A row between the Welsh and UK Governments over who should pay the cost of electrifying the Valleys lines has been settled, with the Treasury now agreeing to pick up half the bill which would otherwise have probably been passed on to passengers through increased ticket prices.
The deal will be announced when the Prime Minister addresses the UK Investment Summit at the Celtic Manor in Newport. He will confirm that the UK Government will now pay outright £230 million, which is half the estimated total cost. The rest of the money will in effect be a loan from the Treasury. It will be up to the Welsh Government to recover the repayments from rail fares.
Electrification should make train services more reliable and environmentally friendly. Better acceleration between stations will also shorten journey times, for example shaving ten minutes off the Merthyr Tydfil to Cardiff service, which today takes an hour. Responsibility for awarding and running the next Wales and the Borders rail franchise will be fully devolved to the Welsh Government when Arriva Trains Wales' current contract runs out in 2018.
The funding row blew up when the Welsh Government realised that it would be expected to repay the full cost of electrification under the deal announced by the then Welsh Secretary Cheryl Gillan in 2012. Welsh Ministers took the view that as the Westminster Government had been happy to take the credit for the project when the announcement was made, that's where the money should come from as well.
It was a view strongly opposed by Cheryl Gillan's successor, David Jones, who as a junior minister had been involved in the original decision. Correspondence was published in support of his argument that the Welsh Government knew that it would have to repay the entire cost. When Stephen Crabb took over from him this year, he made it a priority to settle the dispute with the Welsh Transport Minister Edwina Hart. It seems to have helped that neither of them was involved in the original decision.
The Shadow Welsh Secretary, Owen Smith, felt less need to be diplomatic about the agreement.