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  1. ITV Report

£1bn funding row puts rail franchise in 'jeopardy'

A dispute between the Welsh Government and the UK Government could be a major issue for rail users across Wales. Credit: PA

A £1billion funding dispute could put plans for a new rail operator in Wales next year in jeopardy.

That's according to the Welsh Government who reacted to a threat by the Department for Transport to put bids for the Wales and Borders franchise on hold.

The Wales and Borders franchise is one of the UK's most heavily subsidised, receiving between £110m-£160m a year. It runs most of the passenger rail services in Wales, including the south Wales valleys network, the North Wales coast line, rural services, and mainline services between Wales and major English cities, except for inter-city services.

In a leaked letter to Wales Online, the UK Transport Secretary Chris Grayling blamed the administrative process in Cardiff for failing to address major issues needed to move forward with the new franchise.

The Welsh Government has called the letter disappointing saying it jeopardises their ability to award a replacement for the current Wales & Borders franchise. They say is if unresolved it will be a major issue for rail users across Wales and the Borders.

Aside from a number of inaccuracies in the issues presented, we feel that the position the Secretary of State has taken on rail funding in Wales misrepresents a complex devolution position. This is precisely the reason that we were seeking to de-couple the issues of funding and progressing with the franchise procurement.

Linking the funding issue to the administrative process may be appear to be an expedient way for the Department for Transport to resolve a financial issue it has brought upon itself, however, this approach jeopardises the Welsh Government’s ability to award a replacement for the current Wales & Borders franchise, which if unresolved this will be a major issue for rail users across Wales and the Borders. Being willing to subject people to the prospect of continued overcrowding and poor quality rolling stock to resolve a budgetary issue of their own making is no way for the UK Government to behave.

Our focus now must be to work together to resolve these issues but frankly this whole issue is a direct result of the UK Government’s failure to deliver upon its 2014 promise to devolve rail franchising powers to Wales by the start of 2017. This cavalier attitude to devolution comes on top of the Department for Transport’s decision to walk away from its commitment to electrify the line between Cardiff and Swansea. Taken together, these examples underline the need for a radically new and lasting settlement where Wales can determine its own railway future without being held hostage to broken promise after broken promise from the UK Government.

– Welsh Government Spokesperson

The £1 billion arises as a result of a rebate that DfT currently receives from Arriva Trains Wales. The rebate has now reached £67m per annum. Over a 15 year period the total amount payable would be around £1Bn.

At the end of the current Arriva Train Wales franchise in October 2018 the contractual mechanism for collecting the rebate will disappear as the Welsh Government becomes the franchising authority.

In a statement, the Department for Transport said they would continue to support the Welsh Government to devolve rail powers.

We remain committed to the principles agreed with the Welsh Government in 2014 to devolve rail powers.

We continue to work with them on the devolution and to support them in their procurement of the next Wales & Borders franchise.

– Department for Transport spokesperson