The next statement is a statement by the Cabinet Secretary for Economy and Transport, as an update on Welsh Government requirements for other rail franchises serving Wales and rail infrastructure investment. I call on the Cabinet Secretary to make the statement—Ken Skates. 

Diolch, Llywydd. In May, I set out my ambitions for the Great Western and north Wales main lines, and announced that Professor Mark Barry would be leading the development of the case for investment in rail infrastructure in Wales, against the backdrop of the UK Government’s £50 billion investment in HS2. I continue to support HS2, and call once again on the UK Government to make the right choices for the Crewe hub, and for service patterns to be designed to benefit north Wales. I also continue to exert pressure on the UK Government to mitigate the probable impact of HS2 on south Wales, to ensure that the region and its economy continues to remain competitive as HS2 is constructed and completed. In May, I also set out my expectation that, following the UK Government’s announcements on the cancellation of electrification and the development of rail enhancement schemes across Wales, development and delivery of those improvements need to happen at pace. I'd like to update members on the significant progress that has been made since then by the Welsh Government and Transport for Wales, working with Professor Barry, which will inform the work being undertaken by the UK Government. I will also set out the needs of Welsh travellers for those rail franchises operated in Wales by the UK Government.

The initial findings of this work are stark. Wales has not received an equitable share of UK rail investment over a sustained period and, as a result, has been denied the economic benefits enjoyed elsewhere in the UK. Investment in the railways in Wales is proportionately very much lower than in England. Network Rail’s Wales route, which makes up 11 per cent of the UK network, has received little more than 1 per cent of total spend on enhancements. This has resulted in low lines speed on the south Wales main line, capacity and speed constraints along the north Wales coast, infrequent commuter services for the Swansea bay city region, and inadequate cross-border services in both north and south Wales. Using old and inefficient infrastructure constrains the number and speed of services. Manual Victorian signalling still operating on parts of the network means that the opportunity to operate additional services efficiently is limited. The reduction in scope of the recent resignalling works undertaken in north Wales exemplifies the investment issues that we face.

The significant number of level crossings on the main line in south Wales impacts on journey times by rail, increases safety risks and bring the roads in the communities along the railway line to a standstill over 200 times each day. These constraints dampen demand, constrain economic growth, and increase costs to passengers and taxpayers. It's clear that our ambition should be to see improvements that allow journey times of less than one hour between the main centres of Holyhead and Chester, and Llandudno and Crewe, 90 minutes between Cardiff and London Paddington, 30 minutes between Swansea and Cardiff, and 30 minutes also between Cardiff and Bristol. Wrexham to Bidston services should be better integrated with Merseyrail services and enable direct connections between Wrexham and Liverpool to form the spine of the north Wales metro. In south-west Wales, I want to explore further with local stakeholders options for additional services and stations to support the Swansea bay metro and efficient interurban services. The work undertaken by Professor Barry to date has identified direct transport user benefits of at least £2 billion. These benefits are generated by reducing journey times for rail passengers, with significant benefits to business users. Additional benefits also arise from reduced road congestion, environmental benefits and safety improvements through reductions in car use. 

The House of Commons Transport Committee has recently concluded that the Department for Transport’s current decision-making processes and existing systems for scheme appraisal currently work against regions outside the south-east as they are weighted heavily towards the reduction of existing congestion. It is important, I think, for all governments, including here in Wales, to ensure that investment is planned and delivered in all parts of the economy. Through the economic action plan, I've committed to working with colleagues to ensure that we balance infrastructure investment to support regional growth in the Welsh economy and it’s important the UK Government shows a similar and meaningful commitment across the United Kingdom. I have, and will continue to, set out a broader vision for a successful rail network, one that helps us to meet our obligations to the environment and responsibilities for well-being and future generations, that delivers the goals of the economic action plan, and meets the UK Government’s commitment to rebalance the UK economy.

This week marks a year since the cancellation of electrification to Swansea. The Welsh Affairs Select Committee called on the UK Government to work closely with us to develop transport projects on which the money saved from the cancellation of electrification could be spent. A new process for rail enhancement schemes has been developed by the UK Government and we will continue to engage with this new approach as we try to secure funding to improve journeys both within Wales and across the border. However, if the UK Government cannot help us to meet our objectives and deliver investment in Wales on an equitable basis, alternative arrangements for the prioritisation, for funding and for delivery of enhancements to the rail infrastructure in Wales will need to be followed, following a fair devolution settlement in this area. The investment required to meet standards set for the core trans-European transport network routes through Wales to Milford Haven and Holyhead by 2030 would deliver significant progress and Wales must not lose out on this investment as a consequence of any decisions taken in the context of Brexit. 

I'd now like to turn to cross-border train services in Wales. Following the transfer of rail franchising functions to the Welsh Government, a co-operation and collaboration agreement is now in place with the Department for Transport. This agreement sets out how the Welsh Government and UK Government will actively engage when procuring and developing the franchises that operate services across the border in a way that takes full account of both Governments’ interests and accountabilities. This is an important period for those services and an opportunity to deliver improvements that meet the needs of travellers on both sides of the border. The Wales and borders rail service contract delivers important cross-border connectivity. However, these services are only a part of the picture. The Department for Transport is currently going through its own processes for awarding new contracts for the West Coast, CrossCountry and Great Western franchises. I've made my expectations of these franchises clear to the Secretary of State. They include: integration between the north Wales metro and services to London at key hubs including Wrexham, Shotton, Bangor and Chester; a direct hourly service between north Wales and London; direct services in the CrossCountry franchise between key centres in Wales and all of the UK’s core cities; faster and more direct services between south Wales and London; and of course additional and faster services between south Wales and Bristol.

There is now an overwhelming case for applying the model developed for procuring and managing cross-border services under the next Wales and borders franchise to the procurement and management of other services between Wales and locations in England. This would involve remapping all services operating into Wales to a franchise procured and managed by the Welsh Government. Passengers, operators and the taxpayer would benefit from the integration of local and long-distance services in Wales. This would enable the Welsh Government to have the role that it needs to ensure that services are designed and delivered in a way that will take full account of Wales’s interests and would, I believe, result in real competition and genuine choice for passengers in England.

The Secretary of State for Transport has made it clear, though, that he does not share this view. He believes that these are UK services to be operated on a UK basis. But, if that's to be the case, then the responsibility for realising this vital ambition lies solely with the Secretary of State. The UK Government needs to set out a clear, fully funded action plan showing how it will correct the decades of underinvestment in infrastructure and rail services in Wales. It's clear that the current capability of the rail infrastructure and the services offered through the cross-border franchises is inadequate, and it's vital that Wales is provided with the level of rail connectivity that the UK Government has provided for many other parts of the UK so that the people, communities and businesses of Wales are offered a level playing field on which to compete in a post-Brexit environment. 

In the absence of a coherent and acceptable action plan from the UK Government, I'll continue to develop on the work carried out by Professor Barry, to set out a clear vision for the improvements that the UK Government must make if it is to fulfil its promise to rebalance the UK’s economy. Programme business cases will be completed over the summer and will be made available to Network Rail and the Department for Transport to frame the development of an ambitious, realistic, and equitable rail investment programme for Wales.

I'd like to thank the Cabinet Secretary for his statement this afternoon. The Cabinet Secretary will be aware that the devolution of Network Rail funding in Wales was, of course, examined by the Silk commission and discussed during the St David's Day process, and no consensus on that issue was achieved.

Presiding Officer, I would say that the Cabinet Secretary, like me, has always been a great advocate of cross-border working, and on that basis, does the Cabinet Secretary acknowledge that the nature of the rail network means that it can be misleading to align the benefits with the place where the infrastructure investment is made? It is important, I think, to address the wider historical structural issues beyond our borders that have prevented the rail network from offering good customer service, efficiency and value for money. We shouldn't just focus on investments within our own borders; many investments that are technically in England will, of course, benefit Wales, and I wonder whether the Cabinet Secretary would agree with me on that point.

The Cabinet Secretary knows, of course, that the allocation of transport funding in Wales and England is not done on a per-head-of-population basis. Spending goes where it is most needed and where it delivers the greatest value for money. Decisions are based on rigorous and fair appraisal processes. So, can I ask the Cabinet Secretary: is he asking for or suggesting a departure from this funding regime?

And while I am talking about the current funding regime, which has resulted in the UK Government investing in Wales through a number of different projects, perhaps it's just worth detailing those: £2.8 billion to modernise the Great Western main line; £5.7 billion investment in brand-new trains, which will cut journey times from south Wales to London; £16 million to reinstate the Halton curve; accelerating the delivery of HS2 to Crewe; £50 million for the north Wales signalling improvements; £4 million from the new stations fund for Bow Street in Aberystwyth and £2 million for Pye Corner; £300 million for signalling improvements in Cardiff station; and recently, in my own constituency, the closing of a number of roads in Talerddig with new infrastructure and a bridge there as well. My point, Presiding Officer, is: does the Cabinet Secretary agree with me that our focus on rail infrastructure should be on what is the benefit of a particular project to Welsh passengers rather than where it is?

And finally, in last year's autumn budget, the UK Government provided, of course, a £1.2 billion boost to the Welsh Government's budget. So, can I ask what is the Welsh Government's commitment from its own budget for Wales infrastructure investment going forward?

Can I thank Russell George for his contribution and questions? First of all, I'd say, with regard to the devolution of funding for rail infrastructure, that of course, we are severely constrained by our inability at present to be able to direct Network Rail, and that has resulted in a number of projects being delivered beyond their predicted time frame and over budget. In order for us to be able to deliver the sort of infrastructure that's required to modernise passenger services on the rail network, we need the ability, in the very least, to be able to direct Network Rail.

With regard to investment across Wales and, indeed, across the border, I think the Member makes a very good point that investment in rail infrastructure at key areas just across the border can have a major impact on services that we are able to offer to passengers in Wales. You can take, perhaps, Chester station as a good example of this. Chester station currently has capacity problems, particularly on the Chester east junction, that impact on services from the east. There are also capacity issues in terms of the provision of platforms, which, in turn, limit the ability to provide more regular services into north Wales.

I think, probably, the biggest example, though, of how investment in England can benefit, or, if invested wrongly, can have a pretty devastating consequence for the Welsh economy, is with the HS2 hub proposals. If the right proposal for the Crewe hub is taken forward, there could be significant, huge benefits for the economy of north Wales, with some parts of north Wales seeing an increase in output of something in the order of £37 million a year. But if the wrong solution is selected for HS2 and Crewe, then there will be a major impact in terms of the services that go from Manchester to Cardiff. Also, we need to ensure that there's full integration of the route with onward journeys through onto the north Wales main line.

I am asking for a new funding regime to be established, because there is now ample evidence to show that for many, many years, the existing regime has favoured those areas where there is the most congestion, favoured those areas with the highest density of population. The Institute for Public Policy Research recently carried out an analysis of planned transport spending in the 2016 national infrastructure and construction pipeline, and it showed a stark gap between London and the rest of the country. Indeed, it showed a huge gap: £1,900 per capita planned for London from 2017 onwards compared to just £400 per capita in the north of England. There's no reason to disbelieve any suggestion that a similar gap will exist between London and Wales. Indeed, our own analysis of rail infrastructure spending in Great Britain has shown that we've received little more than 1 per cent of rail infrastructure spend, as I say, despite having 11 per cent of the track in England and Wales.

I think I'd also draw Members' attention to the fact that, on the same day that the electrification of the Great Western main line to Swansea was cancelled, the go-ahead for a business case for a £30 billion Crossrail 2 programme was given the go-ahead, once again, in my view, demonstrating that under the current funding regime it's the south-east that stands to gain the most. And so I've asked my officials to examine the potential of developing a new way of funding infrastructure that better reflects the need to rebalance the UK economy. It would be, of course, for the UK Government to adopt any new workable regime, but I do hope that the UK Government is willing to consider one.

And in terms of our programme of investment in infrastructure across Wales, well, this is captured within the national transport finance plan, and in many parts of Wales we are spending a record amount on transport infrastructure. I know that the Member is very keen to see the completion, on time and to budget, of the Newtown bypass. There are many other schemes, including the pinch-points scheme, the A494 red route scheme, improvements to the A483, and, of course, improvements to other trunk roads across Wales that are being taken forward at pace. Our case, put to the UK Government, is one of, 'If we can spend the money on this side of the border that benefits many travellers going to and from England, then surely you can also step up and apply a significant amount of spend on the English side of the border, and of course rebalance the inequity in terms of rail infrastructure spend by allocating more for the Wales route.'

I'd flag a particular case that we've been working on concerning the A5. I'd like to put on record my thanks to Owen Paterson. We've had great help from Owen Paterson in being able to demonstrate that, as a consequence of the Welsh Government's willingness to spend money on improving and increasing capacity on the A5 and the A483 on the Welsh side of the border, the Department for Transport in Whitehall should also consider dualling at least segments of the A5 on the English side of the border. I think by working together on that cross-border basis, we can make good progress, and I think that, in terms of some of the projects that we've been able to develop and work up in recent times, that is the case and it's proven.

Thank you, Cabinet Secretary and Professor Barry for showing so starkly, truth be told, how badly Wales is being treated—that is, a country that has 5 per cent of the population, as we heard, and 11 per cent of the rail network getting 1 per cent of the investment. Of course, this has been true for many years.

I mean, forget Crossrail, we in Wales should be livid because of the way that we're being treated.

I do welcome the vision set out in the document, and Professor Barry putting forward £2 billion-worth in current net terms over a period of 60 years. The risk, of course, is that, at the current rate, it’ll take 60 years before we see these benefits emerging. Now, what he says, of course—and I sincerely wish the Cabinet Secretary all the best in making the case for Wales—is that we can’t be restricted by a process that has a history of putting Wales under a disadvantage. The question I’d like to ask of the Cabinet Secretary, therefore, is: what is plan B if we are still treated so appallingly? Some of these projects, of course, are crucial to the economic and social progress of Wales.

Now, the Welsh Government does have the right, under the Government of Wales Act 2006, to invest in infrastructure and to create new services. To what extent is the Welsh Government, therefore, making these business cases to the UK Government so that they shoulder their responsibilities? Are we also identifying those projects that we simply can’t wait for a decision from Westminster for, and therefore we have to make progress in delivering them for ourselves?

Electrification, of course, has been referred to, and Professor Barry is still saying that electrification is crucially important to the main lines in north and south Wales. Recent estimates have suggested that the price of completing the electrification between Cardiff and Swansea may be a third of what was anticipated—£150 million. That would mean borrowing, over a period of 30 years, £6 million per annum. Now, surely the Welsh Government should be reviewing the possibility of investing in that sort of initiative. The Welsh Government, of course, is looking at new stations—there is reference to the Deeside industrial park station that is a strategically important investment for the economy of north Wales. Are we also, then, preparing our own plans for the Swansea bay and western Valleys metro? In conclusion, it’s good to see, for the first time, a detailed outline being put forward in terms of the Swansea bay and western Valleys metro. There is reference to the possibility of reopening rail services in the Amman valley, in the Swansea valley, the Dulais valley and the Neath valley, but they are identified as investments for the future, where the priority at the moment, according to what’s included in Mark Barry's summary, focuses on the city of Swansea. In referring back to what the Cabinet Secretary said on striking the right balance, can I appeal to him to ensure that those areas, the old western Valleys areas, are seen as priorities in the first wave of investments for the Swansea bay and western Valleys metro?

Can I thank Adam Price for his contribution and for his questions? I'd agree, people in Wales would be right to be not just cross, but absolutely livid with the historic underfunding of rail investment in infrastructure in Wales over many years. I think it's worth saying that we're not alone, though, in terms of finding the position totally unacceptable. I've been working closely with some of the metro mayors across the border in recent months, and it's very clear that underfunding of rail infrastructure, right across the north—and by the north, I mean above the Watford junction—has constrained the ability of regional economies to grow, and to grow sustainably. My view is that we can't let the UK Government off the hook for historic underfunding, and we must, whilst the responsibility for investment is reserved, play our duty in bringing forward compelling business cases for the UK Government to consider, and to make them so strong that they cannot be resisted, but, at the same time, to do what we can to convince the UK Government to step away from a funding regime, from formulas that have an inbuilt bias to the south-east, in particular to London.

So, in terms of there being a plan B, I would not wish to see UK Government excused of their responsibility, and if they are not willing to provide an equitable share of funding for rail infrastructure to be delivered by Network Rail, then they should enable and empower us to be able to have devolved responsibility for rail infrastructure, and with it a fair funding settlement.

I take what the Member says regarding borrowing powers and the ability for us to be able to invest in rail infrastructure, and, of course, we have done just that on many occasions. The problem, at the risk of repeating myself, is that we don't have the ability to direct Network Rail, and, for example, on some of the projects, including rail enhancements to the north Wales main line—the south Wales journey, rather, the south-north journey—the predicted benefits of the enhancements were not realised equally. Some of the projects concerning the improvement to the Wrexham-Chester line have not yet resulted in the predicted and expected benefits, and so it's absolutely essential, if we get devolved responsibility, that we also get the funding to go with it.

I think Professor Barry's report does contain a compelling vision. Adam Price makes the important point that we can't just look at those projects that are contained within the report. For that reason, I should just outline why Professor Barry's report contained the focus that it did on, particularly, the north Wales main line and the south Wales main line—it was because the investment proposals were focused initially on the areas that the Secretary of State for Transport had already identified for further development in north and south Wales, following the cancellation of electrification. Our view is that it's essential, if we are to achieve and realise the benefits of increased investment, that we put forward those business cases relating to areas of work that the Secretary of State himself has identified as a priority, so that we can expedite some of the work that's so crucially required. But, equally, as this work is progressed it will consider further how the connectivity between the regions, including how links between the south, mid and north Wales can be developed and enhanced. And, again, I would stress to Members that, under the current devolution arrangements, the reopening of any lines and the investment in major station improvements remain the responsibility of the UK Government, but our role is in bringing forward those business cases that make it so irresistible for UK Government to invest in them and, at the same time, to continue our fight—and we now have very strong allies in many of the metro mayors—for a rebalancing of investment across the UK's infrastructure network.

I thank the Cabinet Secretary and warmly welcome the statement, which could not have been more timely given the Office of Rail and Road's latest statistical release on passenger rail service complaints. This shows complaints to Arriva Trains Wales saw a year-on-year increase of 73 per cent, but to be fair to Arriva Trains, there is no doubt that part of the problem has been the unreliability of current rail infrastructure on much of its routes. The Cabinet Secretary quite rightly pointed out the lack of investment in Wales's railways infrastructure compared to England, and although the figures have been mentioned both in your statement and by Adam Price, I think they bear repeating: just 1 per cent investment for 11 per cent of the UK rail network—a statistic that shocked the Economy, Infrastructure and Skills committee in its investigations into the Welsh railways. So, I therefore find both the Cabinet Secretary and the Welsh Government's support for the HS2 project quite bizarre, given that it will swallow up at least £50 billion of investment. And just in case he hasn't noticed, perhaps I ought to point out to the Cabinet Secretary that the whole project lies in England, and there is no doubt that this huge sum of money will, of course, impact directly on the funds available for rail infrastructure in the UK generally, and Wales in particular. And this, especially—. As you have indicated yourself, you feel the need to exert pressure on the UK Government to mitigate against damage HS2 will do to the economy of south Wales. So, does the Cabinet Secretary have any idea how much funding will be needed just to catch up with the infrastructural improvements over the border?

Turning to the Welsh Government's ambitions to have a franchise for all trains operating in and out of Wales, the Cabinet Secretary has indicated that this is not the view of the Secretary of State for Transport. Would it therefore not be an idea to have full, in-depth discussions with the Secretary before Professor Barry is instructed to undertake the investigation and case for investment you've indicated in your statement? However, if you are still minded to ask for this investigation, independent of any discussions you may have with the Secretary of State, can you give us some timeline as to when this investigation will be finalised?

The Deputy Presiding Officer (Ann Jones) took the Chair.

Can I thank David Rowlands for his contribution, for his questions and for his observations? First of all, I should say that complaints concerning rail services are due to many factors, and whilst I would agree that many of those factors relate to the network, they also relate to the management of services as well, and I don't think poor performance should be attributed solely to responsibilities that could be passed on to Network Rail. That said, as I outlined in my statement, there is a serious problem with the creaking rail infrastructure in Wales, where we still have, in some parts, Victorian manual signalling, and where we have 200 road closures every single day because of road crossings, and this is simply not acceptable. So, whilst I take the point that complaints are, in part, due to rail infrastructure, I would also again reiterate the point that many complaints concern the actual management of services.

In terms of HS2, well, the Member is right to highlight the extraordinary cost of HS2, but it is worth saying that, whilst the infrastructure itself will be purely located in England, it will also serve passengers, businesses and regional economies in Wales. I highlighted the figure earlier of the potential benefit of HS2 to the region's economies, particularly north Wales, where places like Flintshire could see an increase in output of more than £30 million; likewise Denbighshire. Wrexham could see an increase in output of more than £17 million; likewise places such as Conwy; and other parts of north Wales would also see—if the right solution is applied at Crewe—significant improvements in the performance of their respective economies. But it's also essential that we don't look at HS2 in isolation from other rail infrastructure.

Whilst I remain supportive of HS2, I remain deeply concerned that a business case for a £30 million programme was given the go-ahead, and I would say that perhaps you wouldn't be given the go-ahead for a business case unless you were minded to ultimately approve a project, and that Crossrail 2 programme would consume a vast amount of investment for a region that has already benefited considerably from Crossrail 1 and many other service enhancements. So, it's absolutely vital we don't look at HS2 in isolation, but that we also reflect on the wider investment across the UK, which, sadly, as I've pointed out, has been all too often concentrated in the south-east.

I think it's important to distinguish between the difference of views and opinions that I have with the Secretary of State concerning the re-mapping of services. He's not minded to agree with me on that. However, with regard to the infrastructure enhancements, the actual projects that he has identified himself are those that Professor Barry has been carrying out work on; and so, as a consequence, they are the most likely projects to get the go-ahead from the Department for Transport. I believe our role is in building the case for each of those projects to make it irresistible for UK Government to carry out the investment that we require.

Thank you. And finally, Mark Isherwood.

Diolch. Just one question: given your statement, oft repeated, that the Wales route only received 1 per cent of the rail enhancement budget, how do you respond to the evidence received by the Economy, Infrastructure and Skills Committee we heard referred to a moment ago, by Network Rail, relating to the Office of Rail and Road report on UK rail industry financial information, which showed that Wales actually received 9.6 per cent of net Government funding for franchise train operators and Network Rail, and 6.4 per cent of total net Government funding for Network Rail routes?

Well, I think the important point here is that you've combined the franchise investment with the investment that is allocated for infrastructure. The figures that we have, which are very robust figures, are also supported by the data that I've highlighted from the Institute for Public Policy Research, which shows a huge, huge gap between per capita spending in London and per capita spending outside of London. I'd stress again: we are not alone in feeling very, very angry at the historic underfunding of rail infrastructure outside of the most urbanised area of the UK. I think this is something that politicians certainly on the left have recognised, and that's why we've had such support from metro mayors, for example, in Manchester and in Liverpool. I think it's about time that UK Government Ministers also accept the historic underfunding and the huge gap between the rest of the UK and the capital of the UK, and then got down to work to actually invest more in Wales and other parts of Britain.

Thank you very much, Cabinet Secretary.