Transport Funding: Wales and HS2

Tuesday 26th October 2021 Westminster Hall

09:30

[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.

[Craig Williams (Montgomeryshire) (Con)]

I am sure it was an omission by my hon. Friend—I call him that because he is Welsh—that he did not mention the Cambrian line, which goes through the heart of mid-Wales to Birmingham. Will he reflect on the hub of Birmingham, and how that impacts on Wales and HS2? He has talked about Crewe, Manchester and Bristol, but mid-Wales looks east to west, and that Birmingham exchange is incredibly important to my constituents.

[Geraint Davies]

The hon. Member makes an important point. Overall, having a fast north-to-south link along the spine of the United Kingdom is good for the UK, and obviously the connections with Birmingham are important as well. My central point is that we are going to spend all this money, but Scotland will benefit much more than Wales: at minimum, we should get our fair share. My secondary point is that a lot of shovel-ready schemes are available, many of which have been devised by the Welsh Government and are ready to roll. If we are serious about being a Union, connecting the Union and building productivity, we should do just that.

The productivity situation, of course, is that unfortunately the gross value added in Wales is something like 70%.In other words, the average wage is about 70% of the UK average. Of course, productivity is generated by skills, technology, access to markets and investment, and the productivity of the actual line is low. Traditionally, the Department for Transport’s formula for investing money, in terms of its cost-benefit analysis, rewards previous investment. In the south-east of England people have expensive houses, and the train network is basically made to spoke into London more and more so that people can work in London and live further and further away, with HS2 and other connectivity. What happens, obviously, is that house prices are bid up, so no one can afford to live in London. People spend half their time going back and forth on a train, using a lot of carbon, and even if the line is electrified the electricity must be provided somehow or other, and the energy of the world is being consumed.

We should look at a more regional basis—a cluster basis—that took advantage of what we all know now about Zoom technology to allow people to work from home, and that sort of thing. Post-pandemic and post-Zoom technology, in our new environment, we should look at how best we can spend money on building localised economies more quickly, rather than having much more grandiose schemes for the long term. I am not speaking against those things as such, but it seems to me that we need to bring forward these other projects.

On net zero, the Minister will know that in Paris we tried to deliver a maximum 1.5° C increase, but the latest projections are that we are already at 1.2° C and that by 2025 we will be at 1.5° C. In fact, over Europe it is already 2° C and over the Arctic it is already 3° C, because there is more heat over land than over sea, which is why 8,500 tonnes of ice are melting every second that we speak today. So we are running out of time. I am not pretending that our schemes in Wales can save the world, but we all need to think about how to do what we can as soon as we can.

On the investment we have had in Wales, the Minister will know that, in terms of rail enhancements over the last couple of decades, we have had only about 1.5% of the UK’s share for 5% of the population and something like 11% of the rail track. In recent times, I ran a big campaign, as the MP for Swansea West since 2010, to get rail electrification to Swansea. David Cameron said he would deliver it, but then something happened to him and we didn’t get it. It was then argued, “Oh, well, there won’t be a very big increase in line speed,” but what we need of course is frequency and electrification so that we get a better service and a greener future. That is something we need to come back to.

We have left the EU, but 60% of exports from Wales are to the EU, so we need support. In terms of economic clusters, the Swansea, Cardiff and Bristol city regions combined have 3 million people. Similarly, Leeds and Manchester have 3 million people. However, Leeds and Manchester get something like eight services an hour, whereas we get about one. So the issue, which comes out of the Hendy review and other things, is that we should be connecting up—this is not being nationalist in any sense—with Bristol and the south-west to create economic prosperity for south Wales and the south-west. We need that investment in railways now.

I know that Lee Waters, the Transport Minister, and Judy James in the Welsh Assembly have come forward with detailed schemes about how to provide a south Wales metro in the south-east and central areas, and moving west. In essence, we are talking about an integrated transport system that would connect up light rail with electric buses, electrified trains and even hydrogen-powered trains in a way that means people can easily get on to public transport and are not kept waiting for hours because the service is unreliable and infrequent, so that they will then switch from car usage.

I would be interested to hear what the Minister has to say about that. It is all very well saying that people must go on public transport but if we are serious about net zero public transport needs to be close to home, frequent, affordable and comfortable. People will make that shift if the fiscal strategy is there. I urge the Minister to urge the Chancellor to address that issue, and I am happy to work with them on that with colleagues.

I know that other Members want to speak, so I will shortly wind up—I am sure you will be thankful to hear that, Sir Edward. However, the Minister may or may not be aware of the Blue Eden project coming out of Swansea. That innovative project combines tidal energy with floating eco-houses—believe it or not—solar energy and capturing batteries’ energy. My point is that there is a great appetite for creative innovation to deliver net zero in Swansea, Wales and beyond. Part of that must be the investment in rail infrastructure and public transport that are environmentally friendly, people friendly and affordable and in building productivity to help Britain to deliver net zero, higher productivity and better prosperity for all.

09:46

[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.

[Geraint Davies]

rose—

[Craig Williams]

I want to come back to my main point before the hon. Member intervenes. I will, of course, give way; he was very kind. The premise of this debate does not reflect mid Wales. It does not reflect north Wales, our priorities and the fact that we fall back on the spine of the UK railway network. I put it to Members that HS2 is as much about capacity as it is speed. In Montgomeryshire we look to London as much as we look to Cardiff, and anyone in my constituency who uses the UK network could see that it had huge capacity problems, pre covid. In Montgomeryshire, we can see the need to invest in that spine. We can see as businesses and constituents that we need additional capacity.

The hon. Member for Swansea West mentioned COP26 and the modal shift; if we are going to have those kind of shifts to public transport, we need the capacity. If we are going to have the capacity for mid-Wales, and the UK, we need new lines. I will give way if the hon. Member for Swansea West wants to intervene, and then the right hon. Member for Dwyfor Meirionnydd—why not two at once?

[Geraint Davies]

Because it is impermissible.

I have been arguing that we need more connectivity within Wales—in south Wales and north Wales—but also between south Wales and the south-west, between north Wales and Liverpool and Manchester, and mid-Wales and Birmingham. We need connectivity to connect the Union, but to do that we need our fair share of investment. That is my simple point; I am not trying to cut off Wales, and I am certainly not saying that south Wales is the be all and end all. However, it is the case, as my father found when he was in charge of economic development in the Welsh Office, that the connectivity between south Wales and the south-west and between north Wales and the north-west is greater than between north and south Wales.

[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.

[Jim Shannon (Strangford) (DUP)]

This is very much a debate about Wales, transport and HS2, but the hon. Gentleman has referred to Union connectivity. I would ask if it is possible to consider us in Northern Ireland, who travel from Belfast to Liverpool to Wales, or go down south to come across on the ferry to Holyhead. When it comes to connectivity, we must improve everything within Wales, but we must do that for the benefit of the whole of the United Kingdom of Great Britain and Northern Ireland—including for us in Northern Ireland who wish to travel to Wales.

[Sir Edward Leigh (in the Chair)]

Order. As a general rule, if you want to make an intervention, you should be here at the start of the debate.

[Craig Williams]

I will remember that for the future, Sir Edward. The hon. Member for Strangford (Jim Shannon) makes an incredibly important point, and it is one that I hope the Union connectivity review does look into. While I am not suggesting a bridge or a tunnel from Holyhead over to Northern Ireland or the Republic, I am suggesting that we need to look at the importance of Holyhead as a UK strategic port, and some better way of connecting into the UK rail network. That is exactly where I want to see the investment from the UK Government going—into our Welsh railway network. The north Wales coast line is an incredibly important strategic railway for the whole of the United Kingdom, not just Wales. I am delighted that that remains—and long may it—the competence of the UK Government, because that is the only way we will see real investment.

I return to the opening speech by the hon. Member for Swansea West and the south Wales orientation of Welsh Labour, be it at parliamentary level or at that of the Welsh Government. On behalf of my constituents, I feel that especially with the Cambrian line. I know from north Wales Members that there is a strong feeling in communities of neglect by the Welsh Government and a complete orientation to Cardiff and south Wales.

[Geraint Davies]

Will the hon. Gentleman give way?

[Craig Williams]

I said I would not give way anymore. I am sure the hon. Gentleman can use his closing remarks to come back on me. Before I sit down, I would reflect again on the importance of looking east to west in terms of connectivity, and the importance of building additional capacity into our UK network. On behalf of my constituents, I welcome the Birmingham hub. I know that, for north Wales Members, the Crewe interchange, and how it builds into the north Wales coastline, will be incredibly important.

Although I recognise the passion and the sometimes cheeky ask for additional money, I expect that mid-Wales will require additional investment in its railway network from the UK Government, through the Union Connectivity Review. I hope that there is no push by anybody suggesting that the easiest way to solve any problem in Wales is to give more money, either through Barnett or directly to the Welsh Government. If we are going to level up and make a huge investment in our network in Wales, that has to come from the UK Government. Otherwise, as I alluded to, I fear it will be a complete south Wales monopoly on developments.

09:56

[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.

10:02

[Dr Jamie Wallis (Bridgend) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Swansea West (Geraint Davies) on securing this debate. He and I serve on the Welsh Affairs Committee and he alluded to its recent report on rail investment in Wales, which had a section on HS2. He will remember, from the fierce debates that we had during those private meetings, that he and I disagree very much on the essence of HS2 and its benefits to the people and the economy of Wales, but I admire his passion and I believe that we as Welsh MPs should fight for as much money for Wales as possible. There is absolutely nothing wrong with that.

I firmly believe that HS2 presents an opportunity for us to build back better not just for England, but for the United Kingdom as a whole. I welcome the hon. Member’s comments that investment in the main spine down the United Kingdom benefits the whole United Kingdom. My hon. Friend the Member for Montgomeryshire (Craig Williams) highlighted how his constituents and those in north Wales will benefit with respect to the east-west nature of their day-to-day travel, with journey times to London from Birmingham, their closest main hub, being significantly reduced. This investment will therefore benefit them.

To turn to areas such as my Bridgend constituency, in the past 20-odd months of being an MP, I have seen a huge number of small and medium-sized enterprises that are heavily involved in Government infrastructure projects, whether that is Hinkley Point C or HS2. I actually surveyed all of the businesses on one of our industrial estates. There were only a few dozen and not all of them replied, but over half of them were currently either servicing or considering tendering for a UK Government infrastructure project, most notably Hinkley Point C and HS2. There are currently 2,000 businesses involved in the development of HS2, with 9,000 people working on the line, and many of those businesses are based in south Wales. The whole of the United Kingdom gets to bid and tender for this work. That money and investment provides job security and opportunities for people across the whole of the UK.

The Select Committee report was slightly unfair and contains some inaccuracies. It suggested that the Welsh Government had not received a single penny from the Department for Transport spending on HS2. I would like to highlight that between 2015 and 2019 the Welsh Government received about £755 million in Barnett consequentials. I appreciate that the hon. Member for Swansea West is referring to future Barnett consequentials, but it is not the case that the Welsh Government have received nothing. They have received Barnett consequentials to date.

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

I do not think anybody is discounting the fact that increasing Department for Transport expenditure leads to overall consequentials for Wales. The question is on the impact of the HS2 element. Having mentioned the £755 million for Wales, what are the figures for Scotland and Northern Ireland, considering that they get 100% Barnett consequentials? That is the issue at hand.

[Dr Wallis]

I thank the hon. Member for his intervention. I represent a constituency in south Wales. Much has been made of the benefit to mid and north Wales, and I am trying to highlight some of the benefits to south Wales. If there is a benefit to people and businesses in Wales, with investment in infrastructure in the United Kingdom benefiting the UK and Welsh economy, surely we have to accept that to ask for 100% Barnett consequentials on the project is simply not right. We have to accept that Wales will get a benefit, so asking for a 100% comparison is simply not right.

Many of my constituents are very concerned about environmental factors, and achieving net zero is important.

[Geraint Davies]

I am listening carefully to the hon. Member’s comments, and I respect the fact that we have genuine differences. Will he accept that, if Scotland gets 91.7% of Barnett consequentials from HS2 and Wales gets zero, even if there are some benefits to Wales from HS2, it could be argued that we should get something in the middle? I know the benefits of people going from Wales to build HS2 and coming home to Wales, as he is mentioning, but should we not get a share at least? We need more money in Wales.

[Dr Wallis]

We have had this debate a lot. There have already been Barnett consequentials given directly to the Welsh Government. I think I have already addressed that point.

Coming back to net zero, we should be trying to drive up rail uptake, and I am very pleased with that. I want to talk about what the Welsh Government are doing with roads. We are talking about achieving net zero and the role of rail in that. We cannot expect net zero to mean zero cars. Passenger cars will be moving to electric technologies and potentially hydrogen technologies, and the state of roads is continually a cause of frustration for my constituents. I picked up three additional cases at my surgery on Saturday of residents on a street in Porthcawl who are frustrated and at the point of exasperation because they cannot get investment in the roads there, and they cannot get what they need. The Welsh Government’s decision to simply abandon any new investment in roads and to completely walk away from building the M4 relief road has done far more to frustrate my constituents than anything going on with HS2, frankly.

I will finish by saying that the bounce-back impact of HS2 in Wales cannot be underestimated, not only from additional funding but by improving transport links from mid and north Wales and increasing opportunities for all Welsh businesses, including those in my constituency. HS2 is a British project that seeks to level up the whole United Kingdom, and I believe it does just that.

00:00

[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.

[Geraint Davies]

The hon. Gentleman is being generous in giving way. Does he agree that one has to differentiate, as I do not think the hon. Member for Montgomeryshire (Craig Williams) did, between the amount of money we get for Wales and who spends it? There was a lot of talk about UK money—“The Government spends this. Don’t give the money to the Welsh Government.”—but the basic point is that we should get our fair share. Of the £48 billion that Network Rail spends, about £1 billion is spent in Wales, which certainly is not the 5% that we deserve.

[Jonathan Edwards]

Absolutely; that is the financial reality. We do not even get a population share, which would be 5% of rail investment. People might argue that 11% of the rail network is in Wales, so we should be getting more than our population share. Historical underfunding is a huge problem for us in Wales in terms of developing our economy and moving our country forward. I will return to some of those themes later.

[Craig Williams]

The hon. Gentleman is indeed being very generous. Will he reflect on the fact that a good chunk of the Welsh railway network is in England? We have already alluded to the fact that Shrewsbury station, which I can assure the Chamber is in England, is an important Welsh station. Going from north to south Wales, a large chunk of that trunk railway is in England.

[Jonathan Edwards]

I listened to the hon. Gentleman’s speech advocating the benefits of HS2 with great interest, but he needs to reflect on the full business case for HS2 produced by HS2 Ltd in 2020. According to Professor Mark Barry’s submission to the Welsh Affairs Committee, there is no passenger benefit to Wales at all from HS2.

Returning to my point, the political process in Westminster following the Silk commission was a hatchet job of the worst kind, in which representatives of the two main Unionist parties drew red lines through the commission’s recommendations. Regrettably, the report was torpedoed below the water line. One recommendation taken out of the report was the devolution of rail powers, which meant that the Wales Act 2014, which followed that process, retained the status quo on that vital issue. The financial implications of that decision are sobering in the context of a domineering project like HS2, due to its impact on Welsh Barnett allocations. It has been catastrophic for Welsh funding.

While Scotland and Northern Ireland get a 100% allocation from HS2, Wales gets a 0% rating because the British Government deemed it an England and Wales project. However, the last time I looked at a map—I made this point in a question to the Prime Minister some time ago—all the HS2 destinations are in England. It says everything about how the British state works that a decision of this nature, with such far-reaching consequences, can be made without challenge. In this post-Brexit world, due to the inequity of the financial settlements across the UK, I have advocated the creation of a body apart from the Treasury to allow the various Governments of the UK to challenge financial decisions. At the moment, Westminster is judge and jury; in this case, that is very much to the loss of Wales. As a result, I have voted against HS2 at every opportunity.

The reality is that as spending on HS2 increases, Welsh Barnett allocations plummet. Now that construction has begun on phase 1, the financial impact has become clear. According to the Wales Governance Centre’s analysis, the statement of funding policy accompanying the last comprehensive spending review indicated that Wales would receive 36.6% of its population share of transport funding, while Scotland and Northern Ireland’s shares remain above 90% due to their full entitlements from HS2, compounding the historical underfunding of the Welsh railways. In 2013, the British Government’s own analysis indicated that HS2 would injure the south Wales economy by more than £200 million per annum; given that that analysis was done eight or nine years ago, I suspect the injury to the Welsh economy will be far more severe than what was revealed at the time.

Underfunding has always been a major issue for Wales. In the way the Department for Transport allocates funding, as our railways become less efficient the case for investment is undermined; meanwhile, investment is ploughed into London and the south-east, leading to a conveyor belt of investment which makes the case for further investment. Indeed, when the Prime Minister was Mayor of London, he argued in the Evening Standard that transport spending in London would need to increase by £1 trillion—if I remember correctly—once HS2 was completed, due to the extra passengers arriving from the north of England. Put simply, the current system does not work for Wales, and we need urgent and rapid change.

The hon. Member for Swansea West made an important point about productivity. Even from the Treasury’s perspective, one of the major issues within the British state is the geographical imbalance in productivity. Transport infrastructure investment is a key economic driver, so if all investment is utilised in and allocated to the most high-performing areas, productivity gaps are worsened. The simplest way to address productivity gaps is to invest in the poorer performing parts of the state, as the German Government realised following reunification—and there was a wall between East and West Germany for half a century. Alas, in the UK, all the money is spent in one small corner. Pre-Budget soundings suggest that an extra £7 billion or so will be allocated for expenditure outside London and the south-east, but the key question is how much of that is new money. It may be less than £2 billion. We wait to hear what the Chancellor has to say tomorrow.

To emphasise the point I made to the hon. Member for Montgomeryshire (Craig Williams), in a submission to the Welsh Affairs Committee’s recent inquiry into this issue, transport expert Professor Mark Barry stated that the full business case for HS2 produced in 2020 proved that HS2 had no transport user benefit for Wales. How the British Government can maintain that this is an England and Wales project is beyond rational understanding, so fairness is at the heart of this debate. Welsh taxes are being used to fund an England-only project that will also have a negative impact on our economy, with no recompense via the Barnett formula. Some might say it was ever thus, but to use the phrase of the moment, this is not levelling up; this is levelling down.

If Wales received fairness in real investment, we could be looking at exciting projects such as a comprehensive metro system for the west based on the one in Swansea—a project that I very much support—a north-south line along the western seaboard, opening up the western half of our economy for further economic development; enhancements across the north Wales and Heart of Wales lines; and electrification of the main line to Swansea.

[Dr Wallis]

The hon. Gentleman talks about these fantastic projects, but given the Welsh Government’s signalling their reluctance to make significant investment in infrastructure with their recent decision not to build the M4 relief road, are they not just further fantasy?

[Jonathan Edwards]

That is a very interesting intervention. I am not defending the Welsh Government’s policy in its totality, but they want to move away from road and towards public transport. If we will not be using road, we have to invest in rail. This is the fundamental question facing us as Welsh representatives: given that the UK Government have shown clearly that they have no intention of investing in Welsh rail transport infrastructure, what are we going to do about it? The only way to address that is to take responsibility for ourselves.

[Geraint Davies]

Does the hon. Gentleman accept that the Welsh Government are not abandoning all investment in roads? They are doing a roads review, looking at how they can balance transport between road, rail and active transport in a sustainable way, which will inevitably—hopefully—lead to a bit more public transport and rail, including electrified buses and public transport on roads. We will have more roads, but we will not necessarily need the M4 relief road if on one in five days people are on a Zoom call instead of sitting in their car.

[Jonathan Edwards]

My understanding of the Welsh Government’s policy is no new extra roads. That does not mean that there will not be investment in road maintenance. However, the reality is that, if we are going down that road, there has to be investment in alternative modes of transport, which again furthers the case for us in Wales to receive the powers, so that we can get investment and make the decisions ourselves. That is fundamentally at the heart of this debate.

On one side of the argument are those of us who argue that Westminster will never invest in Wales, so we need rail powers in Wales that will bring the investment and allow the Welsh Government to make decisions on investing in our own country. On the other side are those arguing that the UK Government will eventually come good and start investing in Wales. That will not happen, so the only solution is for rail powers to be devolved to Wales and for the Barnett consequentials to flow to Wales from England-only projects, as happens in Scotland and Northern Ireland, which will enable Welsh Government Ministers to pursue the transport priorities of our own country.

10:24

[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.

[Dr Wallis]

The hon. Gentleman said that electrification would benefit the people of Wales. My constituents already benefit from the electrification of the line to Cardiff. I have regularly travelled into London, both before and after I was elected as a Member of this House. The train journey times into Paddington from the main station in my constituency are already about 18 minutes shorter. The decision that electrification would not go as far as Swansea, although disappointing, did allow for immediate investment in new, more comfortable and more environmentally friendly trains. Does the hon. Gentleman agree with me that people in my constituency in south Wales do currently benefit from electrification?

[Mr Dhesi]

I thank the hon. Gentleman for that intervention. However, although his constituents in Bridgend, in south-east Wales, may benefit from the electrified railways towards Bridgend and Cardiff, it is absolutely absurd that people in south-west Wales and beyond are missing out.

It is also absurd that the hon. Member for Montgomeryshire (Craig Williams), who is no longer in his place, and the hon. Member for Bridgend (Dr Wallis) are arguing against more money for Wales. If people in Slough felt that they were missing out on resources and funding, they would be up in arms. The hon. Member can bet his bottom dollar that, if the route through the wonderful town of Slough was not electrified, the likes of me would be constantly arguing that we needed more investment in Slough and more electrification of our rail lines. That is the way we are going to tackle the climate crisis.

[Dr Wallis]

I thank the hon. Gentleman for giving way again. As the Member of Parliament for Bridgend, I am certainly not arguing for less money for Wales, and, were my hon. Friend the Member for Montgomeryshire (Craig Williams) still here, he would be able, as Parliamentary Private Secretary to the Chief Secretary to the Treasury, to tell the hon. Gentleman just how many bids had gone in and just how much money we wanted. It is not fair to say that I and my hon. Friend the Member for Montgomeryshire, who is no longer here to defend himself, are arguing for less money for our constituents. Our point is that HS2 does benefit the people of Wales, particularly those in mid and north Wales. It benefits the entire economy of the United Kingdom. It is a British project, and therefore the assumption that it should be fully Barnettised is simply not right.

[Mr Dhesi]

I thank the hon. Gentleman, but Wales is missing out. Some £5 billion of Barnett consequentials is not an insignificant sum. As I have pointed out before, the good people of Scotland and Northern Ireland benefit from Barnett consequentials, and none of the track actually goes through Wales. As has been argued, there is a need to increase the links between mid or north Wales and Birmingham, Liverpool and Manchester, but as has been pointed out, north to south there is still reliance on steam trains. If that were the situation in Slough, rest assured we would not settle for that. We would ask for more money and our share of resources.

The people of Wales are missing out. That is why the Labour party supports the proposal. It is clear that railway must drive the green revolution, just as it once powered the industrial revolution. Electrification is key. The old fragmented franchise model is dead. The modern railway is still waiting to emerge. Properly funded, publicly owned and strategically led, the railway can become the clean, green, affordable and efficient pride of Great Britain. It can boost our economic recovery after covid-19. It can transport us into the low-carbon and post-carbon economy and it can be a vital part of economic and social renaissance in Wales, but not without the investment we know is needed.

[Geraint Davies]

My hon. Friend is making an excellent speech. He may already know that between Cardiff and Swansea, where the electrification stops, the air quality deteriorates because of the diesel fumes. I chair the all-party parliamentary group on air pollution, and I have measured it—it is up to 5 micrograms per cubic metre in the carriage. People are being exposed to pollution unnecessarily. He will also be aware that Transport for Wales now has the skills infrastructure to deliver on the ground speedily while the Department for Transport has multiple priorities and is focused on HS2. We have the skills, but we need the money. Let us get the job done.

[Mr Dhesi]

My hon. Friend makes a powerful point. He has contributed a great deal to the debate on pollution as the chair of the all-party parliamentary group on air pollution, of which I am a member. I am fully aware of the impact on communities of not having electrified rail infrastructure. I am also aware of the review that the Welsh Government is undertaking on investment in rail across south Wales and beyond, so my hon. Friend makes some apt points.

It is surely wrong that HS2 will reduce the London to Manchester journey time to one hour and 10 minutes but London to Swansea will still take three hours. We must invest in and upgrade the Ebbw valley, the Maesteg lines, the Welsh Marshes line, Cardiff Crossrail and more. Levelling up must be for every part of our United Kingdom: not just Manchester but Milford Haven and Merthyr Tydfil; not just Leeds but Llanelli and Llandudno; not just Birmingham but Bangor and Bridgend. The £5 billion from Barnett consequentials would be a good start. I hope the Minister will give us good news.

10:38

[The Minister of State, Department for Transport (Andrew Stephenson)]

It is a pleasure to serve under your chairmanship, Sir Edward. I thank the hon. Member for Swansea West (Geraint Davies) and right hon. and hon. Members for their contributions. We all understand the great importance of transport and levelling up the United Kingdom. All the Members spoke eloquently about the need for more transport investment in Wales, an issue that the Welsh Affairs Committee looked at recently.

Let me assure Members that a key focus of the Government is to ensure we have a transport network that is not only fit for purpose but, above all, able to deliver a better and more prosperous future for all those we represent. HS2 is one of the many schemes that the Department for Transport is pursuing. It will free up capacity on the conventional rail network and support a shift of passengers and freight from road to rail. I stand here as the HS2 Minister, convinced that HS2 will play a vital role in levelling up all parts of the United Kingdom. However, as we have heard, HS2 is not the only matter at hand, so I will first focus on rail funding more generally in Wales and other points raised, before turning the HS2.

Let me be clear: we are investing in Wales. The current control period has seen a record £2 billion revenue settlement for Network Rail in Wales. Of that settlement, almost £1 billion will be spent on renewing and upgrading infrastructure to meet the current and future needs of all passengers, such as the complete restoration of the iconic Barmouth viaduct in Gwynedd. Investments in new stations are being made apace, such as at Bow Street in Ceredigion; line enhancements are being made in north, south and mid-Wales; major upgrades are being made to Cardiff Central station; and level crossing upgrades are being made to the Wrexham-Bidston line. That work is happening now, but a lot more is coming down the pipeline, including the opening-up of opportunities for work, travel and leisure for Wales and across the UK.

Members will of course be aware that the interim report of Sir Peter Hendy’s Union connectivity review was published earlier this year. It identified that rail capacity and connectivity issues need to be addressed in north and south Wales. In response, the Prime Minister made £20 million available to assess options on the road and rail schemes, which the review has identified as crucial for cross-border connectivity. I am glad to say that my officials are working closely and collaboratively with the Welsh Government and delivery bodies to identify potential projects to be supported, in line with our continued support for the Welsh Government in their ambition to have greater control over Welsh rail infrastructure. That is evident in our collaborative approach to working with our partners to divest the core valley lines to the Welsh Government. We expect the final Union connectivity review report to be published in the autumn, when the Government will consider Sir Peter’s recommendations to improve connectivity across the UK.

I will touch on a few of the investments that are currently under way. As we speak, important work is going on to transform Cardiff Central station. The rail network enhancements pipeline has allocated funding of £5.8 million to Transport for Wales for that work, supported by funding of £4 million from the Cardiff city deal. The design and business case work is expected to be completed next year, and it is an example of the strong collaboration in place between the UK and Welsh Governments.

The Cambrian line upgrade will bring the line’s digital signalling up to date. That much-needed upgrade will in turn enable the introduction of new trains and allow the system to work seamlessly with other digital signalling schemes. Further funding for that upgrade has been allocated to deliver the work by May 2022. A third example of a recent project is the Conwy valley line, which includes the longest single-track railway tunnel in the UK. Some £17 million was spent to repair and restore it, making it fit for passengers again after multiple floods in the past five years.

Such projects have an enormous effect on communities, and I know that there will be many more enhancements in the years to come. The north Wales metro strategy board has been established by Transport for Wales to integrate the proposals for transport improvements in the region, building on the exciting opportunities highlighted by those at Growth Track 360, for example, whom my hon. Friend the Member for Vale of Clwyd (Dr Davies) and I met last year, to transform north Wales and deliver 70,000 new jobs over the next 20 years.

The Department for Transport and Network rail are supporting the work of the board in providing advice on progression of the programme. There are plans to reduce journey times on the north Wales coastline between Crewe and Holyhead. The outline business case proposes an increase in line speeds, with the goal of improving journey times between north Wales, the north-west of England and other major UK centres.

Transport for Wales has recently commissioned a further strategic study into timetable optimisation and connectivity into northern powerhouse rail and HS2. It will also consider the case for further infrastructure enhancements including decarbonisation options for the line. Finally, in March, the Chancellor of the Exchequer confirmed funding of £30 million for the establishment of a global centre for rail excellence in Wales.

[Jonathan Edwards]

All the schemes that the Minister has mentioned are extremely noble, but what is the total percentage allocated to Wales in the control period? Is the reality not that, compared with investments across the rest of the UK, especially in HS2, Wales is being offered crumbs under the table?

[Andrew Stephenson]

I thank the hon. Gentleman for bringing me to that point. [Interruption.] I have a nosebleed; I will try to power through, but I apologise for any sniffing, Sir Edward.

[Sir Edward Leigh (in the Chair)]

If you wish to sit down and speak, you may.

[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.

[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.

[Geraint Davies]

The Minister will know that, having left the European Union, Wales will no longer benefit from convergence funding of the order of billions of pounds and that the UK shared prosperity fund has not kicked in to do anything about that. He will also know that convergence funding is focused on alleviating poverty through building skills and productivity and employment opportunities. He has also mentioned that the Department for Transport reaches its criteria on the basis of best value, as opposed to the criteria for convergence funding. Therefore, will he look again at those criteria, given that we are losing convergence funding based on poverty and building productivity, as opposed to best value, which just rewards existing productivity? In particular, given that his list of projects seems to end at Cardiff and, of course, west of Cardiff, there is a lot of Wales with a lot of needs. As has been pointed out, if we had had our fair share of HS2, we would have had another £5 billion, which is a lot more than the totality of what he is talking about.

[Andrew Stephenson]

The hon. Gentleman tempts me to go on to matters that may be covered in the spending review or the Budget on convergence funding and other issues. I do not wish to tempt fate by speculating about what may be announced later this week.

I will just return to the points that were made by several Members in relation to the Welsh Affairs Committee’s report on rail infrastructure in Wales. The report emphasised that it is clear that a joined-up approach to Welsh infrastructure needs is required in order to unlock investment. Therefore, we have responded positively to the Committee’s recommendation for a Wales rail board and are currently working with the Welsh Government to establish that. The board will build on the excellent collaborative arrangements in place between the two Governments to address the effects of the pandemic on transport in Wales and across the border.

I have tried to cover in detail some of the rail projects and proposals that are in the pipeline; there are many more that I could mention. I wanted to do that to give right hon. and hon. Members a sense of the momentum that is building behind this work. We all want the same thing: for Wales to benefit from improved transport infrastructure that will increase productivity and give people a greener way to travel, leading in many cases to a better quality of life.

My Department has also been working closely with the Welsh Government on identifying road investment priorities along the border between Wales and England. This work has secured joint funding from both Administrations for National Highways to develop the long-mooted A483 Pant-Llanymynech bypass. We hope that further joint funding will be made available for its construction and to examine the options for other priority cross-border links. Also, the UK-wide levelling-up fund, which I mentioned before, will invest £4.8 billion in local infrastructure, including local transport, regeneration and culture, over the four years between 2021 and 2025, and at least £800 million of that will go to Scotland, Wales and Northern Ireland.

Finally, I turn to HS2. HS2 is a low-carbon transport system for the future. It will take lorries off the road, benefiting the whole of the UK in the future and playing a role in achieving our transition to a carbon net zero future by 2050. HS2 will also contribute to sustainable growth in towns, cities and regions across the country, spreading prosperity and opportunity more evenly.

Let me start by saying something about the costs of HS2, because they were mentioned by the hon. Member for Swansea West and other Members. The phase 1 full business case, published in April 2020, set out the full cost of the HS2 network at £98 billion—a figure that is, of course, subject to decisions that will be made shortly in the integrated rail plan. Phase 1 has a target cost of £40.3 billion, and my parliamentary report last week showed that, despite covid, delivery remains on track and within budget. The project also retains cross-party support from the three main UK political parties.

I recognise that there is some concern, which we have heard again in this debate from several hon. Members, that Wales may not benefit from HS2, with the recent Welsh Affairs Committee report recommending that HS2 be reclassified as an England-only project. However, the regenerative effects of HS2 will be felt across the whole of the UK and not just along the line of route. As the Welsh Affairs Committee report acknowledged, the project has several thousand jobs as part of its supply chain that span the UK, including Wales. More than 20 businesses in numerous Welsh constituencies have already won work for HS2, including businesses in Bridgend, Montgomeryshire and Swansea West. For example, I understand that Wernick Buildings, a business based in Port Talbot, has already worked on HS2. Hon. Members can review the HS2 supply chain map to see the geographical spread of the businesses that have delivered work on HS2, including in their own constituencies.

On the services side, HS2 will enable quicker and more train services to north Wales. The HS2 route to Crewe, for which the west midlands-Crewe section gained Royal Assent in February, will provide shorter journey times for passengers, benefiting those who are interchanging at Crewe. Such shorter journey times are currently possible on the west coast main line to Holyhead. HS2 will also free up capacity on the existing west coast main line, which could of course be used for additional services, including for rail freight, which will remove lorries from the UK road network.

Also, as has been pointed out by my hon. Friend the Member for Montgomeryshire (Craig Williams), HS2 will dramatically increase capacity for Birmingham, which of course will free up capacity on the existing lines. That will benefit my hon. Friend’s constituency.

Turning to the Barnett point made by several right hon. and hon. Members, the fundamental difference with Scotland is that the Department for Transport has responsibility for heavy rail infrastructure policy across England and Wales and therefore spends money on heavy rail infrastructure in Wales, rather than providing Barnett-based funding to the Welsh Government in relation to heavy rail spending in England. That is consistent with the funding arrangements for all of the reserved UK Government responsibilities and within the statement of funding policy.

However, due to the use of departmental comparability factors in the Barnett formula spending reviews, the Welsh Government have actually received a significant uplift in their Barnett-based funding due to the UK Government spending on HS2. I hope that reassures Members as to why there is a difference. I have set out how we are expanding the amount of network rail funding that is going into Wales. On top of that, there have been significant Barnett consequentials provided to the Welsh Government.

To conclude and to reiterate, investing in Welsh transport infrastructure is an investment in future generations. Ensuring that our transport capability matches our great ambitions for our constituents’ prosperity and wellbeing is a priority for the Government, and one that I know all Members across the House share. We owe it to our hard-working constituents to invest in the most sustainable forms of transport for the future, delivering both on the green industrial revolution and on our pledge to build back better from the events of the past two years.

10:56

[Geraint Davies]

This has been a very good debate. The Minister hit the nail on the head when he spoke of the structural difference in responsibility between Scotland and Wales. The Scottish Government have got responsibility for heavy investment. If we had that in the Welsh Government, we would have our £5 billion. It is still technically possible that if the comparability factors were changed in the formula to be an England-only project, which it could be, we would also have the £5 billion there. Nobody is saying that we are getting no investment in Wales, but we are trying to head towards net zero, deliver higher productivity and level up. I ask the Minister and his Department to think again, to lobby the Chancellor to change the formula and to give Wales the tools to do the job, getting us on the rails to a higher, more prosperous future. I thank all Members and you, Sir Edward, for chairing the debate. It will continue, because we are simply not getting our fair share, and we need it in order to succeed.

Question put and agreed to.

Resolved,

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