We now move on to item 8, which is a debate on the Economy, Infrastructure and Skills Committee’s report, ‘On the right track? The Rail Franchise and South Wales Metro’. And I call on the Chair of the committee to move the motion—Russell George.

Motion NDM6510 Russell George

To propose that the National Assembly for Wales:

Notes the report of the Economy, Infrastructure and Skills Committee on its Inquiry into the Rail Franchise and South Wales Metro which was laid in the Table Office on 29 June 2017.

Motion moved.

Thank you, Deputy Presiding Officer. I move the motion.

In 13 short months, the running of most of Wales’s rail services will transfer to a new franchise. This is an exciting moment, and one that offers a once-in-a-generation opportunity for a new chapter in public transport in Wales and the borders. And it’s, of course, absolutely crucial that the Welsh Government gets it right.

The Economy, Infrastructure and Skills Committee’s report we are considering today sets out our views on the Welsh Government’s procurement of the next Wales and borders rail franchise, and phase 2 of the south Wales metro. The report sets out 10 key priorities for the new contract, based on a survey of almost 3,000 people in Wales and the Marches. This was a substantial and complex inquiry, which I think is appropriate, because this is the most substantial and most complex procurement process taken by the Welsh Government in almost two decades of devolution. It is the largest single investment decision Wales has ever made. And on top of being big, the process is innovative, which brings new opportunities and challenges.

The Welsh Government and Transport for Wales are using a competitive dialogue procurement procedure. A system that has been tried and tested in other fields—for information technology contracts, for example—but never before for rail procurement. They are also seeking to award the first major vertically integrated contract for rail services in Britain, where the successful bidder will manage the tracks and train services on the core Valleys lines. Now, considering this is the first time the Welsh Government has procured a rail franchise, I think it’s fair to say that it has not taken the easy or the safe option. What they are attempting to do is incredibly ambitious. In fact, I think I said at the launch that it’s heroically ambitious, and I think I used that term when I launched the inquiry.

The committee made 19 recommendations in this report, in three main areas: the procurement process, priorities for the franchise specification, and some rail infrastructure issues that came out of our evidence. On the procurement process, we identified a number of risks and challenges, and these include the need for agreement with the UK Government on devolution of procurement powers—still not devolved despite agreement being reached to do so in 2014; funding; and also the transfer of ownership of the Valleys lines to the Welsh Government. Since the report was published, there has been much discussion between the UK Department for Transport and the Welsh Government. Public correspondence between the Cabinet Secretary for Economy and Infrastructure, Ken Skates, and the Secretary of State, Chris Grayling, has only served to put some of the tricky issues that remain to be resolved into the public domain. I know the Cabinet Secretary will tell us this afternoon–as he told us in committee this morning—that progress has been made.

The delays we have seen so far mean there is very little room for contingency. From now on, everything will need to run exactly to timetable, which isn’t always the case as regular rail users will know. For passengers, the priority is getting the new contract in place and getting services running, and I hope both Governments will do what they can to resolve these differences and allow passengers in Wales to enjoy the twenty-first century rail services that they are crying out for.

The second part of our report covered priorities for the franchise specification, and the committee set out its top 10 priorities to improve the quality and value for money of rail services, and they include: one, effective monitoring; two, a greener railway; three, an integrated network; four, adaptable services; five, affordable fares; six, new trains; seven, better communication; eight, modern stations; nine, fair fares; and 10, reduced disruption. The committee’s survey received almost 3,000 responses from all parts of the network. That’s an overwhelming response, I think, to a committee survey from the Assembly. And key priority areas for passengers were, in this order: punctuality and reliability; capacity of seats when you travel; journey times and frequency of service; price of fares; and handling delays and disruption. Just below that level, passengers wanted to see: connections with other train services; quality; clean trains; access and facilities for older people and for people with disabilities. Our results mirror findings by consumer watchdog Transport Focus in their annual surveys. Passengers want and expect the basics done right in the next franchise.

The third and final area we covered was rail infrastructure issues. We hadn’t intended to cover these, but the evidence we received was of sufficient concern that we could not ignore it. The committee urged the Welsh Government to continue to lobby the UK Government for rail electrification in north Wales, and the redevelopment of Cardiff station. Our concerns about the Swansea line proved to be well founded as, following publication of the report, the UK Government Secretary of State for Transport announced that plans for rail electrification to Swansea would not take place. The arguments being used by the UK Government to justify this decision—faster journey times while avoiding disruption—cast a shadow of doubt, of course, over the north Wales electrification as well.

In its response to our report, the Welsh Government has accepted 10 recommendations, with the remaining nine accepted in principle. I’m pleased that the Cabinet Secretary shares the committee’s vision of a high-quality integrated transport network. I look forward to the publication of a summary of key elements of the new franchise specification in due course. I also look forward to the urgent resolution of the outstanding issues to be agreed with the Department for Transport and Network Rail. There remain questions—

Will the Member give way?

Yes.

I’m grateful to him for giving way. I know we are discussing a report that he’s already produced, but I was also aware of the evidence taken in the committee this morning. It seems that it is not resolved yet as to whether the franchise powers will be devolved in time for the agreement to be made. Is he content that an agency agreement is sufficient cover for both the Welsh Government and the Welsh taxpayer, to ensure that this franchise arrangement is strong enough?

I would hope that the Cabinet Secretary will be able to respond to that specific point when he comes to bring his conclusions.

There remain questions—or perhaps the Cabinet Secretary won’t be able to answer all the questions today. But exactly what role the Government wants Transport for Wales to play is another question as well, and how it will ensure that Transport for Wales has sufficient people with the relevant skills that are required. The committee understands that Transport for Wales has been created to be flexible. But, as time ticks on, like any public body, in order to deliver, it will need clear instructions, clear expectations and sufficient funding and expertise to meet the challenges. There remain questions around how the Government will demonstrate value for money in the new franchise. To my mind, it’s not enough to say, and keep saying, that competitive dialogue drives value for money. Whilst a process can make value for money possible, it cannot itself demonstrate value for money. The process may, after all, be mishandled. The recommendation has been accepted by the Government, yet it’s hard to see, in my view, how Cabinet Secretary’s response moved beyond his evidence to us in April. I’m not convinced it will be enough for the Wales Audit Office, and neither for the people of Wales. We need to see clear evidence that this major contract offers value for the public money involved.

Joyce Watson took the Chair.

Finally, in the response—recommendation 14—there is a strong suggestion that the Welsh Government may be moving away from running freight on the core Valleys lines. This is a move that could have a significant knock-on effect for businesses wanting to use the lines to move goods in or out by rail in the future, and reduce opportunities to move freight off our roads. It is not to be taken lightly, and I trust there will be a thorough evaluation of costs and benefits both now and in the future before irreversible decisions are taken. I look forward to the debate today and hearing Members’ views, and comments from the Cabinet Secretary.

Thank you for your report. I think the issues it raises for my constituents is that the competitive bidding process has made it very difficult for residents of my constituency to be able to be part of the consultation on where they want the metro to be in order to enable them to make that modal shift transfer. I hope that once we do get round to awarding a contract to the new franchisee, they will instantly start to engage with citizens in order to ensure that their views are properly reflected. Because if we’re going to get modal shift from the motor car to the metro, it obviously has to be put in in places where people need to travel to, particularly around travelling to work, because we cannot go on with the situation we have at the moment, where far too many people are commuting into Cardiff by car, with all the adverse impact that that’s having on people’s health. I look forward to hearing how the Cabinet Secretary thinks we’re going to be able to fast-forward that arrangement once we have established who the franchisee is going to be.

As our report states, for the Welsh Government to be letting a franchise for the first time represents a big challenge, and as the Welsh Government response states,

‘Passengers expect a high quality and efficient service that is affordable and accessible to all.’

In this response, the Cabinet Secretary states that if the Welsh Government secured the repeal of section 25 of the Railway Act 1993, they would take steps to ensure that future franchises are developed on a not-for-profit model. I proudly spent my previous career working in the mutual, not-for-profit sector, and they must be allowed to compete on a level playing field. However, because of my experience, I also know that they’re just as capable of inefficiency, poor service and financial failure as any other model. How then can the Cabinet Secretary justify putting such a monopolistic approach before his responsibility to passengers and taxpayers?

As UK Department for Transport officials told committee,

‘concession models can work in urban environments…but…on wider franchises such as Wales and borders, giving bidders the flexibility to innovate, develop new services, develop new ticket products, being incentivised to do so by the profit motive, is preferable.’

We also heard that—and I’m quoting—even the Chinese Communist Party recognised the need to incentivise risk.

In accepting recommendations 12 and 13 in principle, the Cabinet Secretary states that, as part of the procurement process, he expects to see higher quality rolling stock introduced, and that this will help to reduce the impact on the environment. In April, I hosted the Senedd launch of Furrer and Frey’s white paper for developing sustainable, agile, multimodal transport solutions for Wales. Speaking afterwards with Vivarail, the company rebuilding former London Underground metro cars for mainline use, they told me that they have sufficient stock to produce just over 70 three-car trains and that they could give us a fuller picture of the next steps for their business, including new battery-powered and hybrid trains. They also said that they were in discussions with Wales and borders rail franchise bidders. I shared this with the committee, and I think I raised this with the Cabinet Secretary in committee, and hope that he can update us on this today.

In accepting our recommendation 14 in principle only, the Cabinet Secretary stated that he was reviewing freight policy for the core Valleys lines and would update committee once the policy position had been confirmed. After discussions with the chair of the Rail Freight Forum and the Chartered Institute of Logistics and Transport at the Furrer and Frey event, I shared with committee his statement that rail freight is an important component of the Welsh economy, keeping 4,000 maximum-rate heavy goods vehicles off the roads each day and reducing carbon emissions by 76 per cent, but he said this must, of course, be protected in any enhancements to passenger services under the franchise. There is potential for increasing further the use of the Welsh rail network for freight, notably for slate waste and timber in the north and intermodal traffic along both the A55 to Holyhead and the M4 from the Thames to south Wales. I therefore hope that the Cabinet Secretary can say more about this today as well.

It is concerning that he only accepted in principle recommendation 15 that the Welsh Government should establish robust passenger and stakeholder engagement structures, including strong representation from the English regions. In July, I hosted an Assembly event organised by the ESP Group, highlighting the importance of inclusion and well-being in the design and delivery of transport services in Wales. They work in the area of inclusion and well-being in transport, including dementia and transport, older people and car cessation, rural transport and younger people accessing jobs and training. What engagement, therefore, has the Cabinet Secretary had or will be having with organisations such as the ESP Group and the Community Transport Association on this critical agenda?

It’s also concerning that the Cabinet Secretary only accepts recommendation 16 in principle, where the chair of the body set up by the Welsh Government to deliver the new franchise, Transport for Wales, a senior civil servant in the Welsh Government, should not be line managed by his own deputy. As the committee report stated, these arrangements are highly unusual and not sustainable.

Finally, given the Cabinet Secretary’s identification of risks and consequences arising because the UK Department for Transport was not in a position to support his intended tender issue date for the Wales and borders rail service, the UK transport Secretary’s response on 8 August, detailing what still needed to be done by the Cabinet Secretary to underpin this, raises serious questions.

Can I thank Russell George, first of all, for an excellent introduction to this report? I’m pleased to be able to contribute to the debate this afternoon. Plainly, rail is not devolved to Wales at the moment. In particular, rail infrastructure is not devolved, and, obviously, the franchising process, meaning passenger service procurement, similarly remains not devolved.

Now, despite every commitment to the contrary, Labour will hand the next rail franchise to a private sector operator, and, by all the evidence so far, they are even failing to do that effectively. Incompetence from Westminster and the underperformance of Labour here has meant that delays to the devolution of the Welsh rail franchise will already cost taxpayers an extra £3.5 million, and possibly derail—pun intended—the whole franchise procurement process.

A £1 billion black hole remains in the funding of the franchise, and the Welsh Government still does not have the powers to procure the franchise. I look forward to an update. Westminster’s apathy and Labour’s issues here are costing Welsh taxpayers millions and could mean delays for rail passengers.

Now, more on the delays in transfer of rail procurement powers, Plaid Cymru politicians in Westminster and here have consistently highlighted concerns that the transfer of functions relating to procurement has not taken place. We’ve noted several responses before and obviously we’ve had some public responses over the summer, but those issues remain unresolved and the franchise and tender documents still do not appear to be fully functional.

Now, despite various commitments in their manifestos and on the floor of the Assembly, Labour in Cardiff have shortlisted four train operating companies to run the Wales and borders rail franchise, as we all know, from October 2018—four private operating companies. Labour claim to be restricted by the Railways Act 1993, which precludes public sector operators, which is the clarification sought in recommendation 2 of the committee’s report. But it’s fair to note that, during the passage of the Wales Bill, now the Wales Act 2017, Labour in Westminster attempted to amend the 1993 railways Act to allow a public sector rail operator to compete for the Welsh franchise, as is the case in Scotland since the most recent Scotland Act. But despite failing to gain this concession, they supported the Wales Bill LCM here in the Assembly, making any long-term commitment to public ownership somewhat vacuous, considering they supported a Bill that actively precluded them from doing so.

So, challenges remain as regards tendering and the whole franchise procurement process. I look forward to the Cabinet Secretary’s reply this afternoon. As I’ve mentioned, delays have already cost taxpayers an extra £3.5 million: money that ideally should have been used towards improving rail services and the litany of issues identified by passengers that Russell George ran through at the start, moneys that could have been used to improve accessibility and improve facilities, train punctuality, cleanliness, and to bring about fair and affordable ticket prices. But at the end of the day, is control over our own railway system too much to ask? Diolch yn fawr.

Well, Dai Lloyd’s put himself through some intellectual contortions there in order to pin the blame on the Welsh Government, and I think that’s deeply unfair, particularly given the depth and breadth of evidence that was gathered in this report. I really don’t think that Dai Lloyd did it justice with that speech. I think it was deeply, deeply unfair. It is absolutely the case that the previous franchise is a failing franchise, and every time a constituent in Caerphilly gets on a train to travel either from Rhymney to Cardiff or any point on that journey, I can hear people getting angry. Overcrowded trains, poor quality carriages, trains that are regularly late and expensive ticket prices—these are all things that are not good enough, but that’s a failure of the previous franchise and it’s something that the Welsh Government is taking steps to address.

The other thing I would say is I’ve raised these issues with Arriva time and time again, and although I would question Arriva’s competence as a corporate body, individual members of staff at Arriva have been incredibly helpful and supportive in trying to find solutions, for example in finding ways to add two carriages in the morning to the peak first two-carriage service of the day on the Rhymney-to-Cardiff line, which travels through Bargoed and Caerphilly. They’ve been incredibly helpful in trying to achieve that, and have also added additional Sunday services on the Rhymney-to-Cardiff line. So, they are, I think, doing their best, including heroic jobs to keep the poor-quality Pacer stock running on the service.

With regard to the report, recommendations 5 and 7 concern that responsibility for the core Valleys lines and the need to secure adequate funding and mitigate liabilities and risk, and the Welsh Government has accepted those recommendations, and recommendations 10, 12 and 13 concern the issue of rolling stock that I’ve just mentioned and the need for the next franchise operator to ensure that enough is provided to deal with these numbers. The issue is, of course, rolling stock: that if it’s diesel and not electrified, it’s very hard to get hold of, and indeed procuring new rolling stock takes a number of years, which is a challenge I’m sure the Cabinet Secretary will be addressing immediately.

Steffan Lewis rose—

Yes, of course.

I thank the Member for giving way. He rightly points to the age of the rolling stock on the Welsh franchise. I wonder if he agrees with me that due to the age of the rolling stock and the incidents of doors jamming and even fires on them, built into the next franchise contract—whoever gets it—should be a commitment not to cut the number of guards on the Welsh franchise from the point of view of the safety of the passengers and the staff that have to use such old rolling stock.

Safety is an issue that the Secretary should be considering and he’s nodding, so he’s heard what you’ve just said; absolutely fair. The other issue, of course, is the funding dispute that’s currently going on with the Welsh Government. The Cabinet Secretary gave evidence this morning to the Economy, Infrastructure and Skills Committee, and he showed remarkable restraint, and I think it’s subject to the fact that he’s having ongoing dialogue with the UK Treasury and I would expect nothing less from him. Nonetheless, I reserve the right to say the UK Government has let us down. In 2014, the transport Secretary in the UK Government wrote to the predecessor of the Cabinet Secretary to say the block grant would be unaffected and reasonable protection provided against the impact of regulatory reviews and track access charges. That promise was made to safeguard that. That was further made to the predecessor Committee to the Economy, Infrastructure and Skills Committee in 2015—September 2015—an official from the Department of Transport made exactly the same promise and, therefore, the Cabinet Secretary was able to tell the Committee in April this year that we expected the block grant to be reasonably protected from the impact of track access charges. Something has changed; something has changed in the UK Government and we can’t work out what it is. The UK Government are now refusing to safeguard the block grant from those track access charges, which is threatening this rail franchise and the Government working hard to resolve it. I think it’s a good thing that that issue has been separated from the issue of the awarding of the contract, but this is something that must be resolved, and I can see that the Cabinet Secretary will work on that. If the Welsh Government is to effectively implement these recommendations in the report without being hamstrung financially by the UK Government, then we could see a transformation of rail services. And what I would say to Dai Lloyd is that I’m seeing a Welsh Government working hard to do that, in spite of difficulties that have been put in the way by the UK Government, and I urge all parties in this Chamber to get behind this report and get behind the Government in resolving this rail franchise.

It must be acknowledged by all parties in this Assembly that the intransigence of the UK Government in both the commitment to funding and the devolution of the necessary powers to the Welsh Government is making procurement and the franchise award infinitely more difficult for the Welsh Government to realise its ambitions for rail services in Wales and the delivery of the metro. This must also be seen in the light that in order to deliver these objectives, the Welsh Government has decided to instigate a totally new governing body in the form of Transport Wales. We also acknowledge the huge complexities in the transfer of the ownership of the core Valleys lines and the ongoing commitment this means for the Welsh Government. Perhaps the Cabinet Secretary could also update us on the position with regard to the £125 million that was promised for electrification of the core Valleys lines, and whether this will be forthcoming if electrification does not go ahead. Given these issues, or perhaps one would say ‘almost insurmountable difficulties’, is the Cabinet Secretary confident that the aspirations of the Welsh Government for the rail network in Wales, as envisaged, will indeed by achieved?

Following an update session with the Cabinet Secretary’s staff yesterday, I fully understand why the Welsh Government has decided to go ahead with the issues of the tenders. We were told that if matters went beyond Christmas, there was a very real possibility of two bidders dropping out of the tender process. UKIP calls upon the UK Government to give full funding and devolvement to the Welsh Government.

It’s a pleasure to be able to contribute to this inquiry and to the resulting report as well, as a Member for a Valleys constituency, where improvements in rail infrastructure are so very desperately needed. For my contribution today, I want to focus on just a few of the recommendations. First of all, recommendation 10 is critical to ensuring that we meet future demand. The previous franchise, as has already been mentioned, failed to make any provision for growth, whether through carrot or stick, and we are facing the consequences of this now. My constituents frequently contact me to complain about the cramped travelling conditions they can face during peak-time journeys. So, I welcome the Welsh Government’s accepting of this recommendation, both in terms of expecting bidders to show how they will build in the capacity to meet demand, and how they will use a range of tools to monitor passenger satisfaction.

Recommendation 12 raised the linked issue of those occasions when passenger demand spikes, for example, in connection with sporting events in Cardiff. Just yesterday, I met a group of my constituents here who’d come to visit the Senedd, and the very first thing that they wanted to speak to me about was the challenges that they felt they faced in accessing rail services when they want to come to the capital city to attend football or rugby matches. It is good that the Welsh Government has accepted this recommendation in principle, but I am still concerned that bad experiences on occasions like this could deter people from relying on our train services and using them on a more regular basis, when we so desperately need to try and convince more of our citizens to make that shift from the car onto public transport.

The Welsh Government accepted our recommendation 17 that

‘the evidence base for future decisions and prioritisation of the Metro considers the spatial context.’

But I have some reservations here on the need to get this right. ‘Prosperity for All’ committed itself to

‘ensuring that all new and significant developments…are sited within easy reach of a station.’

This is a laudable aim indeed, but I would appreciate clarification that this could refer to bus as well as train stations within the context of the pan-south Wales metro. My reason for saying this is because I feel there are particular challenges around the topography of the Valleys, and the northern Valleys such as Cynon in particular, where our most disadvantaged communities are the ones that are actually furthest from the railway line. It’s really important that we recognise that and that future developments don’t just restrict themselves to that central flat Valleys floor, but are actually encouraged to go further up into the Valleys where we will see the bus stops for the metro as well. I think that’s an important social justice angle and one that I would appreciate some clarification on.

I have to say that a lot of these arguments are very familiar. I think that those of us who have served since 1999 are now affectionately known in the Assembly as ‘the lifers’—[Laughter.]—and it does feel that way sometimes. I see there are two other lifers in the Chamber. Indeed, Dr Lloyd was first elected in 1999, but because of his good behaviour, he was given a brief period of parole, but of course we are delighted that he’s back serving his time. The point I want to make is that, when all this was discussed in 2003, we didn’t have the powers. These wider arguments about infrastructure and how we would be able to control the wider sort of environment so that we could make effective decisions were discussed. When I was Chair of the Audit Committee, there was a report pointing out some of the shortcomings in the procedures that were adopted and, you know, regretting perhaps the decision of the Welsh Government at that time not to take these powers because they thought they were getting such a poor deal from the UK Government—then, of course, a Labour Government. So, I think it is really important that the committee points to the issue of more effective collaboration being required between the different Governments, because there’s a strategic issue here, and it’s slightly depressing that, 15 years later, people are making similar points. I don’t express how valid they are, but, clearly, many people hold these views and some of them, no doubt, do have some substance.

Can I say that I particularly note, as a Member serving the Valleys, that the risk of transferring ownership of the Valleys lines to the Welsh Government does concern me, as does the rather sad plight of freight in the Valleys? Most of the Valleys networks were actually developed for freight, and it was a secondary thing to have passenger transport on them. So, I do think we should be very careful about losing that capacity to carry freight.

I’m particularly pleased to see the recommendations around greener railways, effective monitoring and affordable fares, as well as the redevelopment of Cardiff Central station and the long-promised rail electrification to Swansea. I’d say, as a Welsh Conservative, that I only wish that that commitment had been maintained, and we’re completely right to argue that it should be reinstated.

I’m a regular user of Arriva trains, and, you know, I speak with experience about the quality of the service over that time, but it actually does return to a rather dull franchise being awarded in the first place. I noticed that the Welsh Affairs Committee looked at this and called the service rather ‘old and cramped’ and said that at the heart of the failure was the inability to anticipate remarkable passenger growth. We should be celebrating the passenger growth. In fairness, I don’t know quite how active Arriva Trains have been in that but, I mean, it has happened, and that ought to be something that we really want to take further because that rather dry phrase ‘modal shift’ is really, really important. Even in the last few years, this process has continued with over 0.25 million extra commuters now using the service in south Wales, so those are really important things.

I want to make some more general points about freight, having referred earlier to the Valleys. I’m not quite sure that the Government knows quite where it’s going, because the previous administration under Rhodri Morgan did identify freight and its growth and development as being really important, so I’m disappointed that you are only accepting recommendation 14 in principle. I have to say, as a former Chair of the Constitutional and Legislative Affairs Committee, I never quite like Governments when they accept ‘in principle’ because you don’t really know what that means, do you, other than some sort of milk-and-water endorsement that doesn’t get you very far? But, the Cabinet Secretary’s response highlights that the demand for freight has reduced recently due to the closure of opencast mining in some areas. But, previously, the potential for increasing freight in such areas as maritime containers has been identified by the Government, and I fear that perhaps they’re losing sight of that now.

The report says that the Government’s intentions are on a heroic scale and I don’t think we should criticise them for that, but we do need to ensure that the monitoring and scrutiny is effective, so that some of these ambitions are realised. But, I do congratulate my colleague Russell George and his committee members on a thoroughly good piece of work. I think this report will stand us in good stead to monitor the Government’s performance in the future.

I’m not sure in what level of detail Dai Lloyd was able to read the committee report, but I suggest it might bear re-reading, because it represents a much fairer balance of the issues than he found himself able to represent in his speech.

The rail franchise is an example of the tortured transition in which we find rail devolution: a franchise where the powers are held in Westminster, but are exercised by Welsh Ministers, where the Welsh Government has pumped in millions of its own resources to plug gaps in funding for a franchise that isn’t even devolved, and where rolling stock is falling apart because the Welsh Government doesn’t have the power, and the UK Government doesn’t have the inclination, to order better stock in a timely fashion.

We’re approaching a situation now where the franchise is being let despite of, not because of the UK Government, in my view. Nowhere was this clearer than in the evidence of the Department for Transport to the committee, which suggested to me that the UK Government had all but washed its hands of responsibility for the franchise, whilst, at the same time, dragging its heels on devolving the powers to the Welsh Government. That is the absolute antithesis of good government and transparent administration. And so the rail franchise runs the risk of being trapped in the first circle of Dante’s hell, which the First Minister spoke to the Labour conference about, which is a state of limbo.

Powers should’ve been devolved in January of this year. We now hope that they’ll be devolved by the end of this year, but as we heard in the committee this morning, that may not even be the case by the time the franchise is let. All the Department for Transport officials could say, when they came in front of the committee, was that the franchise could be delivered in time with a fair wind. But, far from a fair wind, we’ve seen storm clouds gathering over the summer months, as the devolution of powers was linked to yet another financial dispute, this time over track access charges, which could adversely impact the Welsh Government to the tune of £1 billion. As Hefin David has already mentioned, the 2014 agreement between the UK Government and the Welsh Government confirmed that the block grant would not be cut, which is, in effect, what the UK Government is now planning. As we are in the midst of Brexit, we are used to being told repeatedly that this is a UK Government that meets its obligations to the European Union. Well, it’s now time for it to meet its obligations to Wales.

We’ve already seen, as the report lays out, the question mark that arose over the UK Government’s commitment of £125 million to the Valleys lines electrification and we know what’s happened in relation to the promise of electrification west of Cardiff. This situation is compounded by the persisting limitation caused by the failure to repeal the Railways Act 1993 in Wales, which, in truth, frustrates the Welsh Government’s scale of ambition in introducing a genuinely not-for-profit operation across all aspects of the franchise in Wales. This was dispensed with by the UK Parliament in relation to Scotland; it should’ve been and needs to be in relation to Wales as well. I agree with the Welsh Government, with our rail unions, the Co-operative Party and others in this Chamber that we need a genuine not-for-profit solution across all aspects of the franchise. I’d like to hear from the Welsh Government that it plans to continue pressing for the repeal of that provision in the Railways Act and what it will do during the lifetime of this franchise if it succeeds in that aim. I’d also like to encourage social enterprises and co-operatives to engage with the procurement of the range of ancillary services that will need to be in place when the franchise has been let.

We all look forward to a better, more passenger-focused franchise for the next 15 years than we have seen in the current franchise, and we want to see the metro come to fruition quickly. We call it ‘the south Wales metro’, but let’s not make the mistake of believing it solves the transport needs of all of south Wales. It’s, in truth, the south-east Wales metro. It’s no less important for that, but the real prize here is to see this as the beginning of an integrated rail and bus service that allows our citizens to travel from Monmouth in the east to Hirwaun, down the beautiful Vale of Neath to the mainline station at Neath, and on to a Swansea bay region integrated transport west to Mumbles, Llanelli, and beyond.

Can I thank the Economy, Infrastructure and Skills Committee for the report? And, in doing so, I’d like to support the importance of the metro network as a whole and the related investment in my own constituency. It’s on that particular point that I’m going to confine my more generalised comments, rather than the more specific comments on the franchise as a whole.

Both Merthyr Tydfil and Rhymney valleys have rail lines connecting them to Cardiff and the wider rail network, and both of these lines have seen new investment, for example in new stations, platforms and signalling, but the frequency of those trains remains an issue. For example, Merthyr is less than 25 miles from Cardiff, but the journey time of over an hour is not a pleasant experience in a dirty, overcrowded train. That’s the kind of thing that needs attention if we are to encourage more people onto the trains to help reduce the use of cars around our capital and to make all travel more sustainable, and indeed encourage people to travel in the other direction from Cardiff and all other points in between.

Similarly, the Rhymney valley line: again, we’ve seen investment in that route, as Hefin referred to earlier, but journey times clearly need attention. And, as Jeremy Miles has said, the metro is not just about trains. The other aspect that requires our attention is the importance of local bus services. These are often the vital lifeblood that help people to move around local communities, and I note that these matters weren’t directly addressed as part of the report, but they will be an important part of providing better connections as part of the whole metro package.

In this age of flexible working and people holding jobs in different locations, we could usefully think about how we provide a network of bus services that better meets local needs. For example, it can be difficult, if not impossible, to get services around some parts of Merthyr after the traditional working hours of 5.30 p.m., and, if we are to give people who don’t have their own transport access to work opportunities, or, as Jenny Rathbone was saying earlier on, encourage them out of their cars, if they have them, that needs to be improved, and more flexible travel arrangements provided as the metro network evolves.

I also think we need to be careful that we don’t end up with people perceiving the south Wales metro as just new trams serving Cardiff Bay, but then missing out on the vital investment elsewhere. But, like all of our committee reports, we’re also hostages to events, and, again, Jeremy Miles and David Melding have already remarked on this, that, when this report was published in July, the concerns being expressed over the electrification project have since become a hard reality, and we can now see, unfortunately, another broken Tory promise to the people of Wales.

So, I just want to thank again the committee for the report, and to hope the Assembly accepts the recommendations, and that we ensure that the Welsh Government remains firm about its investment plans and the needs of the whole transport network across south-east Wales.

I call on the Cabinet Secretary for Economy and Infrastructure, Ken Skates.

Thank you, and thank you to all Members for your contributions today, and especially to members of the Economy, Infrastructure and Skills Committee for their report and the very welcome scrutiny that the committee has given to this important matter. I’d also like to place on record my thanks in particular to the Chair of the committee, who I believe has led an excellent exercise in an entirely impartial and objective way.

Over the summer, I’ve been involved in complex and, at times, as you will have seen, controversial discussions with the Secretary of State for Transport. But my priority is securing a way forward that is in the best interests of the people of Wales. Now, firstly, I’d just like to briefly touch on where we have come from with the current franchise. Members have already identified the incredible growth in passenger numbers, up 60 per cent between 2003 and 2017. It’s a staggering fact that the Welsh Government, since 2011, has invested £200 million in the network, in spite of the fact that rail infrastructure remains non-devolved.

Looking forward, we need to ensure that our network can facilitate growth, and I do welcome your views within the report to help support me in achieving this. My ambition is to lay the foundation for a network of transport infrastructure across Wales, and especially within the metro area, that has the potential to deliver a step change in the way that we can use transport and, in the south Wales metro area, to develop a model that can act as a blueprint for elsewhere in Wales.

I agree with the committee’s 10 priorities for the procurement of the new Wales and borders rail service. These are reflected in our requirements for the next rail franchise and are included in the procurement specification and across the evaluation criteria.

I would like to briefly touch on a number of points that Members have raised this afternoon. Firstly, the contribution from Jenny Rathbone—I can assure you, Jenny, that the design of the metro will take place in a way that complies with the objectives of the well-being of future generations Act, especially as far as consultation with communities and with passengers is concerned, and in a way that promotes active travel and encourages modal change.

Mark Isherwood, you spoke about the need to reward risk. I’d heard that within the banking sector prior to the financial crash. It’s my view that the current franchise offers no demands for service improvements, as Vikki Howells has identified. Instead, our proposals will incentivise—

Mark Isherwood rose—

Yes.

Do you recognise that a number of not-for-profit mutual banks and building societies also crashed for the same reasons as some of the for-profit larger banks?

I do, but I would insist again that it was because of the risks that those larger banks, particularly on the other side of the Atlantic, were taking—that led to the financial crash, and we should learn from that. I doubt that many Members in this Chamber would support any approach that leads to an operator maximising profit at the expense of reinvesting that money in the Welsh network. So, our proposals instead will incentivise service enhancements, but there will also be a cap on profits so that we can reinvest excess profits back into public transport. I think that is exactly the right approach to take.

Jeremy Miles and Hefin David both responded accurately and fully and properly to the contribution of Dai Lloyd.

I'd like to now just touch on some good progress that we have made against the committee’s priorities. We’ve recently procured 20 additional train units. The lack of capacity on the network is one of the most frequently raised issues in my department. I’d like to pay tribute to a number of Members in this Chamber who regularly raise it on social media and with me directly, including Hefin David, who is a great champion for his constituents, regularly posting videos about the frustrations that his constituents have on the rail network. The 20 units will be commissioned for use from June 2018, providing additional resilience to the existing fleet of trains, but they will also open up the opportunity for us to enhance the existing fleet for persons of reduced mobility. These additional trains will provide the capacity that is required for us to make all trains accessible for persons of reduced mobility. I have committed to removing the old Pacer trains as a priority replacement procedure.

By undertaking wide-ranging engagement, by gathering public views on the policy priorities for the next franchise, we have been able to incorporate views expressed by the public transport users as a fundamental part of our thinking throughout the procurement process, and we fully intend to deliver on the public’s expectations. I am pleased to announce that, following the process of competitive dialogue, we will be issuing final tenders tomorrow, with the intent to find a preferred partner early next year.

A key issue referenced within the committee’s report is funding for the core Valleys lines. I have had a positive dialogue with the Secretary of State for Transport, and my officials are currently working with counterparts in the UK Government to agree the final details needed. Furthermore, I agree with the committee that we must secure a robust agreement regarding the transfer of ownership of Valleys lines. Initial headline terms have been developed between the Welsh Government, supported by Transport for Wales, and Network Rail. An agreement has been made to enable further and more detailed development work to be undertaken alongside the procurement process. I’d just like to—[Interruption.] Yes, of course.

Thank you for giving way, Cabinet Secretary. You’ll probably recall that yesterday, in the business statement, I raised the issue of the rolling stock. I know it’s secondary to the core of this report, but would you agree with me that it’s important, at the earliest opportunity, for the Welsh Government to engage with the franchise, with the new franchise holder, to make sure that that rolling stock—new rolling stock—is brought on stream as quickly as possible, so that the Welsh public get the full benefits from the new franchise?

I would agree entirely that the Welsh public would expect nothing less of us, and that will certainly happen. I’d just like to also address a number of points raised by Vikki Howells, Dawn Bowden and David Melding, and also Jeremy Miles. Both Vikki Howells and Dawn Bowden raised the important point that the metro must be a piece of infrastructure, a public service, that spreads wealth-creating opportunities across all communities. It is a multimodal service, and will comprise more than just rail services. Where rail services are unable to reach, we anticipate new bus services to be able to carry passengers to and from services and to and from places of work. And, further, through reforms to local bus services, we would aim to improve the delivery and the accountability of bus service managers to the communities that they serve.

David Melding raised the point that many of our railways across Wales, and indeed the UK, were designed for freight, especially the movement of industrial goods to ports, and also munitions to and from factories at times of war. We have an ongoing programme of liaison with businesses, such as Tesco and Aldi, as well as with freight operators, to discuss the modal shift opportunities and how we can help, including the potential for public subsidy.

However, there are major challenges in persuading the market to shift to rail generally, and specifically to Wales, because of the relative lack of critical mass, even in south-east Wales. That said, accommodating existing freight needs and future growth in freight is an integral part of the procurement process for the next franchise, including metro.

Jeremy Miles and Hefin David made important contributions, offered a fair, accurate, and objective analysis of the frustrations that we have encountered over recent months, and also identified the need for us to have the powers that we’ve been pressing for and will continue to press for. Should we be successful, in particular in seeing the repeal of section 25 of the Railways Act, as has been the case in Scotland, we would take steps to ensure that future franchises are developed on a not-for-profit model. Whilst I recognise the obstacles and the risks that need to be overcome to achieve my ambitions, it’s important to appraise the benefits that vertical integration of the core Valleys lines can provide. It opens a range of long-term opportunities for us to develop a railway that meets the needs of passengers and provides important links between communities and connectivity to employment opportunities.

So, while reflecting back on the hard work that has been done to date, there is more work to be undertaken if we are to realise our heroic ambition. This is the largest procurement exercise the Welsh Government has undertaken, and I realise the challenges this brings, including the complex negotiations that remain, but I hope that I can rely on your continued support in delivering a vastly improved transport system that will benefit every citizen in Wales.

I now call on Russell George to reply to the debate.

Thank you, acting Presiding Officer. Can I thank the Members who have taken part in this debate this afternoon? To pick up on a few points myself, Jenny Rathbone made some points about public involvement, and the committee really agreed that the competitive dialogue process did make it very difficult for public engagement and involvement. This was certainly noted. We’re pleased that the Government accepted our recommendation to produce a user-friendly specification, but still the concerns remain about public involvement in a competitive dialogue process, which is perhaps a lesson to be learnt.

Now, the Cabinet Secretary—I thank him for his comments about my being fair and objective as Chair of the committee. I don’t intend to get drawn into party political matters in my contribution this afternoon, but I would agree that I am disappointed, as others are disappointed this afternoon, that there has been that delay in the devolution of powers, and I hope that those issues will be resolved.

Hefin David made some points about track access charges, and I would agree with Hefin to a point—with his view that something has changed. My view is that there’s some missing information that our committee is not aware of. There are some gaps in the story, and those are yet to be revealed, and that’s potentially a future piece of work for us to do. In fact, I am very pleased that the Welsh Affairs Select Committee will be undertaking an inquiry, which may well draw out some of those missing gaps that we’ve talked about today. I hope that our committee can have some involvement with that piece of work in some way as well, and I’ll certainly be writing some letters in regards to working across those two committees.

I should also say that I have also written as the Chair of the committee to the Secretary of State, Chris Grayling, and asked him to appear before our committee. Certainly as a committee we’re more than happy to accommodate him on our timetable; we will move our timetable to accommodate him. Also, I would say, I am pleased that, since that public correspondence between the Secretary of State Chris Grayling and Ken Skates over the summer, where there appeared to be a lot of contention in those public letters, it seems to me that there has been a positive move forward in recent weeks. And, in fact, the fact that the Cabinet Secretary has announced today that the tenders will be issued tomorrow, which is a new piece of information that he’s relayed to us this afternoon—I think that demonstrates in itself that there’s been a lot of goodwill and working, and a goodwill gesture, between both Governments in recent days and weeks.

I think it’s also right that I do thank a few people as well. I certainly thank our 3,000 contributors to our survey, and to let them know that their involvement in our survey influenced our work and our recommendations. I should also like to thank all those who gave oral evidence. There was a large amount of people who gave written evidence, which takes a great deal of time, so I would like to thank them. We did hold a number of stakeholder events—and particularly the people who helped us in organising and accommodating the right people for those events; I would like to thank those particular people.

I’d also like to thank our clerking team, and the wider integrated team, and also the great resource we have in the Research Service. We had some real, real complex issues that particularly the members of the Research Service have really managed to support us on as a committee, and it’s clear that, without them, we would not have the report today. I’d also thank again those who have taken part in this debate today. I’d also like to thank the Cabinet Secretary for allowing his officials to give us some technical briefings, which was a great help to us as a committee.

A lot has happened since we produced our report. It’s one of those reports that has perhaps quickly gone out of date, to an extent. And the Cabinet Secretary and his team are, of course, very aware that there is a lot more that needs to happen in the weeks and months to come. But, as it stands at the moment, we have a once-in-a-generation opportunity for a new chapter in public transport in Wales and the borders. I hope our report has shed some light on the process, highlighted the priorities of passengers, and provided a challenge to move things forward. Passengers deserve nothing less.

The proposal is to note the committee’s report. Does anybody object? The motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.