Metro rail project cost rises to £1bn
THE pandemic and spiralling construction inflation have pushed the cost of the South Wales Metro rail project to the £1bn mark.
The Welsh Government’s flagship transport project will see the Rhymney, Aberdare, Merthyr and Treherbert lines into Cardiff electrified – with the Coryton and City lines in the city also being upgraded.
Chief executive of Transport for Wales (TfW) James Price said the project will come in at about 40% more than the original forecast of £734m and be mainly completed in 2024.
Full implementation of a new timetable, which will see a significant increase in service frequency and capacity with new tram-trains and trimode rolling stock, is on track for 2025.
TfW took over the Wales and Borders rail franchise from KeolisAmey in 2020. However, the electrification project still involves Amey under the management of TfW.
The original budget, set in 2016, consisted of £164m from the EU, £445m from the Welsh Government and the £1.3bn City Deal for the Cardiff Capital Region and £125m from the UK Government.
With double-digit inflation impacting capital projects, the overspend on the Metro will not come as a surprise.
When announced by then prime minister David Cameron in 2012, electrification of the Great Western Mainline to South Wales from London was expected to cost £900m. Latest figures show that even with the ditching of electrifying around 60 miles of track between Cardiff and Swansea, it still incurred a cost of £2.8bn.
While there could be an argument that as a funder, the UK Government should pay a proportionate part of the increased cost, the additional capital required for the Metro will be borne by the Welsh Government.
However, the Cardiff Bay administration has for the first time – after years of under-utilisation – used its full borrowing powers under the Wales Act to draw down £150m for capital investment from the Treasury.
Repayable over 25 years, a significant part of it is being assigned to the Metro.
The Welsh Government has also provided a passenger subsidy for TfW to operate the Wales and Borders franchise of £258.6m. Last year, its revenue generated from passenger fares was about £140m.
Mr Price said: “In terms of progress I would say we are three-quarters through the project [Metro]. Obviously this is a high-risk scheme and if you look at any other major rail infrastructure projects in the UK they have all gone a bit wrong, and some of them very wrong.
“The complexity of what we are doing on the Core Valley Lines is often not recognised as we have new trains and signalling.
“This is proven technology, but it has never been integrated in one project at this scale.”
On the current projected cost of the project, which covers around 170km, Mr Price added: “At the minute we are talking about a round figure of £1bn.
“If you add a year to the programme because of Covid, and then plug in the higher inflation figure that we have seen, compared to the level that was predicted, you close around 75% of that gap.” He said the rise in the cost of concrete and metals were the two biggest contributors on the inflationary side.
The chief executive added: “However, the main driver of the cost is the length of the programme so anything we can do to finish it earlier the better. However, while people will be able to use [the entire network] by 2025, we then have to go through a whole process of final documentations through an Office of Rail and Road (ORR) perspective and that is very expensive.
“So, that might be another year, but I want to compress it as much as possible as that is where we can maximise cost-savings. At the moment we have the best part of 1,000 people working on the programme and if you think of the sums involved, if we can save a couple of weeks, it adds up to a lot of money.
“So, it’s not easy, but it is still going to plan. The difficulty is ahead of us in terms of entry into service. However, in the next three to four months we should see tram-trains being tested on the Treherbert, Aberdare and Merthyr side of the network with driver training, so it is becoming very real very fast.”
The first tram-trains operating from the Heads of the Valleys are scheduled to enter service in 2024. The Rhymney Line (where trimodes will run) will be completed in 2025.
On the Rhymney Line, new diesel trains have entered service and will be transferred to other parts of the Wales and Borders network once the trimodes, which can operate in diesel, electric and battery mode, are delivered.
Mr Price, who was previously a deputy permanent secretary at the Welsh Government, said: “We are just over a year delayed, but I still stick by us being months not years behind on the basis that some things we have brought forward like on the Rhymney Line, where we have got the new rolling stock far earlier than we were planning for example – although it is not electrified yet.”
Due to signalling technology on the Treherbert Line dating back to the 1930s from Pontypridd north, it will be closed from April until early 2024. Alternative bus services will be provided.
However, on the other lines disruption will be less intrusive with weekend and overnight electrification work.
Going forward, the biggest operational cost on the Metro will be staff related.
Unlike driver-only tram-trains and light rail vehicles on most light rail networks, like those in Manchester and the London Underground, the Valley Lines will also have guards on tram-trains that will have to operate to heavy rail specifications.
This will mean they will not be able to travel as close together than if able to use line-of-sight signalling.
The heavy rail solution designed by KeolisAmey will also mean, as currently timetabled for, just two trains an hour on the most densely populated sections of the Metro along the Coryton and City Lines in Cardiff.
Hong Kong-based transport firm MTR, which was the other final bidder for the franchise and electrification of the Core Valleys Lines, would have provided at least four an hour on the Coryton Line and set out plans for four on the City Line – although the whole network would have required de-designation by the ORR from heavy to non mainline light rail.
Asked if the competitive procurement process, which saw KeolisAmey named as the winner bidder in 2018 – and at one stage had set out a goal of four trains an hours on the Coryton Line – was in hindsight the least effective outcome, Mr Price said: “I do think it was (right) because if someone had rocked up and said we want to put a rail notice closure on for two years and then we are going to reopen it as a light rail network (although MTR proposed a phased approach), I am not sure what the political chances of getting that through would have been.
“Plus at the time there were a whole host of deliverability questions around how that would have worked.
“What we have bought is the ability to run light rail, but running it to heavy rail standards.
“However, it doesn’t mean that we cannot go at a later date and amend some of those standards. In terms of the route from Queen Street to Cardiff Bay, that is all being done under tramway rules and we have already applied to the ORR and there are no objections to us doing that.”
The reasons why the Cardiff lines are constrained to two trains an hour is the limited capacity through Network Rail’s Cardiff West Junction in Canton and a single-track section on the Coryton branch line. To fix these issues would require an investment estimated at £50m.
Mr Price said rather than moving existing train capacity from the Heads to Valleys to the two Cardiff lines, investment was the way forward.
Some argue that if tram-trains on the Heads of the Valleys were reduced to three an hour – still an improvement on the current diesel operation – and redeployed on the Cardiff lines, their increased passenger usage could soften the impact of a projected rise in Welsh Government subsidy support.
Moreover, whether the Welsh Government, with its close workings with train unions, would have the appetite to generate operating cost-savings by removing the need for guards on tram-trains – even if offset somewhat with new roles created elsewhere in customer support on the network – is unclear.
Speaking from TfW’s new HQ in Pontypridd, Mr Price said four trains an hour from the Heads of the Valleys should remain.
He added: “I think public transport has to be for everybody and the whole turn-up-and-go narrative around Metro was around stimulating demand and model shift (less car journeys) so we shouldn’t turn that off. I don’t think there is any political interest in doing that, but the challenge is making the case and funding it. So I think you do it (increased Cardiff line frequency) without taking away what has already been promised.”
On the overall franchise, which includes services that travel across the border into England, Mr Price said it has potential for significant rail passenger growth.
While it varies in different parts of Wales – with the core Valley Lines at just over 10% – only about 3% of journeys in Wales are made by train.
Mr Price said doubling the current rate was far from being unachievable as growth would come from a low base.
While rail passenger numbers on the Wales and Borders franchise have yet to return to pre-Covid levels, revenues have. This is due to an increase in people taking longer train journeys.
With working from home levels in Wales now around 30%, Mr Price said that travel to work patterns have become more nuanced.
He added: “If there is genuinely less demand at times, we can amend services as we are not locked into anything. You could connect two trains together and run them less frequently for a portion of the day.”