Billions, millions or nothing at all? What will Rachel Reeves provide for rail in Wales at the spending review?

Wales Online

2 days ago

Billions, millions or nothing at all? What will Rachel Reeves provide for rail in Wales at the spending review?
More pain than gain is expected for most departments from this year's spending review. But there are hopes of extra cash for rail projects in Wales
It is now expected funding will come to Wales in the spending review for rail
(Image: Matthew Horwood )
On June 11, Chancellor Rachel Reeves will stand in the House of Commons and spell out the UK Government's spending plans for the coming years. While we are told the final details are still being worked out, there is now chatter within Welsh Labour ranks a sizeable amount of money will be allocated to spend in Wales on rail projects.
Rail isn't fully devolved to the Welsh Government. Managing the Wales and Borders franchise is devolved to ministers in Cardiff Bay, and the Core Valleys Lines are now owned and operated here. But rail infrastructure planning and funding is still managed by Network Rail from Westminster and funding is not divided up fairly between England and Wales.
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WalesOnline had campaigned for that to change and some kind of fair funding mechanism, whether through devolution or another means, put in place. However that looks unlikely to happen.
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Instead of action to address the fundamental problem, there is now a growing expectation that Rachel Reeves will announce some extra money to spend on rail projects in Wales over the period of this spending review. This has been brewing for some time.
There was an orchestrated release of letters in January, with an admission from the UK Government that rail in Wales had been historically underfunded. You can read that here. For our free daily briefing on the biggest issues facing the nation, sign up to the Wales Matters newsletter here
The Welsh Government's transport minister then set out plans for developing services in north Wales, including for electrification of the mainline - the most ambitious of which need UK Government investment.
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Then a report in Politico last week quoted "government figures" saying that Wales would receive "billions" of capital investment for rail in the spending review. However, Labour sources in both governments have dampened expectations, saying the sum is unlikely to be as much as "billions" but there is an acceptance that something is coming, and it will be sizeable.
Politically, the Welsh Government need a big gift from UK Labour given the Senedd election is less than a year away, and polls show Labour is in for a tough time here. The most recent poll showed Labour slipping to third, way behind Plaid Cymru and Reform UK, you can see that here.
UK Labour is also aware that Eluned Morgan, Wales' First Minister, has been openly criticising her counterparts in London and something is needed to unite the camp. A big cheque for something she can explain to voters in a pithy way on the back of a leaflet would be most welcome.
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She told plenary on June 3 that she was "hopeful" of "movement" on rail funding in the spending review. "I've made the case very clearly," she said.
Wales' transport Ken Skates has made no secret of the fact he wants to see investment in rail and it is expected the investment would be for stations in south Wales. As a solution to congestion on the M4, and the abandoned relief road, proposals were made by the South East Wales Transport Commission report for increased rail services between Cardiff and the River Severn.
What are known as the Burns proposals - the report's architect was Lord Burns - include upgrading the relief lines between Cardiff and the Severn Tunnel, and the development of five 'Burns stations' in Cardiff East, Newport West, Somerton, Llanwern and Magor and Undy.
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Mr Skates has previously said these stations would be "absolutely transformational" for Newport and the surrounding areas, and it is these stations that spending review money is widely expected to cover.
But it isn't quite that simple.
Whatever figure may be pledged next week, it is a matter for voters whether they think a pledge for funding - given serious physical progress is impossible before polling day - is enough to persuade them to cross in the box for Labour rather than someone else.
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However, the bigger question is whether any funding which comes on June 11 is enough to right the decades-long underfunding of Welsh railways and whether there are any longer-term commitments about ensuring Wales does not miss out when there are major spending commitments on rail in England.
The latest row about railways which is gaining traction thanks to opposition Lib Dem MP David Chadwick and Plaid Cymru's leader Rhun ap Iorwerth is over a new rail line planned between Oxford and Cambridge.
The £6.6bn line will see no tracks laid in Wales but, because it will be funded from the England and Wales pot, there are fears that it will suck up a significant part of Network Rail's budget and leave less to spend in Wales.
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This is all because the Barnett formula - the system where the devolved nations a fair share of the cash being spend in England - does not apply to rail in Wales. It does for Scotland and Northern Ireland but not Wales.
This issue has been most acutely felt because of the HS2 scheme, which is taking up such an enormous part of that England and Wales transport pot that there were calls for it to be funded separately and Wales given a share. There was precedent for this, as it happened with the Crossrail scheme, but despite the route being entirely in England and evidence showing the scheme will have a net negative impact on the Welsh economy, UK governments led by by Labour and the Tories have consistently refused.
Both Mr Chadwick and Mr ap Iorwerth have said the Oxford to Cambridge line is "worse than HS2" because the argument used for Wales not gaining any financial consequential payment from HS2 was that it would have improved services to Crewe which would have made journeys between north Wales and London quicker.
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There is no suggestion from anyone the Oxford to Cambridge line would improve any services for people in Wales.
However, the argument isn't quite that simple.
Politicians can argue about specific projects like a new rail line in Oxford and Cambridge all they want, but the issue is that the devolution settlement isn't fair. It isn't clear and the way decisions are made about what funding - if any - will come to Wales isn't transparent. The system which determines rail funding isn't fair, even Wales' transport minister admits that. Ken Skates has said today: "The system used for paying for rail improvements puts Wales and Borders within a wider network which has historically disadvantaged us," he said.
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"Previous governments have failed to change that, but the current UK Government has acknowledged that it short changes Wales. Past Ministers could have delivered a fair funding settlement, but failed to. Instead, they backed HS2 with no fair funding for Wales," he continued.
He says it is in "stark contrast" that Labour in London has admitted Wales has been underfunded. His critics will say that admission is nice, some millions to make some improvements are helpful but this UK Labour government has to take its chance to right the historic wrong on a wider scale.
Labour's former deputy transport minister, Lee Waters, has today told the BBC: "The signs are encouraging that we'll get more rail funding from the imminent spending review but we need to fix the system so that this doesn't keep happening. It's no good recognising the problem in opposition and then not sorting it when you get a chance in government."
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