1. ITV Report

UK Govt finds extra £230 million to end rail row

Electrifying the entire Valleys network is expected to cost up to £463 million Photo: Arriva Trains Wales

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.

I am delighted to announce today that we are going to press ahead with the electrification of the Valley Lines. After years of neglect, this part of Wales will finally get the infrastructure it needs with faster, more modern, more efficient trains and the impact will be huge. Spreading the employment opportunities from Cardiff and out to the Valleys and helping hardworking people from all parts of this great nation to get on. This has only been possible because of the UK Government and shows our long-term economic plan in action and working for the people of Wales

– Prime Minister David Cameron MP

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.

I am delighted we have been to able to come to an agreement on the funding for this very important project. This deal will ... enable us to move forward plans to modernise the Valleys Lines at no net cost to the Welsh Government. Together with an agreement to fully devolve power over the Welsh rail franchise this will allow the Welsh Government to move forward with its ambitious plans to create the efficient and reliable rail service Wales needs and deserves.

– First Minister Carwyn Jones AM

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.

I am delighted that we can now seize this opportunity to transform the Valley communities. Effective transport links are a vital part of any modern economy and there are few areas in the UK more in need of the improved commuter costs, travel times and more frequent train services that this investment brings.

– Welsh Secretary Stephen Crabb MP

Today’s announcement is the result of a great deal of hard work and co-operation between the Welsh Government and The Department of Transport. Electrification of the mainline will be a massive step forward in creating a modern train service that is capable of meeting future demand and supporting economic growth.

– Transport Minister Edwina Hart AM

The Shadow Welsh Secretary, Owen Smith, felt less need to be diplomatic about the agreement.

David Cameron has been doing the hokey-cokey on funding the Welsh railways for over a year. First he claimed that he’d pay for the lot, including the full line to Swansea and commuter services to the Valleys, then he reneged on the deal and now he appears ready to split the tab. Welsh rail passengers will be pleased he’s finally made his mind up, even if, in the end, the Welsh Government is going to have to foot some of the bill

– Shadow Welsh Secretary Owen Smith MP