Senedd’s ability to make fiscal decisions is being undermined
IN PRESENTING his Budget to the House of Commons last week the Chancellor made little reference to Wales (or Scotland and Northern Ireland).
Most of his speech and the Budget was designed for an English audience.
Similarly, the London-based media were of little help in showing how the Budget and the spending review statement fitted into Wales’ transport system.
The Budget’s Welsh block grant (2021-22: £15.9bn; 2022-23: £17.7bn) is calculated using the Barnett formula now discredited as unfair.
This should give Wales 5% of public services expenditure in England but it takes no account of transport infrastructure or revenue financing needs which could be put in place by the Welsh Government following Senedd approval.
Noticeably, these two bodies are disparagingly referred to as “devolved administrations” or even “departments” until the word “nations” appears on page 146 of the Budget statement through which I ploughed on your behalf.
We shall have to wait to see how the funding is allocated by Mark Drakeford’s cabinet and indeed whether it is sufficient to fund the desired investment in railways, buses and roads (though the low level of roads expenditure is a determinant of the climate change ministers).
Network Rail (owned by the UK Government) is responsible for Wales’ rail infrastructure (excluding Valley Lines north of Cardiff). However the Wales fiscal analysis of Railway Infrastructure shows we do not currently receive 5% of Network Rail expenditure in England.
Outside Network Rail, HS2 has been defined as a Wales and England investment so brings no consequent 5%, which would produce £250m annually.
This would, over five years, fund rail electrification of the Swansea– Cardiff mainline, the north Wales mainline and the Wrexham–Bidston line.
Electrification schemes have been supported by construction industry sources along with a wider range of more local road maintenance projects (i.e. pothole fixing) “in urgent need of funding”.
The Budget provides generously for specific urban areas in England. Two examples: Bristol/Bath bus priority route (£540m); renewal of Sheffield Super Tram (£570m) – should augur well for Swansea’s public transport proposals but it is unlikely they were considered separately in the Budget’s block grant calculations.
The Budget’s halving of Air Passenger Duty for internal UK flights to encourage air travel has been criticised in the climate change context by environmental groups and government controlled and funded railway companies operating long-distance trains with the same overall journey time on parallel airline routes.
One presumes all government travel to Cop26 in Glasgow will be by train.
The Budget’s “Levelling Up” local project direct grants equate to the European funding which totalled £375m annually.
The first tranche in this Budget is £121m with no indication of what future payments will be.
In addition, Wales’ local authorities have to apply to Whitehall for these funds rather than to the Welsh Government, so competing with England’s councils.
Included is the Hwb Caerfyrddin, an interchange for car/bus and rail adjacent to Carmarthen station and including a bus network linked to the town centre.
Omitted is the M4 Junction 46 car/ rail interchange at Velindre scheme.
Intended to reduce M4 traffic, contribute to climate change (itself not mentioned in the Budget) give Swansea and Neath a second station and increase train frequency to Carmarthen.
The Ideas Fund provides for feasibility studies into Welsh rail services between Oswestry and Gobowen and Gaerwen and Amlwch, hopefully with Transport for Wales involvement.
The Heart of Wales Line would have hoped for a similar study; or one funded from the £23m going to the Union Connectivity Review in view of the investment proposal as a union connectivity route and a sustainable rail journey between Birmingham/ Manchester and mid Wales.
Proposals for the British Business
Bank to operate in Wales might be better served through applying its funds through the existing Development Bank of Wales, thus avoiding duplication of investment funding sources.
It is also difficult to see how “the new trade and investments hub in Cardiff” will bring the benefits of global trade policy to Wales – it’s an administrative office. Or is it a subliminal reference to a freeport at Cardiff as one of two in Wales? Probably not.
The worrying trend in the funding of schemes, albeit on a small scale, directly from Whitehall undermines the Senedd’s fiscal decision-making position. It also suggests an arrogance in Whitehall government circles that it better understands the needs of Wales and can assess local needs better than Cardiff Bay. This surely indicates temerity at its worst.