Clear as a bell."

Whose line is it anyway?

You know what this sounds like?
A payday loan on an epic scale.
(Pic : Huffington Post)
The position should be unequivocal. Rail infrastructure isn't devolved. It's an EnglandandWales matter like criminal justice, so funding electrification should be exclusively Whitehall's responsibility (via Network Rail).

If you want an analogy, it's like a landlord (Whitehall) getting their tenant (Welsh Government) to reimburse them for repairs the landlord is legally-obliged to fund out of their own pocket.


....there really was a formal agreement between both governments that Wales would eventually foot the bill for electrification. I'm not privy to that sort of information, but judging by what the correspondence is reported to contain, that's indeed the case. Someone's trying to dodge that £600million electricity bill.

So this is a lot more serious than it looks.

It's also worth asking why the UK Government are doing this?

A few weeks ago it was announced the first stage of High Speed 2 could be extended from Birmingham to Crewe to boost its economic impact in NW England. It's understandable that the UK Government and Network Rail will want to find all the spare change they can in order to fund HS2 itself (Will High Speed 2 benefit Wales?), let alone that extension. What's £600million to the Taffs?

Also, if rail infrastructure spending were devolved in line with Scotland (meaning Wales having ~5% of all Network Rail spending ring-fenced), Wales would receive more than we currently do; money that could be spent on things like line upgrades or new stations. In 2011-12 the figure was as low as 0.7%.

So on the railways, Wales (nominally) subsidises England and has done for some considerable time. Clawing back the costs of electrification over 30 years is one way of ensuring some of that arrangement remains in place even after rail infrastructure is devolved (if Silk II is implemented in full).

In shorthand, Whitehall are forcing the Welsh Government into a massive I.O.U. when they have no authority to do so - unless the Welsh Government were foolish enough to agree to it. We won't know until it's confirmed whether there was a binding agreement or not.

They've fallen victim to the unscrupulous payday lenders of Whitehall and don't even realise it.

Electrifying the Valley Lines is crucial in developing a metro system in and around Cardiff. This row could also have a knock-on impact on future electrification of the north Wales coast line as it's setting a precedent for funding arrangements.

For the Welsh Government to pay the bill, it could mean : higher ticket prices, higher car parking charges, cancellation or delays to other projects (like station upgrades), rolling stock transfers done on the cheap and possible delays to electrification itself.

That would subsequently – as Simon Thomas AM (Plaid, Mid & West Wales) is quoted as saying – chuck the "Valleys Metro idea out the window".

This is also an example of why powers should be devolved in their entirety not on a piecemeal basis. Powers over the rail franchise should never have been divorced from control of rail infrastructure.


Post a Comment