Transport Funding: Wales and HS2

Debate between Andrew Stephenson and Geraint Davies

Tuesday 26th October 2021 Westminster Hall

[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.