Transcript of Transport Committee hearing on scrutiny of the draft Rail Reform Bill

Transport Committee

Oral evidence: Scrutiny of the draft Rail Reform Bill, HC 584

Tuesday 21 May 2024

Watch the meeting

Members present: Iain Stewart (Chair); Paul Howell; Karl McCartney; Grahame Morris; Gavin Newlands.

Questions 231–249

Witnesses

Ken Skates MS, Cabinet Secretary for North Wales and Transport, Welsh Government; and Peter McDonald, Director for Transport and Digital Connectivity, Welsh Government.

Written evidence from witnesses:

– The Welsh Government

Examination of witnesses

Witnesses: Ken Skates and Peter McDonald.

Q231       Chair: Welcome to today's session of the Transport Committee, in which we continue our pre-legislative scrutiny of the draft Rail Reform Bill. Today we will look at the devolution angle of the topic, and on our first panel we are joined by colleagues from Cardiff. For the purposes of our record, will you please state your name and position? Minister, would you like to go first?

Ken Skates: Thank you, Chair. I am Ken Skates, Cabinet Secretary for North Wales and Transport.

Peter McDonald: My name is Peter McDonald. I am Director for Transport and Digital Connectivity.

Q232       Chair: We are very grateful to you both for giving us your time this afternoon.

Minister, will you please briefly outline the Welsh Government's position on the draft Rail Reform Bill?

Ken Skates: I am really delighted to join you today and to set some context, if I may. I shall outline the unique circumstances and instruments that we have in Wales.

With Transport for Wales, we effectively have a single guiding mind covering all modes of transport. We have an ambition to create one network, one timetable and one ticketing regime through re-regulating buses with the Bus Bill.

The one piece of the jigsaw that we do not have is rail infrastructure. We have long held the position that it should be devolved. The draft Bill touches on the work of the Williams review in 2018. I gave evidence to the Welsh Affairs Committee following its call for evidence on that piece of work.

It is important that the draft Bill builds on the Williams review. Certain changes would enable a greater role for the Welsh Government and Transport for Wales in ensuring that we have the infrastructure in place to meet the needs of rail passengers and of all modes of transport where integration and interchanges are required.

We currently have control over the Core Valley Lines infrastructure; we are responsible for that. We have Transport for Wales rail services operating in the south-east Wales metro area, but we lack it elsewhere.

We are also incredibly keen to work with communities and leaders of the regions on the English side of the border, recognising that the Wales-England border is incredibly porous, particularly in north-West England and north Wales but also in the south-east, bordering with English communities there. The mid-Wales and midlands corridor is vital to prosperity and social cohesion. We work very closely with colleagues across the border.

That recognises the fact that we believe in partnership, but, unfortunately, the Welsh Government and TFW are still considered in too many cases as stakeholders rather than true partners. I should like to work more with the UK Government in shaping decisions around infrastructure in particular and rail services that impact on people in Wales. At the moment, we have barely any say, in truth, over rail infrastructure investment on Wales and Borders routes. Nor do we have any real say on franchises that the UK Government are responsible for in Wales—for example, Avanti and GWR.

Q233       Chair: It is helpful to put that in context. Before I turn to specific questions about the draft Bill, for my own interest and for clarity, may I ask what existing relationships are like with transport in Merseyside and Transport for the North in looking at cross-border services?

Ken Skates: You touch on a really important point. I have returned to this role after three years on the Back Benches. I am pleased to say that at an official level and a political level the relationships are better than they ever have been. We work incredibly closely with organisations like Growth Track 360 in assessing the infrastructure needed on both sides of the border to promote better passenger transport.

We also work with Metro Mayors, with Liverpool city leaders and with elected Members on both sides of the border. I am very keen, as soon as possible after the UK general election, to meet newly elected Members of the UK Parliament, given that they will have a keen interest in cross-border services relevant to their electors.

Q234       Chair: The draft legislation has been in gestation for quite some time. What conversations have you had with the Department for Transport in trying to shape it to its current form?

Ken Skates: Unfortunately, I am only weeks back in the job so it might be better if—

Q235       Chair: What about with your predecessor?

Ken Skates: I do not know whether the relationship between my predecessor and UK Ministers was particularly strong or constructive, but I know that at official level the relationship is excellent. I have heard that the relationship at official level is better than it ever has been, but it might help if Peter outlines the discussions that have taken place in recent years.

Peter McDonald: We have had a dialogue with the Department for Transport for some time. Given the length of gestation that you referenced, that relationship is reasonable.

In addition, we have a relationship with the Great British Railways transition team. We are working with them to try to construct a model, or for devolution in Wales, that can best be reflected in GBR. That is often non-legislative preparation, so it might not be directly relevant to your consideration of the Bill, but it helps us to be ready to react once the legislation has passed through Parliament.

Q236       Chair: Do you think that the concerns and suggestions that you made in your opening comments today have been listened to or rejected? What is the state of play with them?

Ken Skates: It might be cruel of me to say that they have been rejected. I think they have not been given sufficient attention, and I very much welcome further conversations on how we can progress our long-term ambition to see greater powers for the Welsh Government over rail infrastructure decisions and rail services that impact on Welsh citizens.

Chair: I will return with some questions later but I will now turn to Gavin.

Q237       Gavin Newlands: Thank you, Chair, and good afternoon, Minister. The Welsh Government said in their submission that the proposed arrangements for the delegation of powers from Welsh Ministers to the Integrated Rail Body were practically inoperable. That is similar to some of the submissions we have had from the Scottish Government, who we will see tomorrow morning. Can you explain why the Welsh Government have come to that conclusion?

Ken Skates: I just cannot envisage a situation where we would wish to delegate, given the time it took to have powers devolved to the Welsh Government in the first instance and given the accountability that is now in place, with the relationships between user groups and between regional interests in Wales and the Borders area. I do not think it would necessarily be in the best interests of rail passengers to remove all that and delegate to GBR.

Devolution is a process rather than a single event. There are benefits that can be realised through the creation of GBR and closer working, with a greater say for Welsh Ministers in the decisions that GBR makes.

Q238       Gavin Newlands: I understand that and I imagine we will hear something similar tomorrow morning from Fiona Hyslop on the IRB deciding franchises in Wales and, indeed, in Scotland.

The other arrangements are fairly complicated and convoluted regarding who is responsible for infrastructure. There are similarities between the situation in Scotland and that in Wales, and as you point out in your submission there are differences as well. What needs to change to make that workable?

Ken Skates: That is absolutely right. There is not symmetrical devolution at the moment between Wales and Scotland. At the very minimum, we would like to have the same powers as those enjoyed by the Scottish Government, and I outlined them in our written evidence.

In examining what further attention should be given, it is important to note that we are on a journey at the moment in Wales. In the next 24 months we shall complete the South Wales Metro. Where we are in charge of infrastructure and services, we are seeing significant improvements in the timeliness of trains, fewer cancellations and so forth. We need as much power and influence as possible over decisions on infrastructure investment.

One of the problems that we have is that we are classed alongside the western area. Investment in rail infrastructure across the Wales and Borders area is pitched against investment decisions from the Thames valley over to Bristol and beyond. Because of the way in which the Treasury operates and investment decisions are made, we will always see a disadvantage for the rest of the Wales routes because we are always having to compete with more affluent areas that have higher passenger volumes.

It is a fact that here in Wales we have, as a proportion of the population, the fewest people using rail travel. That demonstrates a major opportunity to increase the number of people using rail as their primary transport mode, but it requires the decisions to be in the hands of those who are serving their communities, and in this instance that means Welsh Ministers and Transport for Wales.

Q239       Gavin Newlands: On the draft Bill's proposed levels of accountability to the IRB, in your view, how would the relationship have to work between the Welsh Government, the IRB and the Secretary of State to make all of this workable? What is your best-case scenario?

Ken Skates: The best-case scenario would be eventually to have the devolution of rail infrastructure decisions and devolution to the Welsh Government, and for services a formal role—a partnership—specifying and holding to account operators that are not in the hands of the Welsh Government's gift: Avanti, Cross Country and GWR. That would be the best-case scenario. It would require some pretty hefty changes to the draft Bill to realise that, but it would be in the spirit of wanting to work in partnership with the UK Government and GBR.

Q240       Gavin Newlands: Let us be cynical for a second. I assume that those changes will not be made and that will not all be devolved to you. What is the next-best option? What changes would you make to the strategy in the draft Bill to make that relationship work as best it can, short of devolving it all to Wales?

Ken Skates: If I may, I shall bring in Peter on some of the detailed points.

Peter McDonald: It is worth saying that things can be done in the legislation that do not fundamentally alter the current devolution settlement. I shall give you three examples.

The first would be to allow the Welsh Government to explore the full range of options for the current Wales and Borders franchise. At the moment, there is a series of DFT and Secretary of State for Transport controls on that franchise, even though we operate it and bear the vast majority of the financial risk.

The second example would be to have clearer and more real levers over decisions on the other three franchises that operate in Wales, as the Minister has just described. That could be put in place through legislation with no change to the current devolution settlement.

Finally, there could be proper levers for the Welsh Government and the Welsh Parliament to hold Network Rail to account for its activities in Wales.

All those three things can be done within the existing devolution settlement and without prejudice to further changes to devolution that may happen in the future.

Ken Skates: We could look at strengthening the role of the Wales Rail Board, ensuring that it does not exist just to make recommendations and consider investment opportunities but has direct influence over decisions made.

Q241       Gavin Newlands: We have spoken about the rather convoluted arrangements that we have, and in your case they are perhaps even more convoluted than those in Scotland. With the IRB coming in and changing some of those arrangements, is it possible that it will make those arrangements and structures more complex for devolved authorities in Wales and Scotland than they are currently?

Ken Skates: There may be a risk of that happening. That was why I mentioned at the outset the importance of the Williams review. It was described at the time as a root-and-branch examination of rail. The draft Bill perhaps should build on that a little more so that we have simplification and clarity rather than, as you say, the pretty complicated system that we have at the moment.

Q242       Grahame Morris: You have covered some of the ground that I wanted to ask about.

In this inquiry, we are doing some of the pre-legislative scrutiny of the draft Bill. Notwithstanding your concerns about the devolution settlement and its implications for franchises operating in Wales, in response to questions from my colleague Gavin Newlands and from the Chair, you, Minister, stressed the importance of these powers being devolved.

We are dealing with the Bill, as presented to us. The next panel to give evidence, including Martin Tugwell from Transport for the North, might have a different view, but from your perspective do the Welsh Government want the power to delegate franchising functions to the Integrated Rail Board? How would the legislation, as currently presented, need to be amended to satisfy your concerns?

Ken Skates: As it stands, I cannot comment on what regional leaders in England may want to happen, but Welsh Ministers would not consider delegation to GBR at any point in the near future.

Peter McDonald: The Minister has commented on the question of whether it is desirable. Even if it were desirable—the Minister says that it is not currently—there are problems with the power, as conceived in clause 3. There is no power of revocation—it is difficult to revoke. It requires the consent of the Secretary of State in the Department for Transport to proceed with it. We would be delegating power to an IRB for which we had no direct route of accountability. If something were to go wrong, we would have no control over the revocation and we do not have a route of accountability to hold the IRB to account.

Even if it were desirable—the Minister has explained how it is not—in technical terms it is not something that we could recommend to Ministers.

Q243       Grahame Morris: Will the Welsh Government seek direct representation on the IRB? Is that envisaged?

Peter McDonald: We have certainly pressed for that many times in our dialogue with the Department for Transport and colleagues in the UK Government. Given how much activity Network Rail does in Wales and how much expenditure happens on the railway in Wales, a clear and real form of accountability is the necessary quid pro quo.

Ken Skates: At the very least, we would expect a very strong Wales business unit to make sure that we have that focus. As I have mentioned on a number of occasions, infrastructure improvements in Wales are not competing for investment with other parts of the UK.

Q244       Grahame Morris: Are there any other provisions that you would like to see on the face of the Bill that are not included?

Ken Skates: I have no more comments on any other provisions that we would like to see on the face of the Bill; everything has been captured in our evidence so far, I think.

Peter McDonald: I would make one point to build on the points I made about accountability with respect to Network Rail, and many of those points apply equally to the Office of Rail and Road.

Q245       Karl McCartney: I have a curve ball for the Minister. I do not think that the Welsh Government—you might correct me—will ever put the money forward to build a road from north to south Wales. At the moment, anybody who wants to travel by rail has to go outside the country. If you had the power, would you consider rebuilding and putting back in place the 60-odd miles that would join Aberystwyth and Carmarthen, going through Lampeter?

Ken Skates: The estimated cost, I think, going back several years was about £800 million—a considerable investment. If we were to adjust that for inflation, I imagine we would be looking at over £1 billion for that route. That would be a huge investment, and we would need to judge whether the passenger numbers would justify the return of that piece of infrastructure.

I mentioned TFW's role in planning other services. We also have something called the TrawsCymru network. It is a coach and bus-based network that supplements the rail network for long journeys in Wales. That is a far better service in terms of cost benefits than reintroducing a major piece of infrastructure that may not carry sufficient passengers to justify the case.

Q246       Karl McCartney: I do not suppose that many of your Assembly Member colleagues use that service to get from north Wales to south Wales.

Ken Skates: The TrawsCymru service? Because of the topography of Wales and the existing rail lines, most people coming from the north to the south would use the line from Holyhead across to Chester and head south from Chester to Wrexham; Wrexham onward to Hereford; Hereford down to Newport; and then across to Cardiff. That would be the obvious route for most Members of the Senedd travelling by rail.

However, because of years of under-investment, that route still has Victorian signalling in parts. We really do need to see the under-investment in the rail network in Wales adjusted, not just for the benefit of Members of the Senedd but for the passengers who rightly deserve a better standard of rail transport in Wales.

Q247       Chair: I should like to conclude this with a couple of supplementaries based on what you have said to colleagues.

You both made the point that rail infrastructure investment in Wales is in competition with other parts of the network. Consequently, you would like formal representation on the IRB.

I should like to probe that a little further. How do you see the IRB working when it considers investments that might not physically be in Wales but would be to the benefit of Wales? I recall that a number of years ago an expensive upgrade of Reading station and junction—some miles from the border—improved capacity on the Great Western mainline as a whole. How do you see the IRB working in assessing those decisions, where the spend and pounds might physically be in one part of the country with the benefits spread more widely?

Ken Skates: It is very interesting to draw an actual example of how partners can work together to promote infrastructure in one part of the UK that has very significant benefits for people living across that national border—the Wrexham to Bidston line. For years, we have been seeking investment in the line to enable us to run metro-type services—four trains an hour, ideally—through to Liverpool.

We work very closely indeed with our partners in Liverpool and the Liverpool city region, but because we do not have a direct say in Network Rail we have never been able to draw down the investment required to upgrade that line.

With the IRB, I would be hoping for, at the very minimum, a strong Wales business unit able to allocate funding for infrastructure improvements within Wales and for us to be able to work in partnership with colleagues across the border, rather than as stakeholders.

We recognise that infrastructure improvements on the English side of the border can have huge benefits for services used by people in Wales. I have just highlighted one, but the line mentioned in the previous question from north Wales to south Wales that passes through the borders of England is vital. I have spoken on many occasions with previous DFT Secretaries of State about the need to improve rail infrastructure on the English border side as well as in Wales.

Q248       Chair: Thank you; that is very helpful.

Other witnesses to our inquiry have made the point that the draft Bill is just one piece of a much wider jigsaw and were not too concerned that the Bill is relatively narrowly defined in its scope. Notwithstanding the amendments that you have already said you would like to see made, are you broadly content with the approach—that the Bill is sharp and focused, and much of the rest of the infrastructure can be built around it?

Ken Skates: Yes, sharp and focused. I would love it to be more ambitious, as I have outlined, but I am also a pragmatist and I recognise that it is a starting point that it is difficult to argue against. Moving forward, something with greater detail and greater ambition would be beneficial.

We have a magnificent opportunity through the creation of a single guiding mind, where there is very powerful representation by the regions in England and the nations, to be able to create something that reflects what British Rail was at its best—and its best came very late in its day. We do not need to reinvent or resurrect what British Rail was, but we can learn that when it operated best it operated with a very strong degree of devolution.

Q249       Chair: That is very helpful.

Final question: is there anything else that you would like to put on the record as part of our inquiry?

Ken Skates: I think I have covered most points, Chair. I am very grateful for the opportunity to contribute and I look forward to appearing again at some point in the future. Thank you.

Chair: Thank you very much. We are very grateful to both of you for your time this afternoon.