Written Statement: Union Connectivity Review

For too long Wales has been at the back of the queue when the UK Government has invested in rail infrastructure.  As an area that is only partially devolved to Wales, and until very recently has been solely the responsibility of the UK Government, we have not seen anywhere near the levels of investment in our rail network that our population and share of network infrastructure deserves.

We have also suffered from an overly centralised, UK approach to aviation which was failing the less populous parts of the UK before Covid and now poses an existential threat to regional connectivity everywhere.

Because of these serial failures by the UK Government to level up its own connectivity responsibilities in Wales I hope the appointment of Sir Peter Hendy by the Secretary of State for Transport to undertake the UK Government’s Connectivity Review will help mark a step change in this approach.  I have been clear, along with the other devolved administrations, where the focus of this review should be and where it should respect the devolution settlement.

Llwybr Newydd – the new draft Wales Transport Strategy - will require us to make better use of the railway in particular, and this review could enable us to do that, if it is shaped in the right way, if it helps us address the historic underfunding we have suffered and if it respects the democratic responsibilities of the Welsh Government.

I have recently spoken to Sir Peter and set out these issues clearly for him. 

I made clear that we would support a review where it leads to the UK Government adequately funding its existing responsibilities to Wales in areas such as rail infrastructure and aviation.  However, this Government will not support any review which seeks to weaken or trample over the existing devolution settlement.  The review must avoid commentary and proposals on matters such as the devolved motorway and trunk road network, which are the clear responsibility of this Welsh Government and Senedd.

With my counterparts in Scotland and Northern Ireland this red line was set out in a letter to the Secretary of State for Transport.

When I spoke to Sir Peter I underlined the need for the UK Government to make good on its promises that not a penny less would be spent in Wales as a result of leaving the EU, and this applies equally to Transport.  Whilst members of the EU the UK Government had a commitment to enhance the Trans European Network – which for example bound them to electrifying the main line railways in north and south Wales by 2030.  For a number of years now the UK Government has failed to set out how it would make good ion this commitment.

Based on known commitments for the period from 2019 to 2029, we estimate shortfalls of up to £5.1bn over this period.

As for the future, we need to remember that there will be no direct HS2 services benefitting Wales.  According to HS2’s own figures, despite some benefits for north east Wales, HS2 will overall cause £150m annual damage to the economy of Wales.    We will find out on Wednesday what share Wales will get of the £100Bn of Welsh and UK taxpayer’s expenditure on a project which damages Wales.   A fair share would allow us to upgrade the railway in Wales and keep pace with those other areas of the UK benefiting from enhanced infrastructure and consequent improvements in the way they are perceived as areas for investment.

Over the next 10 years UK Government has committed to spend just £60m on rail improvements in Wales.  If we were given a fair share we should receive over £3bn.  We are being consistently short-changed.  Today I have published a report ‘Historical investment in rail infrastructure enhancements’ which sets out this funding neglect that I have previously presented to the Secretary of State for Transport, Members of the Senedd and Members of Parliament who represent constituencies in Wales.

That scale of underinvestment can be seen in the strained infrastructure in many parts of Wales and the Borders, something that has undoubtedly impacted on our productivity and economic performance in Wales, as well as contributed to other transport bottlenecks, as the recent Burns Commission Interim report into congestion around the Brynglas Tunnels so clearly demonstrates.

At the root of this problem is a fundamental flaw in the models used in the industry to assess investment.  Systematic underinvestment is built into, and magnified, not only in the scheme prioritisation processes, but also by the analytical framework which the UK Government relies upon to produce business cases and value for money assessments. The industry’s forecasting approach has significantly overestimated demand for schemes in London and underestimated demand for those elsewhere in the UK, including here in Wales.  One need only look at the success of the re-opening of the Ebbw Vale line by this Welsh Government – something traditional transport models failed to predict – to see the existing, conservative transport models need to revised and updated.

I have asked Sir Peter to look at this.

Given this consistent minimisation of rail enhancement funding in Wales, we have little confidence that the existing settlement will deliver for Wales and its communities. The additional infrastructure funding powers contained in the Internal Market Bill are a fundamental threat to devolution and its plans.

There is a clear problem here which I discussed with Sir Peter.  Wales has not seen the level of investment in infrastructure enhancements seen in other parts of the UK.  It has been the UK Government that has itself talked about ‘levelling up’ across the UK.  This picture of rail underinvestment in Wales, together with the fragmented way in which infrastructure is planned, will not achieve the UK Government’s own ambitions.

I, along with colleagues across the Senedd, believe that only through devolution of rail infrastructure powers to the Welsh Government with a full and fair funding settlement to go with it can this situation be addressed.

In the meantime and in advance of any major change of this kind, I have also published a document ‘Mainline railway enhancement requirements’ highlighting the ways in which strategic investment in the north and south Wales mainlines, as part of Metro systems, can help to address some of the issues I have highlighted today.

Aviation represents another failure of the UK Government to support the people and businesses of Wales.  Current policy is skewed to the large commercial airports in England.  Unlike other parts of Europe, before and during the Covid crisis the UK Government has prohibited financial support for safety and security – the cost burden on smaller airports can equate to as much as 30% of their operating expenses.  This is a State Aid option available now, which the UK Government has banned.  Taken together with a persistent refusal to devolve Air Passenger Duty, the refusal to even consider allowing publicly funded air corridors between Cardiff Airport and anywhere in the UK other than London, and another picture of neglect and disinterest in Wales and the regions of the UK emerges.

I am sure that Sir Peter will do an excellent job of reviewing the rail and aviation situation, but he has been hampered by not being asked to include broadband in his remit.  Given the recent changes to working patterns and to people’s lives it is more important than ever that UK Government steps up to fulfil its reserved obligations to ensure that every premises in Wales has access to a least Superfast broadband.

The UK Government has systematically failed Wales in areas of connectivity it has reserved to itself – rail, broadband and aviation.  It has stubbornly failed to devolve these powers to let others with a greater interest and commitment to improvement take over.  The Union Connectivity Review is an opportunity for the UK Government to reflect on its neglect, and focus on putting these areas right.