Transport Funding: Wales and HS2

Liz Saville Roberts Excerpts

Tuesday 26th October 2021 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

I beg to move,

That this House has considered transport funding for Wales and HS2.

Bore da. Good morning. It is a pleasure to serve under your chairpersonship, Sir Edward. I am here to talk about HS2 and particularly funding for the railways in Wales. We are all aware that tomorrow the Chancellor has his Budget, that next week is COP26 and that the Government have been talking about connecting the Union, levelling up and net zero. When we think about all those together, there is a compelling case that the Chancellor should look to give Wales our fair Barnett consequential, akin to the Scottish one, so that we can tool up, gear up, connect up and help move the UK towards net zero with more rail investment.

The Welsh Affairs Committee, on which some of us here serve, recently recommended that Wales should receive the same Barnett consequential share as Scotland. Simply put, Scotland gets 91.7%, as a proportion of population, of its share of the total costs of HS2. If Wales got 91.7% of our 5% share of HS2, and if for argument’s sake HS2 cost £100 billion, Wales would get something in the region of £4.6 billion. If HS2 ended up costing twice that, we would get something in the region of £9.2 billion. I am sure that we will hear about this from the Minister soon, but we have heard that the projected costs have moved from £38 billion to £100 billion, and now there is talk of costs of £160 billion to £200 billion.

HS2 is obviously a UK scheme. However, it is a north-south spinal scheme, so it will clearly benefit Scotland more than Wales. One could argue that Wales should receive a higher proportionate share than Scotland, but that is not what I am arguing; I am simply arguing that we get our fair share.

I know that the Minister is a great expert in HS2. Phase 1 was originally due to be completed in 2027. That has been kicked forward to 2033, and the latest news from the hon. Member for North West Leicestershire (Andrew Bridgen) is that we are looking at something like 2041. Given the timescale for action that is projected by COP26, we really must get a move on. There is a very strong case that Wales should have its share of the money to get on with shovel-ready schemes in both north and south Wales, to help build productivity and connectivity, to help with levelling up and to help deliver net zero.

We know that the Leeds section of HS2 has been cancelled. We also know that, because of the amount of concrete that will be used, HS2 will take 100 years to become carbon neutral, and that two thirds of the woodlands cut down will be burned by Drax power station, which will affect carbon emissions and air quality.

However, let us assume that HS2 is going ahead full throttle—namely that phase 1 might be over by 2041. We in Wales then have a case to get moving now and to get schemes delivered on the ground. I should disclose that, as people may know, a long time ago I was the leader of Croydon Council. I delivered the Croydon Tramlink scheme, a light rail electrified orbital tram system, which is 26 km long and connects Beckenham, Croydon and Wimbledon. That cost £200 million gross, but £100 million net, because it was a public-private partnership. That scheme, which connected three constituencies, cost the Exchequer only £100 million. With HS2, we are talking about £100 billion—a thousand times that scheme. My point is that there is a lot to be said for small, cluster-based schemes around the country, particularly on an east-west basis. I am talking about the northern powerhouse as well as connectivity to Wales and, very importantly, within Wales.

The situation in terms of relative competitiveness is that I can go from London to Manchester in two hours and 10 minutes, and from London to Swansea in about three hours. With HS2—if it does happen—we will be able to get to Manchester in one hour, so we have to ask what investors are going to do. We have already seen Virgin pull out of Swansea and go to Manchester because of this, and KPMG did a study some years ago showing that we will lose tens of thousands of jobs from south Wales unless we get some investment of our own to connect up, in particular, the clusters of Swansea and westwards with Cardiff and Bristol, to make that engine turn faster.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

To return to the point the hon. Gentleman made about speeds and time, what is the rationale for the Severn tunnel being the dividing line? To the east of the Severn tunnel, a person can travel at 125 miles an hour, but we are supposed to accept that, for some reason, to the west of the Severn tunnel, the speed is 100 miles an hour at best. Why should we accept that as a rationale, when other times for travelling are being so spectacularly improved?

[Geraint Davies]

I completely agree with the right hon. Lady. Obviously, there are engineering and geographic issues here: Brunel originally had a straight line going through to Swansea, which would have taken half an hour—clearly, it used to loop around to pick up coal and that sort of thing. But one of the things about time, of course, is that if you increase frequency, you reduce average time. I appreciate that the Minister may have a different view on HS2, but I think there is too much focus on gaining a few extra minutes when what we really need from HS2 is greater capacity: bigger trains and thicker tracks, or whatever, not necessarily going faster. If I can go to Edinburgh in three hours, which is the same time it takes me to get to Swansea, do I really want to spend £100 billion or £200 billion to gain that extra bit of time?

In the meantime, although I know Members will talk about the benefits for Wales, it is sad that the current plan does not contain the direct link between Crewe and Manchester that would help Wales. As we know from our own line, after we zoom through to Bristol and then to Cardiff, there are a number of smaller stations, and the train has to stop and start and that sort of thing. If HS2 had lots and lots of different stations, it would have to stop all the time, so that has been ruled out, but that means that people have to travel a long way to get to HS2 and connect with it. If we do not have this Crewe connection—which we will not—the benefits for Wales will be very small, much less than for Scotland. My minimum ask is that we agree the Welsh Affairs Committee’s joint party report that said we should get the same share as Scotland, as opposed to more, because Scotland will benefit and we will lose out.

--- Later in debate ---

[Craig Williams (Montgomeryshire) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. I want to make a couple of political points and to reflect on what my hon. Friend the Member for Swansea West (Geraint Davies) said—I will continue using “Friends”, as we are mostly Welsh in the Chamber.

This debate starts from the premise that HS2 is not good for Wales and I completely dispute that. On the political map of Wales, above the Brecon Beacons, we find one Labour MP. I think that is a reflection of the political circumstances of Wales. To put in a nutshell what is being alleged today, the political reality of the Labour party in Wales is that it is in south Wales, and only south Wales, so anything that matters to any one above the Brecon Beacons is not Welsh and not helpful for Wales.

In my intervention, I alluded to the Cambrian line. The Montgomeryshire economy looks east and west. It looks to Birmingham. Our railway line goes straight into Birmingham. Our international airport for mid-Wales is Birmingham International airport. In terms of a political ideological point about the Welsh nation, I get why people go on about north-south links, but the reality of our economy and transport is that we look to Birmingham. That is just a day-to-day part of life.

[Liz Saville Roberts]

I am sure the hon. Gentleman shares with me the concerns that historically there were north-south links. There is a deep irony that anyone who wants to use a train for a north-south link now, even in my constituency, has to use a steam train, which is very effective, but not indicative of a country in the 21st century or of our needs. We need these links in Wales, to build the nation of Wales, alongside all the talk of building the Union.

[Craig Williams]

I agree to a point, but it is ironic that since the creation of devolution we have seen the public transport network in Wales deteriorate. I speak as somebody who served as a director of a bus company. The funding to our bus companies in Wales and to a lot of things in devolved areas has completely wiped away capacity in the nation of Wales. I would reflect on what our Welsh Parliament has done to those north-south connections.

I occasionally commute to my constituency office by steam train—the right hon. Lady has been on the line from Llanfair Caereinion to Welshpool—and it does not reflect the modern, dynamic Wales we want, but the heritage railways are incredibly important.

--- Later in debate ---

[Craig Williams]

Before I give way to the right hon. Member for Dwyfor Meirionnydd, I will reflect on the fact that this debate is very premature. The Union connectivity review is yet to come out, and those are the exact issues that Peter Hendy has been looking at. The review is the vehicle for delivering this. There is a pressure, at times, that unless we give money to the Welsh Government we are not giving money to Wales—that is not true at all. The UK Government invest in Wales as well as the Welsh Government. We have two Governments that look after Wales; the UK Government, in terms of strategic assets such as transport links, and the Welsh Government in terms of devolved responsibilities. I was in Machynlleth, at the black bridge, with Peter Hendy some months ago; as the hon. Gentleman and I have neighbouring constituencies, we know that that was a multi-million pound investment to sort out the Cambrian line by Network Rail and the UK Government. That should be the UK Government’s role, and I expect that after the publication of the Union connectivity review there will be a significant investment into Wales.

[Liz Saville Roberts]

Of course, we do share the Cambrian coast line that runs through Montgomeryshire; it serves Ceredigion and Gwynedd as well. One of the issues that has arisen from HS2 is the way that it distracts from other possible places of investment. I would argue that for many of the hon. Gentleman’s constituents, as with mine, that improvements at Shrewsbury would make a far greater difference to connectivity in the immediate term than improvements to Birmingham.

[Craig Williams]

I agree on that point. That is under the franchise of Transport for Wales; although it is an English station it comes under the Welsh franchise and they operate it. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and I are campaigning, along with other Shropshire MPs, to get direct services from Shrewsbury to London, and improve the connectivity across the UK in terms of the Cambrian line. I will give way once more, and then I will make some other cheap political points before I shut up.

--- Later in debate ---

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr iawn , Sir Edward. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Swansea West (Geraint Davies) on securing the debate. It is delightful to follow the hon. Member for Montgomeryshire (Craig Williams).

HS2 is a symbol of many things, but for many people it is the example of a monumental Government white elephant. Justified on the basis of shaky calculations, which are almost 10 years old now, supported for the sake of political face-saving, and adjusted for political purposes rather than transport need, it has become for many people a political and economic catastrophe. It is certainly a highly political matter, of which the Conservative party will be aware, given recent by-elections.

That we press on with a project, originally costed at £32.2 billion in 2012 but now, scarcely nine years later, nearing £108 billion, is a testament to the failure of this Government to deliver. It is an example of the Westminster Government having their English cake and eating it, while telling the other nations to stump up for the ingredients. For Wales, it leaves an especially bitter taste.

HS2 has become a catchphrase for constitutional injustice, the high-handed mistreatment of Wales by Westminster, and the lack of fair play, let alone a level playing field. It reveals the reality of this Union of inequality. The consequences of HS2 for Wales are best seen when viewed, as two Members have already said, through the lens of the levelling-up agenda.

The Government have made much of their proposals for infrastructure investment, as part of the long overdue levelling-up agenda. Yet in the previous spending review, the Chancellor pummelled down rather than levelled up, by reducing the amount Wales will receive, when compared to UK Government transport investment in England. Wales was reduced from 80.9% in 2015 to just 36.6% in 2020. There is not much levelling up by the look of it. That represents a collapse of 44.3 percentage points, nearly half of what the Welsh Government will receive from every pound of UK taxpayers’ money, as spent by the English Department for Transport in England.

Why is that? Since 2015, Plaid Cymru has been arguing that Wales, like Scotland, should receive a full Barnett consequential from HS2 on the basis that it is a railway solely for England. Not an inch of its track will be laid in Wales. With the project currently expected to cost approximately £108 billion, Wales would receive roughly £5 billion based on our population share, if only we could apply the same formula with which all other England-only expenditure is treated. These are significant amounts of money, are they not?

That injustice was made worse by the Government’s project calculating that HS2 would cast a blight on the south Wales corridor. This region, of course, includes many of Wales’s valleys communities that are most desperately underinvested, and I am sure that it also includes the constituency of the hon. Member for Bridgend (Dr Wallis). The south Wales region is set to lose out to the tune of approximately £100 million a year because of the economic blight that HS2 will impose on the south Wales region.

This is where the situation becomes incomprehensible. Labour voted, against Plaid Cymru’s efforts, for Westminster to classify HS2 as an England and Wales project, arguing that both will benefit. That needs to be on the record. Even yesterday, the shadow Secretary of State for Transport, the hon. Member for Oldham West and Royton (Jim McMahon), said that Labour is fully “committed” to the delivery of HS2 and described changes to the proposed route as a “betrayal”. I beg to differ. The significant betrayal is Westminster’s treatment of Wales and it is frankly incomprehensible to witness Labour’s collusion in that.

Tomorrow, the Chancellor must make good his mistake, and he has an opportunity to do that. We have heard an awful lot about levelling up. This is an opportunity to give Wales, like Scotland, what would surely seem obvious to any reasonable person outside this place—a full Barnett consequential from HS2, as Scotland has. This is a glaring injustice, made worse by the fact that despite having 11% of the UK’s rail track, Wales has received only 1.5% of the money that UK Ministers spent on rail improvements. Yes, there is spend on maintenance, but when it comes to improvements in the 21st century for a public rail transport system that we desperately need, that money is not being spent in any measure of equivalence in Wales. Correcting the Treasury’s treatment of HS2 and its Barnett consequential for Wales is the right thing to do, and that would fast-track our benefit from levelling up. That is, of course, if levelling up is ever to be anything more than a catchphrase for Wales.

--- Later in debate ---

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Diolch. It is a pleasure to serve under your chairmanship again, Sir Edward. I congratulate the hon. Member for Swansea West (Geraint Davies) on securing this timely debate on the eve of the Budget and the comprehensive spending review.

How Wales has been treated in relation to HS2 is a scandal of epic proportions, and it highlights why the British state does not, and never will, work for Wales. HS2 has been funded purely and totally by public investment, which means that Welsh taxes that have been paid into the general Treasury pot are being utilised. That is different from HS1, which was financed completely via private means. If anyone thinks that I am arguing against public investment in rail, that is not the case. I am arguing that if public investment is used to fund a major rail infrastructure project, the allocation of public funds becomes an important political topic.

Despite the confusion about future phases of HS2, with news reports this weekend indicating that future phases might run on existing routes north of Birmingham, the reality is that the HS2 project dominates UK rail infrastructure spending and will do so for many years. It is likely that the whole project will not be completed until the middle of the next decade.

When the last Labour Government promoted HS2, the projected costs were nearly £40 billion. As my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) said, the costs are now estimated at well over £100 billion by the independent Oakervee review, despite the Treasury’s desperate attempts to cut costs. Lord Berkeley, the review’s deputy chair, put the costs at more than £170 billion. Regardless of HS2’s finished costs, the key question for the debate and for Welsh transport is its impact on Welsh funding.

Rail infrastructure is not devolved in Wales as it is in Scotland and Northern Ireland. The cross-party Silk commission, set up by the Cameron Government in 2010 to look into the constitutional settlement, advocated equalising railway powers in the Welsh settlement with those of the other constituent parts of the UK. Even before HS2 came online, the commission understood full well the financial implications for Wales of those powers being retained in Westminster.

[Liz Saville Roberts]

My hon. Friend makes an interesting point. There has been one significant material change since the original costing for HS2, in that since last year, Transport for Wales—Wales’ transport network—has been in public ownership under the operator of last resort. Given that the train system is in public ownership, surely Network Rail should also be devolved to align public spending most effectively in Wales, along with the proper funding. There is a staggeringly obvious discrepancy and inconsistency between those two things.

[Jonathan Edwards]

As always, my right hon. Friend makes a pertinent point. It does not make any sense that the responsibility for operating the railways in Wales is devolved to the Welsh Government but the responsibility for the infrastructure remains in the hands of another Government.

To return to my point, the Silk commission recognised that the devolution of those powers and the equalisation of powers for Wales, Scotland and Northern Ireland, was right not only for operational reasons, but because of the financial implications and the historical underfunding of the Welsh railways that resulted from the powers being retained in Westminster.

--- Later in debate ---

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

It is a pleasure to serve under your chairmanship once again, Sir Edward. I congratulate my hon. Friend the Member for Swansea West (Geraint Davies) on securing the debate. He is more often in the Chair than addressing it, so it is great to see him in his place. He made a compelling case for a redesignation of the funding formula so that HS2 is considered England-only. As right hon. and hon. Members have heard, that would mean that under the Barnett formula, up to £5 billion more could flow into Wales’s rail infrastructure and put Wales on the same basis as Scotland and Northern Ireland when it comes to the formula’s consequentials.

My hon. Friend makes that argument not only because he is a doughty and dogged champion for the people of Swansea, and indeed, the whole of south Wales, but because he rightly identifies that rail infrastructure in Wales is in pressing need of investment and modernisation. The redesignation of HS2 as England-only is a sensible and practical way to release funds to upgrade the railway in Wales. It was, after all, one of the recommendations of the cross-party Welsh Affairs Committee. In its report on 6 July, the Committee concluded:

“There is a strong environmental and economic case for substantially enhancing the rail infrastructure that serves Wales, and the passenger experience of slow services and inadequate stations only underlines the need for an upgraded network.”

In its conclusions, the Committee reported that:

“Wales will not benefit in the same way as Scotland and Northern Ireland from Barnett consequentials arising from the HS2 project. This is despite the fact that UK Government’s own analysis has concluded that HS2 will produce an economic disbenefit for Wales. We recommend that HS2 should be reclassified as an England only project. Using the Barnett formula, Wales’ funding settlement should be recalculated to apply an additional allocation based on the funding for HS2 in England. This would help to ensure that Welsh rail passengers receive the same advantage from investment in HS2 as those in Scotland and Northern Ireland.”

The case is clear in the Committee’s findings, and it is indeed compelling. When the Minister responds, I hope he will not merely dismiss it out of hand, but instead consider carefully the many expert opinions in favour of such a move, including the Committee’s recommendations and the thought-provoking speeches of my hon. Friend the Member for Swansea West and the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), and the invaluable contribution from the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards).

The Opposition remain 100% committed to HS2. A Labour Government would listen carefully to local concerns and place environmental factors at the heart of the project, but we would get on with the job at hand. We see new high-speed rail as part of a much larger modernisation of our railways. We would invest in new lines and stations and open up all parts of the UK, and therefore the economy, with affordable, efficient railway services—services that are accessible to all, including young people, people with disabilities and people on low incomes; services that are safe and clean, and services that are integrated across the transport system of walking, cycling, buses, ferries, light railways, trams and road systems. A great example would be the electrified metro for the Swansea Bay city region, which my hon. Friend the Member for Swansea West so ably championed and which I thoroughly support.

We want significantly more freight off lorries, off our roads and on to the railway, and we would accelerate the electrification of the railway with a rolling programme of upgrades. The Conservative Government’s decision to cancel the electrification of the Great Western main line from Cardiff to Swansea was short-sighted and bad for the environment, and it should now be reversed. It is absurd that the Great Western Railway’s Hitachi bi-mode trains run on diesel mode between Cardiff and Swansea and switch to the less polluting and more efficient electric mode on the rest of the route in England, including as it goes through the wonderful town of Slough.

As the right hon. Member for Dwyfor Meirionnydd rightly noted, in England trains can reach the magic inter-city speed of 125 mph, but once on the Welsh side of the Severn tunnel, they slow to average speeds well below 100 mph—not so much levelling up as slowing down. Will the Minister update us on the Department for Transport’s stalled plans for the electrification of the railway in Wales? The last Labour Government rightly prioritised and invested billions of pounds in modernising our old, inefficient rolling stock. Having achieved that, the priority of the last decade should have been the electrification of our rail lines.

[Liz Saville Roberts]

We heard from the hon. Member for Montgomeryshire (Craig Williams) about the significance of the line from Holyhead into England. There has been no mention in the slightest of that being electrified. Those lines have some of the most polluting rolling stock, and we have no alternative in many cases but to use it. That is not the transport infrastructure of the 21st century, which, just days before COP26, is what we should be discussing.

[Mr Dhesi]

The right hon. Lady is absolutely right. I recently visited my family and saw the wonders of north Wales, and, although it was lovely to see the scenic countryside on steam railways and the like, what was sorely missing was an electrified rail network. That would greatly benefit the good people of Wales, and that is why there needs to be greater investment in Wales, and in particular in electrification.

--- Later in debate ---

[Andrew Stephenson]

It is fine. The Network Rail regulatory financial statements and expenditure breakdowns show that Wales received around 4% of all Network Rail spending in 2011-12 to 2015-16, and 6% in 2016-17 to 2018-19. In 2018-19, the spend on Wales was 6.1% of the England and Wales figure, or 5.4% of the England, Wales and Scotland figure. The figures include Network Rail’s spending on operations, maintenance, renewals and enhancements. Does that clarify the hon. Gentleman’s point?

[Liz Saville Roberts]

We understand that to be the total spend, but we also understand that the spend on investments, development and improvements is where the spend in Wales is so much spectacularly lower than we would expect, in terms of the 11% of the rail infrastructure that we have and in comparison with the conventional Barnett formula of per head of population.

[Andrew Stephenson]

I thank the right hon. Lady for her point. The UK Government work collaboratively with the Welsh Government on putting forward business cases. As she will be aware, we do not allocate set proportions by region across the United Kingdom; we work on where the enhancements deliver the best possible value. We have worked collaboratively with the Welsh Government to bring forward a number of business cases for further investments. We hope to continue to do so. The figures I have just outlined show that an increasing proportion of the Network Rail budget is spent in Wales—something I am sure the right hon. Lady would welcome.

--- Later in debate ---

[Liz Saville Roberts]

I want to be clear on this, because that, of course, includes Barmouth Bridge in my constituency, which is more than 150 years old. We will have to do work on it, if it is to be maintained as a line. I take issue with the Minister on levelling up. I rarely find myself trying to argue the Union point, as I do here, but if we are talking about levelling up, those areas of the United Kingdom that most need infrastructure will not receive it unless it is given by central Government. Wales is a classic example of this, yet we see that infrastructure investment in railway, the electricity grid and all the infrastructure needs we will have in the future to change to net zero—those are the areas where Wales is lacking. I would welcome the Minister showing us his future intentions on these arguments.

[Andrew Stephenson]

On this point we are going to have to agree to some extent to disagree. Through the Union connectivity review, the Government are demonstrating their real desire to invest more. We are investing record sums in rail across the whole United Kingdom. The £4.8 billion levelling up fund, of which at least £800 million will be allocated to projects in Scotland, Wales and Northern Ireland underlines the Government’s commitment. Changes to the Green Book will directly help projects in Wales in the way that I hope they will help projects in the north of England, where my constituency of Pendle is located.

I think we all share a desire for projects to be moved forward at pace. As a Rail Minister, I will not argue against even more investment in rail, but the statistics I have put on record today show that we are working collaboratively with the Welsh Government in order to deliver significant projects that the right hon. Lady’s constituents and other constituents want to see across Wales.