Wales shouldn’t get a Barnett consequential from HS2 says minister David Davies

Wales Office minister David Davies says Wales shouldn’t receive a Barnett Formula consequential potentially worth billions of pounds from the high speed two (HS2) rail project in England. Last week a report from the cross-party Welsh Affairs Committee in Westminster, chaired by former Welsh Secretary and Tory MP Stephen Crabb, called for the rail project, whose next phase will see it reaching Birmingham and then onward to north of England cities like Leeds and Manchester, to be reclassified from being an Wales and England scheme to a solely English one. :Welsh Affairs Committee report on rail in Wales.[1]

As it stands while Scotland and Northern Ireland will get a Barnett consequential from HS2, Wales will not. Over the next decade around GBP100bn has been earmarked for the project, which if barnetised would provide additional funding of around GBP5bn for the Welsh Government, which it would be free to decide where to spend. While recognising that HS2 will free up capacity on the existing UK rail network and will benefit North Wales with links via Crewe and Chester, providing the North Wales Mainline is upgraded, the committee’s report also highlights it would also generate disbenefits.

Analysis shows that by bringing northern cities closer to London it would have a negative economic impact on South Wales, as well as Bristol. Under Secretary of State for Wales, Mr Davies said: “We don’t agree with the Welsh Affairs Committee on this, but obviously we recognise that Welsh MPs will do everything they can to argue for more money for Wales and that is what they should be doing. ” However, the HS2 case doesn’t really stack up in my opinion.

The infrastructure is being built to get people out of their cars and onto railways and it is part of our commitment to deliver net zero by 2050. “If we are serious about net zero then we need to build the railways where we will get the maximum number of people out of their cars and into railways powered by electricity that will hopefully be generated by renewable power. And that means putting it (investment) where the population base is.

“Wales is going to benefit from it (HS2), firstly because the whole of the UK will get a benefit if we get our carbon emissions down and secondly it is a misnomer that the only people travelling on HS2 between the Midlands and London will be people from the Midlands and London. “There will be people there who will not use it and people in Wales that will. In addition to that a lot of Welsh businesses can benefit from the tenders for doing the work and none of this takes away from the fact that the UK Government has been investing a lot of money into the railways in Wales, GBP1.5bn is going in over the next control period (next five year investment cycle).”

However, outside of the necessary operating maintenance and renewal costs, there is currently just GBP345m allocated for rail enhancement projects in Wales. While at the time not a devolved matter with a case that it should have been paid in full by the Westminster government, Mr Davies cited the UK Government’s financial contribution, via the City Deal, for the electrification of the Core Valley Lines. Network Rail is currently working on early stage business cases for upgrading the freight lines between Cardiff and Bristol for passenger train use and upgrading to the North Wales Mainline.

The committee’s report was not arguing against HS2, but that Wales like Northern Ireland and Scotland should get a Barnett consequential. Over the last decade and more, despite having around 10% of the UK rail network, Wales has received less than 2% of rail enhancement projects, like new stations and section of new track.

Asked what the Wales Office is doing to get the Treasury and the Department for Transport to invest more in the Welsh rail network, which apart from the Core Valley Lines, are is devolved, Mr Davies said: “I respect what the Welsh Affairs Committee says, but the UK Government has a fantastic record on delivery of public transport for Wales and the whole of the UK. “We have been making the case for Wales and quite a lot of money is coming in for the railways anyway, but we have got to build those railways where the passengers are.

There is no point in us spending millions of pounds building an improved railway between Aberystwyth and Shrewsbury as no matter how good the railway is the passenger demand is just not going to be there.” The Welsh Government has set out several billion pounds worth of rail enhancement investments it wants to see the UK Government back in Wales, including the Cardiff Crossrail and Swansea Bay Metro schemes, electrification of the North Wales Lines and additional stations on the Great Western Mainline. With HS2 not being barnetised will mean a squeeze on the attribution factor in Department for Transport spending in devolved areas for the Cardiff administration.

With rail now taking up a much bigger slice of the overall Department for Transport budget, the attribution factor to the Welsh Government from spending in England in areas which are classified as devolved, like roads, has been revised downwards to around 34%.

It had previously been 80%.

References

  1. ^ Welsh Affairs Committee report on rail in Wales. (www.business-live.co.uk)