Rail Electrification to Swansea - Professor Gerald Holtham

Electrification of the railway between Cardiff and Swansea has been scrapped. It is a victim of cost overruns on the electrification project between London and Cardiff and the UK government’s need to find economies having just promised one billion pounds to Northern Ireland for the DUP’s help in keeping Theresa May in power.

Predictably there have been cries of foul and complaints from Wales. Sadly, however, no-one has come up with a positive suggestion. So here is one.

If the UK government has any shame or conscience at all they should be mightily embarrassed at breaking their promise. They have tried to cover the retreat by saying they will supply bimodal trains that can run on diesel between Cardiff and Swansea but that is patent rubbish. The trains will be much heavier than pure electric ones and slower to accelerate. They will not reduce travel times between London and Cardiff as much as pure electric trains would. So Cardiff as well as Swansea will suffer.

The Welsh government has therefore got an excellent case for going to HMG and demanding the right to borrow several hundred million pounds, itself to finance electrification to Swansea. If bonds were issued on its behalf by the UK’s Debt Management Office as gilt-edged securities, the interest rate on them would be lower than the current inflation rate. Thirty-year gilts yield 1.85 per cent at the time of writing. Paying back, say, £300 million pounds over 30 years would cost £13 million a year, less than 0.1 per cent of an annual Welsh budget of £15 billion. And that proportion would fall over time with inflation. Embarrassment would make it hard for HMG to refuse a determined initiative from the Welsh government, especially when the latter is picking up the tab.

Ah, you may say, but the electrification will cost £400 million, perhaps more if there are overruns. Not a problem. Firstly, lessons should be learned from the overruns on the cost of the London to Cardiff electrification, which was not well planned and chose expensive options. Cost per mile of the Swansea extension could be quite a lot lower. Secondly, Cardiff and Swansea have both been promised City Deals with Cardiff receiving over a billion pounds from the Treasury if the Welsh government kicks some money in too. Some of that money is to be spent (albeit very slowly) on the Cardiff metro. But it is no secret that the Cardiff City Region has no clue yet how to spend the rest of it. The Welsh government can insist that both city regions contribute, say, £75 million each from the city deals to complete the rail electrification. This is an offer they can’t refuse because if the Welsh government declines to contribute to the deals they won’t get any money at all. At present neither region has come up with better projects than improving the link between them.

Contributions from the city regions and a railway bond issue would finance the extension and give Network Rail no reason not to complete it. Apart from reduced travel times and lower energy costs, the project has other benefits for Wales. A maintenance facility for electric trains was being prepared in Swansea. Now that is being scrapped and maintenance will revert to London. With electrification back on, the facility could be revived bringing back skilled jobs.

Some will complain that all this is not fair. Central government should pay since the rail network is not a devolved responsibility. Yes, yes. But we are where we are. Sometimes Wales has to do more than moan that we are not well treated and get on and sort things out for ourselves.

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