HOC WAC Rail Infrastructure 2020 SC v3
TY’R CYFREDIN SAN STEFFAN: PWLLGOR MATERION CYMREIG
SEILWAITH RHEILFFYRDD YNG NGHYMRU 2021
Tystiolaeth Ysgrifenedig ar y pwntiau canlynol
Yr Athro Stuart Cole CBE, BA, MSc, FCIT, FICE
Athro Emeritws mewn Thrafnidiaeth (Economeg a Pholisi), Prifysgol de Cymru
HOUSE OF COMMONS: WELSH AFFAIRS COMMITTEE RAILWAY INFRASTRUCTURE IN WALES
Written evidence submission
Professor Stuart Cole CBE, BA, MSc, FCIT, FICE,
Emeritus Professor of Transport (Economics and Policy), University of South Wales.
(1) Where does responsibility lie for rail infrastructure in Wales?
Welsh Government* £455m
European Union £158m
UK Government £125m
Total ringfenced budget £738m
The Covid – 19 impact may mean an increase in CVL costs
*There is an element of City Deal funding in this figure.
(2) How effectively do the UK and Welsh Governments cooperate with one another in the management, and funding, of rail infrastructure in Wales?
South Wales Main Line increased track speed and electrification (NR)
Core Valley Lines electrification and increased capacity (TfW)
North Wales Main Line track speed and electrification (NR)
Cambrian Line (to Aberystwyth) increased line speeds and more dynamic loops
Cardiff Central additional platforms
Ebbw Vale line improvements
Swansea Commuter Network
Swansea District Line as a commuter route and an additional route saving 14 – 22 minutes between Carmarthen / Pembrokeshire and Cardiff (NR, Wales Office)
Heart of Wales Line improved track speeds and frequencies. (NR)
Electrification of relief lines on South Wales Main Line: Cardiff – Newport and adjacent to M4 J33. (NR)
Chester – Wrecsam – Bidston increased line speeds and electrification to link into Merseyrail as a loop.
(3) Should responsibility for railway infrastructure in Wales be fully devolved?
Wales needs at minimum the same position as Scotland in relation to Block Grant funding and the powers in relation to Network Rail. However, the Welsh Government has gone one stage further in owning a part of the network
The asset transfer of Core Valley Lines from Network Rail to TfW has broken down the previous rigid barriers where DfT was responsible and WG was an onlooker. There may well be case for updating the 2005 Railways Act to reflect the new devolved arrangements,
Rail infrastructure is partly devolved with Core Valley Lines. The Scottish model provides evidence of the practicability. However, financial costs and risks - for example, if a crisis with similar travel impacts to Covid occurred, with very few trains running so providing less income from track access charges.
(4) What share of investment has Wales secured in its rail infrastructure since privatisation came into effect in 1994, and how sufficient is that level of investment?
Different estimates have been made of the percentage of total Great Britain expenditure coming to Wales. Under the Barnett formulae (itself an unsatisfactory and at the time temporary measure) 5% of total capital expenditure on railway enhancement investment should come to Wales. Wales appears to be receiving 1% - 2% the Great Britain figure, particularly so when expenditures on HS 2 and Crossrail are considered.
Making comparisons with 1994 may be a red herring because the major part of GB rail passenger demand and journeys is not in Wales and markets have changed since 1994. Consequently, whether it is right or wrong it is inevitable that more funding goes to major economic centres like London and Manchester because they are much bigger. That is the output from pure economic analysis such as BCR. The Committee might perhaps get more from a compare / contrast analysis between what DfT will spend over the next few years versus what WG would be prepared to spend.
Thus, the percentage share of total expenditure is not the only discussion. The key comparative measures should be equating the:
London – Reading: 77 mph
Reading – Swindon: 95 mph
Swindon – Cardiff: 70 mph
Cardiff – Swansea: 46 mph
Swansea – Carmarthen: 34 mph
Carmarthen – Whitland: 40 mph
These low speeds are the result of under investment in Wales’ railways.
Maintenance and repairs have been on a consistent level across the Network Rail network
Significant changes are needed in the Green Book approach if Welsh capital investments schemes are to come further up the priority list for DfT (Section 5 refers)
The electrification of Core Valley Lines is not funded in the same way as Network Rail’s parts of the Welsh rail network. This is a Welsh Government initiative entirely (Section 1 refers)
The South East Wales Transport Commission’s brief from Welsh Government was to find solutions to peak period traffic congestion on the M4 around Newport and Cardiff – morning, evening and major events. Removing twenty per-cent of traffic is required and the Commission’s report (November 2020) shows this to be achievable
(5) How is funding allocated to rail infrastructure projects across the UK and how are the different infrastructure needs of the regions and nations of the UK assessed?
Subsidy – ‘Why should the means of travel of the wealthy middle classes be subsidised?’ is HM Treasury’s question, reflecting its perception of rail travel as London commuting.
Funding to HM Treasury equates to ‘bad financial management’ and should be avoided – it is akin to subsidy. One may find that ‘Fund’ is replaced by ‘Initiative’ in new financial bids
Ironically, road construction is seen as an investment for personal mobility and economic success
Wales where income levels are lower and infrastructure costs are about the same but the user is not in that wealthy category.
Therefore, Welsh Government has determined that fares on Valley Line services are 35% of those on London commuter lines.
Revenue support for rail passenger services in Wales is determined by Welsh Government.
Examples in Wales of financial limitations imposed by HM Treasury:
1) Department for Transport plan to electrify from Cardiff – Swansea was curtailed
2) no additional funding above the initial £125m capital for Core Valley Lines investment
Increases in train frequency
Reduced journey times
Infrastructure investment at stations to enhance journey experience
Increased capacity on trains (i.e., operating longer and more efficient trains)
More modern, comfortable trains
Provide passengers with a high quality travel experience
Reduced journey time
Faster more frequent trains
Strategic links to / from less densely populated areas (represented by about 70% of wales’ land mass) to enhance wider economic and social objectives.
Extendibility of the network in the future
Reduced operating costs
Lower environmental impact
DDA approved accessibility on trains / stations
The first stage is the High-Level Output Specification (HLOS) and the Statement of Available Funding (SoFA). This is made prior to each Network Rail Control Period (i.e., financial period). The decision for Control Period 6 (2019 – 2024) was announced by the DfT in October 2017 as £47.9 bn. Of this £34.7 bn was expected to be provided via UK government grant and the remainder from access charges and property portfolio This was subsequently reduced by £1 bn (almost 3%) which it is understood was a Treasury decision.
Capital expenditure on railway projects may be funded by the Welsh Government but this expenditure is not reflected in the Welsh Block Grant
The HLOS, SoFA determine overall expenditure and the HM Treasury’s Green Book considers allocation on a case-by-case basis. (Section 5 refers)
Network Rail is a GB-wide organisation so its processes and project management have a single set of rules in terms of its financial probity and its Network Licence. It is therefore guided towards high investment returns.
Network Rail carries out three stage business cases (Strategic Case, Outline Business Case and Full Business Case as per the DfT guidance) for all significant infrastructure investment projects. This informs Ministers about investment choices. There is also a nine stage GRIP analytical process within Network Rail to ensure the option progressed gives the best return for the criteria set
The announcement by the Chief Secretary to the Treasury (November 2020) should bring benefits to Wales. The Green Book is to be modified in terms of its dependence on the BCR as a primary investment criterion. For Wales, this would mean that schemes with a strategic benefit should be the priority schemes. However, the Transport Business Cases (Strategic, Economic, Commercial, Financial and Management) ‘developed in line with the Treasury Green Book’ has supposedly been in place since 2013 but with little impact on decisions based on strategic importance.
For many years since the 1960’s the evaluation base was referred to as Cost Benefit Analysis where travel time, vehicle operating costs and accident cost savings formed the key elements in determining value for money. Despite agreeing to environmental and wider economic impacts being agreed by DfT / HM Treasury, value for money continued to be based on travel time and operational cost savings. Under the current business case process only schemes passing the Strategic Case should go forward. This is the essence of the changes proposed in the Green Book Review 2020. It makes clear that some business cases do not have a strong strategic case
‘This is seen by some (including Professor Stuart Cole) as a result of attitudes inside HM Treasury giving undue weight to BCR results’. The review sees BCR ‘as a valuable tool for informing the choice of options at a short-listing stage to see if there is value for money’ but it has been used ‘without reference to a strategic case and does not give a comprehensive view of the social value offered by the scheme’
The Transport Business Cases form the basis of WelTAG, the Welsh Government’s project evaluation process where quite correctly, the Strategic Case has to be as predominant as the Economic and Commercial cases.
Ultimately, the allocation of funding is a political decision, so the more the UK Govt and WG engage and cooperate the more likely a better outcome. It is worth noting that rail investment in Wales did not increase significantly under both Labour and Conservative UK governments. Where therefore lies the obstacle – BCR as a basis for investment?
(6) What will be the impact of the Covid-19 pandemic for the railway network in Wales (including the sustainability of services and potential impact in the railway infrastructure?
Taking 1st March 2020 as a base of 100 the index of average Network Rail passenger numbers has been:
Climate change has to be a primary governmental objective
Road emissions and concern for them are a significant cause of passenger transfer to public transport.
Road congestion and more predictable journey time by train is one of the biggest causes of transfer from car to rail travel especially in commuter travel.
Commuting into Cardiff is currently only 2% of the total Cardiff journey to work area commute; in London 70% of commuters into the centre travel by train / underground. Thus, there a large potential latent demand which the Cardiff City Council would wish to tap into with its transport strategy.
The conclusion here is that while demand is low currently consequent on movement restrictions it is expected that 80% of previous demand will return, However, major train companies are looking at changes in passenger demand between leisure and business travellers. Many of the latter are working from home; the difficulty is estimating how many will continue to do so and meet on-line in the future
There will less demand and more capacity / supply. This brings into question whether investment in more capacity (for more frequent trains) and investment in journey times (where the business case is weighted towards business commuters saving a few minutes) is really needed.
An alternative investment strategy might be making the existing network better by improving the journey experience of existing passengers. For example, consider investing billions into upgrading existing capacity within a context of making more railway stations fully DDA accessible; improve station facilities and build more stations (with faster accelerating trains to neutralise any end-to-end journey time increases).
However, investment in Wales’ railways will still be required with the enhancements indicated (section 2 refers) in earlier sections compensating for the under investment over a long period
(7) What opportunities are there for Wales as a result of the recently launched Union Connectivity Review?
The Union Connectivity Review refers to ‘cross-border’ infrastructure
Led by Sir Peter Hendy it has a wider brief to examine links between Wales and other parts of the UK in terms of quality and reliability of major connections; the expected future demand for transport links and the benefits for economic growth from the internal UK market once we leave the European Union. In south east Wales there must be common ground with the SEWTC report along the M4 corridor. We shall see whether the Hendy report outputs agree or not.
The statement, by the UK Government (no reference available) that only schemes ‘crossing the border’ would be considered. If this is pursued it makes little transport or economic sense unless the full length of such railway lines is improved.
The key investment result is increased liner speeds and consequent reduction in journey time.
Major schemes to consider are:
Currently rail investment responsibility is through the UK government funding Network Rail, of which Sir Peter is chairman. This may take his proposals towards rail connectivity solutions for Wales and extend them beyond south east Wales. The electrification of the North Wales Main Line, under discussion for forty years, would bring economic benefits as HS 2 train services could operate along its length thus improving internal UK connectivity and links to Ireland – another of the Hendy study’s objectives – through Holyhead, Britain’s second biggest Ro-Ro port.
Increased capacity on the Cambrian Line and the Heart of Wales Line from Shrewsbury (in England) to Aberystwyth or Llanelli would encourage an environmentally preferred route for those wishing to enjoy mid Wales’ leisure attractions and hospitality sector – and 15% of Wales’ workforce.
Changing the role of BCR in rail scheme appraisal provides the opportunity to enhance the position of cross-border schemes mentioned in this submission.