Millions for Wales' rail funding is 'underwhelming'
Millions for Wales' rail funding is 'underwhelming'
A row over Rachel Reeves' words in her spending review is overshadowing the UK Government's big announcement
Chancellor of the Exchequer Rachel Reeves delivers her Government's spending review to MPs in the House of Commons
(Image: PA )
The UK Government's announcement that £445m of funding will come to Wales is "underwhelming" and not enough to make up for years of underfunding, experts have said.
Chancellor Rachel Reeves made her long-awaited spending review statement in the House of Commons on Wednesday, June 11. As part of it, she declared: "Following representations from my Right Honourable Friend the Welsh secretary, the First Minister for Wales, and Welsh Labour MPs I am pleased to announce £445m for railways in Wales over 10 years including new funding for Padeswood sidings and Cardiff West junction."
The paperwork associated with the statement said that would mean "£300 million for rail investment in Wales, including for the Burns Review stations, North Wales Level Crossing, Padeswood Sidings and Cardiff West junction." For our free daily briefing on the biggest issues facing the nation, sign up to the Wales Matters newsletter here
However, the chancellor's words led to confusion, because UK Government then sought to row back on the chancellor's words, saying the funding wasn't over 10 years at all.
If the money were for over a decade-long period, it would be considerably less good news for Wales than Labour had been briefing especially given the historic underfunding for rail Wales has had.
The Treasury and Wales Office explained to journalists in a subsequent briefing the money was split into different parts, £300m will be spent by the UK Government on heavy rail - so things like the new stations and sidings mentioned above and rail improvements. The Welsh Government will get £48m for the Core Valley Lines and the remaining £97m would be for developing future schemes.
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They explained that while the "bulk" of the total sum would be spent in this next three year period, only the £97m development funding would be for a longer period of 10 years because it covers the upcoming spending review, and the next from 2030.
Despite that, confusion continued to reign, which led to a spat in the Senedd between Mark Drakeford and Rhun ap Iorwerth - which you can read here.
The experts at Wales Governance Centre gave their response to the chancellor's comments saying: "In today's statement, the Chancellor announced that this £445m would be spread over ten years: six years longer than the period of the spending review period itself. It includes £48m for enhancements to the Core Valley lines over four years, responsibility for which is devolved to the Welsh Government.
"In the spending review documentation, there are specific mentions of the Borderlands Line and the Cardiff to Bristol line. Beyond this, there is no substantial detail on the profile of this funding in each year of the spending review period.
"Given the rail enhancement spending currently committed to projects across England, this level of funding would fall well below a population share for Wales over the next decade. Any suggestion that this funding in any way compensates Wales for the loss incurred from HS2 is obviously unsustainable. It does not substantially change the overall picture of underfunding of Welsh rail infrastructure."
In February 2025, the Welsh Government estimated that the loss in consequentials from HS2 being classified as an England and Wales project (rather than an England-only project) was £431m, from 2016-17 up to and including 2025-26.
"However, Wales Governance Centre say it now estimates that the total loss from HS2 between 2016-17 and 2029-30 now stands at approximately £845m.
"Over the course of the next four years, Wales will lose more than £100 million in capital funding every year because of HS2's designation as an England and Wales project, and the cumulative loss will continue to grow significantly at future spending reviews. We show our workings in the attached table," their analysis reads.
"The Welsh Government has apparently expended significant political capital in pushing the case for rail infrastructure investment in Wales. In that context, the announcements today feel underwhelming.
"Furthermore, by leaving the existing system of funding rail infrastructure in place, it will leave Wales again at the behest of future governments (of whatever political colour) and risk further entrenching rail underfunding at future spending reviews."
Their analysis further consequentials deriving from NHS and schools spending in England equate to around 91% of the additional funding announced for the Welsh Government in 2028-29.
Passing on these consequentials to equivalent services in Wales would still leave NHS funding growing at below its long run historical average (3.6%) but this would still see other services facing tight budgets over coming years, leaving them – at best – flat in real terms
"Following the pattern of recent years, the funding is also frontloaded, with faster growth in spending in 2026-27 followed by leaner budgets in 2027-28 and 2028-29.
"This is good news for the current Cabinet Secretary for Finance, who may be able to avoid having to cut services in next year's budget, which will need to pass through the Senedd a matter of months before the election," Guto Ifan's analysis says.
Wales' finance minister Mark Drakeford told BBC Radio Wales that the spending review was good for Wales. He said the Welsh Government had got everything it wanted from the UK Government and it had only asked for funding for things it could deliver in terms of resources and staff.
He said claims by opposition parties that funding would be evenly split over a decade was an "elementary error". He said he had repeatedly corrected assertions that it would be divided, but they kept quoting it.
"Despite having that error corrected a number of times, they continued to cling to it. The error was to assume the money would be evenly divided over that 10 year period, whereas in fact, £350m of it, the vast bulk of it, will happen in the next three years.
"What the chancellor was explaining was that on top of the £350m there is £95m associated with a ten-year investment strategy. It's not £45m a year, as the leader of Plaid Cymru kept asserting, despite having had it explained to him, it's actually £350m over the next three years and there will be opportunities in subsequent spending reviews to add to that," he said.
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