Climate Change, Environment, and Infrastructure Committee

Good afternoon, Lord Hendy. I'm going to ask you some questions regarding fair funding and future commitments. We have lots of debates about this in our Senedd. Do you believe that Wales has received fair and reasonable levels of investment in its rail infrastructure?

The first thing I have to say is good afternoon to all of you. It's a pleasure to be here, and it's a pleasure to answer questions. Thank you for the invitation.

I think that this Government recognises that railways in Wales have recently and historically seen very low levels of enhancement spending, and that's why we've worked really hard with the current Welsh Government to put that right. I think it's important to recognise that the spending review and the 10-year infrastructure strategy recognises Wales's long-term infrastructure needs, and will deliver at least £445 million-worth of rail enhancements to release them, and no doubt we'll talk about that.

And of course, you will all know, I hope, that I know what the position has been because I chaired Network Rail for nine years, and in those nine years I don't think we saw anything like the level of commitment to railway infrastructure investment that has occurred in the spending review as a result of the collaborative work with both your Cabinet Secretary, Ken Skates, with whom I'm very pleased that I get on well, and Jo Stevens, the Welsh Secretary in our Cabinet here at Westminster.

Thank you, Lord Hendy. In 2022, Jo Stevens MP said that it's utterly illogical to designate HS2 as an England-and-Wales project, estimating that Wales was owed £4.6 billion in consequential funding from the full scheme. Many of us in the Senedd have also called for that funding. In 2023, you said that something is amiss with the way that the Barnett formula is applied to HS2. Do you believe that the designation for HS2 will change?

At the time I made my previous comments, I wasn't a Minister in the Government; now I am. You'll all know just as well as I do that the whole of the way in which the Barnett formula and the Barnett consequentials work is about the devolution settlement, which is a matter for wider government and of course not just, or even mostly, for me. I think that what I have to say to you is that heavy rail is reserved in Wales, so any heavy rail scheme that the department delivers should always be classified as England and Wales when the formula is applied, which includes HS2. That's different from Scotland and Northern Ireland, where heavy rail is devolved and therefore they do get Barnett-based funding. It's consistent with the funding arrangements for all the other policy areas reserved in Wales but devolved in Scotland and Northern Ireland.

Having said all of that, I think the answer that I gave you to the first question, which I hope is welcome, is that actually the context of everybody's previous remarks on this was that previous UK Governments have not, in fact, given enhancement spending in Wales in any meaningful way, and this one has. So, whilst I can't comment about any changes to Barnett because, as far as I'm aware, none are currently proposed, what I can say is that the Government has recognised the need to spend appreciable sums of money on rail enhancements. And actually, out of quite a difficult spending review settlement and quite a difficult total settlement for the rail network enhancement programme, we are really pleased that a significant amount of money has been allocated, which will see some significant benefits, which I'm sure we're going to discuss this afternoon.

We're pleased about the funding announcements and the money that has been allocated, but we were told that more money could be allocated as the network is developed. The Welsh Government has identified a wide range of rail investment priorities, most recently in the 'Network North Wales' document, and it's currently developing a prospectus of rail infrastructure projects. I had a look at the 'Network North Wales' document online. It's ambitious and significant and there are indicative timelines of how they will be developed over the years. Will Wales, do you believe, receive the funding needed to deliver these key projects? I know we've had the announcement of that key funding, which I know is significant, but we need to continue with this programme. What's your belief?

The other thing I should have maybe started off by saying is that some of you, maybe all of you, know that I was asked by a previous Prime Minister when I was the chair of Network Rail to do a review of the connectivity of the union. I'm pretty familiar with the Welsh railway network anyway, but as a result, I identified as part of that review the significant contribution of particularly the north Wales main line and the south Wales main line to connectivity, growth, jobs and housing, both in Wales and in the relevant parts of England adjacent to Wales. So, I'm familiar with some of the ways in which rail enhancements might be spent.

The total that was talked about in the spending review and the 10-year infrastructure strategy says at least £445 million, and that comprises £302 million for rail network enhancement programme investments over the spending review period to 2029-30, and we can talk about some of the detail of that. Part of that—you referred to north Wales—is to do infrastructure changes at level crossings in order to increase service levels on the north Wales main line. There's also a £48 million contribution to enhancements of the now Welsh Government-owned core Valleys lines, and then, significantly, for what you were saying, an additional at least £95 million, which represents a further commitment to continuing to support enhancements beyond the spending review period. Now, in the particular case of Wales, we're proposing, with the agreement of Cabinet Secretary Skates, to expand the role of the Wales rail board and, subject to all the necessary approvals, consider the limited transfer of some initial governance from DfT. And I would see the Wales rail board as our way, with the Welsh Government, of proceeding to work out what else to spend the money on.

So, this ought to be a choice, which is made as a consequence of intelligent investment propositions, but it ought to be what the Welsh Government want, what's necessary for the Welsh railway network and, as a consequence, it should all go through the Wales rail board. And I think, by those means, the spending beyond this current spending review period to 2029-30 is not constrained by the £95 million. What that actually represents, in many ways, is a development fund that will allow the development of future proposals that are important for the Welsh railways. And I can recognise, in Network North Wales, the importance of the north Wales main line for the economies both of north Wales and of the adjacent areas in England, and therefore probably, or almost certainly, the desire of the Welsh Government, through the Wales rail board, to develop further proposals in which to make the railway better for the economy and society of north Wales.

Thank you for that. I know we want to pursue some of the points that you made there in greater detail in a moment, but I think, Delyth, you want to come in at this point?

Diolch, Cadeirydd. Lord Hendy, it's a pleasure to have you with us. Thank you ever so much. I wanted to come back to what you'd said about HS2, just to begin with, if I may. You'd said that your previous comments on HS2 were made before you were a Minister, and we appreciate that. The facts haven't changed, though, have they?

Well, it's very possible to interpret the Barnett formula, as people have in your position, as being disadvantageous—

I'm so sorry to interrupt you. Forgive me. My point is that that had been your position previously as well. I'm just interested to know if your reading of those facts have changed since you've become a Minister.

Well, I think what's changed is that this Government has decided to commit a very significant amount of money to rail enhancements in Wales, and the context of most people's previous view was in a position where previous Governments have not made the commitments to Wales, which you would expect them to make in the light of the fact that heavy rail is reserved. So, where I think we are, which is quite different, setting aside the Barnett formula and those things that are matters for the whole of Government and not for me. The fact is that we have made a significant commitment, which will enhance the Welsh railway, and in this spending review. So, from that point of view, that's very different, because if we were sitting here in 2023, those commitments had not been made and there wasn't any money. And I knew that there were a lot of things that people wanted to do. And I'm very pleased with what the Welsh Government want to put into the package to spend, of this £445 million, because personally I believe, and the department believes, and I think the Welsh Government believes, that, actually, this investment deserves to happen. So, I'm very pleased that it is. That's the difference.

Thank you so much, and we will come on to the £445 million at any moment, actually. I just wanted to press you, if I may, just once more, because the Welsh Government's position is still that that money from HS2 should come to us as well as that, and notwithstanding how welcome the £445 million are, but, obviously, you'd appreciate, wouldn't you, that there would be so much more that we could do with that £4 billion. Is that something where your position has changed? I just want to clarify whether your position has changed on whether we should have that money.

So, look, I'm a realist and a pragmatist. In sitting here in the department, as the Minister of State for Rail, we've got a spending review settlement to 2029—a significant part of it, for the first time for many years, has been allocated to railway investment in Wales. And that is a significant difference from where any of us sat in 2023. So, I'm not in a position to argue further about Barnett consequentials and whether the formula should apply, and if it did, what it would produce. What I'm here to say is that this Government has recognised the need to invest in railway improvement in Wales to a significant degree, and I think one of the pressing jobs we've got to do is to make sure that we do spend that money, that it's well spent, and that we get on with spending it on the right things.

Thank you. Chair, would you like me to move on or is there another question?

I'll just ask one or two questions, if I may. Thank you. Do you understand people's frustration in Wales—that they feel that there's an injustice here? Because obviously they see consequential money going to other parts of the UK, which isn't coming to Wales, and you referenced the £0.4 billion additional funding, as welcome as it is. But, of course, when you compare that to some of the levels of funding similarly provided to regions in England, it very much firmly tells us that we're pretty much at the bottom of the table.

So, I think it would be—. 'Yes' is the answer. I can hear—. If you tell me that people in Wales are frustrated, you're their legitimate representatives and therefore I've heard what you said and recognise it, but where I think I am coming from is that if we were still in the position of previous Governments, where, actually, the consequence—whether or not that argument was substantiated or not—and the situation until recently was that Wales got virtually no railway enhancement spending. Now it is, so, actually, I think that's a significant improvement, delivered by this Government. And my position, as I sit here, is that, actually, I'm very determined, as is the Secretary of State, and as is the Government, that that money gets spent—it gets spent wisely, and it gets spent on the right things. And in that we appear to be in great harmony with Cabinet Secretary Skates and with the Welsh Secretary and the Cabinet. So, let's concentrate on that because, actually, that is an improvement and it is something that wasn't there prior to the election of this Government in the UK.

Okay, thank you. Delyth.

Okay. To move on to that £445 million, which was announced in the spending review, I'm guessing, from what you've said, what your answer might be to this, but just so that we have it for the record: is it your belief that that is a fair allocation that's based on the need, and the network condition, and the population, and the network length in Wales? Just especially because it's over 10 years, and I think that we all genuinely do appreciate the point that you've been making about it being better than what might have come before, but on where we are now, do you think that it is a fair amount?

Well, the total pot for enhancements for the spending review period was really significantly oversubscribed throughout the whole of England and Wales. And one of the more difficult things that I've had to do, as the Secretary of State has had to do, is to speak to a number of people around the country who are deeply disappointed that the enhancements that they've been seeking haven't been funded in the way that they believed was right. But we have spent the money in the best way that we—. We are spending, rather, the money in the best way that we think it should be done.

It's quite clear that connectivity drives economic growth, jobs and housing, and therefore there are projects within Wales that deserve having money to be spent on them. And I'm delighted because I know a bit more about the expenditure that is planned, simply because I did the union connectivity review. So, the Burns stations would not be funded on the south Wales main line without this, neither would the improvements that will give more train services on the north Wales main line, nor would the improvements that will give a better train service from Wrexham to Liverpool.

So, actually, out of a relatively limited total pot for England and Wales, which is related to the state of the economy that the Government inherited when it took office a year ago last July, I believe that this is a significant settlement. It is not constrained over the 10-year period to £445 million, it is at least £445 million. And as I was saying to one of your colleagues earlier, the remaining £95 million, as a further commitment to continue to support enhancements beyond the SR period, is in fact a real opportunity for the Wales rail board to put forward and start to develop the business cases for further investment, which will then, hopefully, be mature enough for future Governments to decide to support them. And I think that's really important, because up to now, there hasn't been development money, and you will all, I think, know that if you can't get to the stage of developing decent business cases, then it isn't possible to get in the queue for further money. So, actually developing those business cases for a continuing pipeline of investment opens the prospect of a lot more money than the £445 million committed now, and that's why the Government is spending that £95 million, so that the Wales rail board can work its way through what next to do after the £305 million and the other things that we're going to do in the spending review period for the longer period beyond the spending review.

Okay, thank you. Janet, did you want to pick up on this particularly?

Can you provide—? Am I muted? Sorry. Can you provide—? Good afternoon. Prynhawn da.

Hi.

Can you provide an update on the development, status and delivery of the £4 billion enhancement pipeline developed by the Wales rail board? When will this pipeline be published and will it be accompanied by a delivery plan?

So, I can't do that currently, because I think that the Wales rail board needs to work its way through that. My understanding is that that work is happening, but unless I'm misinformed, I don't believe that it's got mature enough to be published yet, and I think it is up to the Wales rail board and not up to us to do that when it feels ready. And I don't want to go on endlessly about things I've already said, but, actually, because part of the committed £445 million allows the development of business cases, what I'd expect that will enable the Wales rail board to do is to not only publish a general list—. I think one of the things that's been a plague on the railway industry in the last Government was the publication of long lists of projects with no business cases, no apparent funding and no timescale, and what I think we'd like to see from the Wales rail board, given the availability of money to produce business cases, is for them, in due course, to put forward what the best things to do are for the Welsh railways and how much they're going to cost, what they're going to deliver, both in railway terms and in wider economic and social terms, and what the priority is. I think that that is a job for the Wales rail board—I don't believe it's finished it, or if it has nobody's told me. But the £95 million will support the development of business cases and that will ensure that, come the next spending review, Wales is in a good position to put forward things that are worth doing and will get to the top of the list and will get funded in future.

Delyth, you wanted to come back in.

Diolch eto, Gadeirydd.

I just wanted to check—and I know that you've covered quite a bit of this already—that I have understood you correctly on it: of the £302 million of the £445 million that's been announced, it's been said that that will fund projects that are identified by the Wales rail board, could you just confirm, are those going to be fully funded from that, or will they require further allocations in further spending reviews? I just wanted to check that I have understood you correctly.

My current understanding is that the principal aims for that £302 million over the spending review period are funding the new Burns stations on the south Wales main line, which may take longer to deliver than the spending review period but, actually, they need some development work and they certainly should be started. I don't know whether they can be finished in time, because that's quite a large expenditure. There are several stations and there's also infrastructure work to go with them. It certainly will pay for the infrastructure needed to increase service levels on the north Wales main line, which is the level crossings and other associated work. And my understanding is that that will be spent within the period, because, I believe, the services are due to start in May 2026. But, prior to the spending review settlement, there wasn't the money to do the level crossing and other work that would enable them to happen. And I also believe that the total funding—the total public funding—for the work that's needed at Padeswood sidings on Wrexham to Liverpool will be done—there is a part of that to be funded by the cement company, whose name escapes me, temporarily, but I'll think of it in a minute—and also Cardiff west junction, which is during control period 7, which is 2024 to 2029. So, if not all of it is finished spending, my understanding is that it fully covers the expenditure on those things within the spending review period up to 2028-29.

Thank you very much. That's very useful. Finally from me, because you've answered the other question that I had already, but could I, Chair—? I know that we're asking you quite specific questions about specific allocations of money—we appreciate that that will be very technical in nature—but, taking a step back from it, and again appreciating and in many ways agreeing with what you've said, that what is being proposed does represent an improvement from where we were, do you think that what is being proposed is enough? I appreciate that it is more than we had, but do you think it is enough to make up for the injustice that you yourself identified over such a long period?

Well, you have to start somewhere, and the truth of this is that these significant projects take quite a long time to start up and deliver. So, even if you'd aspired to do more in the spending review period, because there's been no project development, it seems to me to be pretty unlikely that there would have been anything much more to be delivered. And one of the reasons I keep going on about the further £95 million is that the real benefit of this is to produce the business cases for further investment after the spending review period that enable both you and us to recognise what else needs to be done to Wales's railways. And I'm not suggesting at all that these are the only things that need to be done, but they're the only things that are developed enough to spend any meaningful amounts in the spending review period.

The real benefit of the very cordial relationship that we have in the department with Jo Stevens, as the Welsh Secretary in the Cabinet, and with the Cabinet Secretary, Ken Skates, is that, actually, if we agree that what Wales needs is a pipeline of investment of good things to do for the benefit of the Welsh railways, economy and society, then, for the first time, not only have we started this pipeline with the projects that we've talked about, but we've enabled some money to be committed to developing the further things that need to be done, so that they are good projects, so that they can be advocated with confidence and get to the top of the list. And nobody would be more delighted than me to see more Welsh projects. But, actually, there's a whole difference between a document that says, 'We've got all these things we'd like to do'—. But, actually, you'll all know, just as with Welsh Government spending, just as I know with UK Government spending, that you don't get anywhere with that unless you've got the detailed business cases, you've done the work, you know how much they're going to cost. And I think that, actually, apart from the projects that we're talking about in this period, in the spending review period, that's the real benefit of this, which is this Government is committing money that enables the Wales rail board to develop a programme of future worthwhile investment for the Welsh railways in a way that just hasn't been done for a very long time.

Thank you. Before I bring Janet back in, Carolyn, you wanted to ask something?

Yes, please. You talked about having a business case, which is why I believe getting the work done at Padeswood et cetera is coming forward. There was talk about electrification of the north Wales line. So, could you confirm, Lord Hendy, then, that that is something that really couldn't have been brought forward, because there isn't the business case developed for it?

No, absolutely. I'm just struggling to remember what the thing was called—it was network north, I think, which was the last Government's last gasp at this. It included a whole pile of projects following the abrupt cancellation of phase 2a of HS2, which were alleged to be the things that the money was going to be spent on instead. I can tell you as a matter of fact that, actually, there had been no work done in Network Rail on the electrification of the north Wales main line after 2010, which is 15 years ago. So, not only was the money not real money, but there was no prospect of doing that, because there'd been no work done on the business case.

Going back to what I've just been saying, if you want to see meaningful enhancements, then you have to work through what you want to do, why you want to do it, what the benefits are, whether it all stacks up. The north Wales main line electrification, it may or may not be a good thing to do, but, if I was still at Network Rail, I couldn't currently tell you what the 2025 cost of doing it is, never mind make an economic case for it. So, that was a delusion stewarded by the previous Government. I think, like many of the things in that document, it was just a delusion. So, no work's been done. If that's something that Wales, the Welsh Government, the Wales rail board, want to do, then now there's some money to work through a business case to see whether it's worth doing.

In the meantime, the other thing I'd say on electrification, because it's worth saying about this, is that technology's moved on quite a lot. The prospect of needing continuous electrification on many routes of railways in England, Wales and, actually, Scotland is reducing, because modern battery technology will produce trains—in fact, you've got some on the Valleys lines—that are tri-mode; they're diesel, they're battery, and they run from wires. I think, frankly, it's extremely unlikely that the whole electrification of any line of the sort of the north Wales main line would now be proposed. What you want is an environmentally clean and attractive train service. And if that can be produced by battery power and discontinuous electrification in some form, it's likely to be far more achievable, the business case will be better, and therefore it's more likely to be funded. So, that's the sort of thing that I would expect the Wales rail board to look at, to think about what it wanted to do, to work out what the business case was, and then to pursue it.

Thank you. Janet.

Okay. So, the infrastructure strategy extends beyond the current spending review period. Is this £95 million guaranteed for Wales, or is it an aspiration?

So, the £95 million is guaranteed. It's at least £95 million. I think that the objective of the Wales rail board, in terms of scheme development from now to the next spending review, ought to be to get schemes ready so that they are fit to be put forward in future spending reviews, so that they can be funded, so that Wales does see a continuing level of enhancement spending.

Thank you.

Joyce is now going to take us on to another area of questioning, I believe.

Good afternoon, Lord Hendy. I'm going to move on now to the overview on rail reform. I'm quite interested for you to outline how the Welsh Government and Transport for Wales are being involved in planning both statutory and non-statutory elements of that, and if you can give any particular examples of how plans have changed, or might change, to reflect that input.

Thank you for raising the subject. A lot of time and effort is being put in in this department on railways reform. There will be a railways Bill in this current parliamentary session, and we're making very active preparations for it to be introduced into the House of Commons as soon as we can. It is in an advanced stage. We're committed to railway reform, because the current railway is fragmented. It has too many different people with too many different contractual obligations, and, in many cases, many, many good people on the railway are working furiously hard to make the best of bad contractual situations to run the best train service they can. Equally, we recognise the progress made in Wales, and in particular the huge progress that Transport for Wales have made in modernising the Welsh railway network, both in respect of the core Valleys lines and in respect of the rest of the network. I think that much of what's been done by TfW is a model for other parts of the railway to follow, and I hope you all, and people in Wales generally, are pleased with the progress of TfW, because certainly I can see real progress.

So, we start from the position where, actually, Transport for Wales is now publicly owned and operated. We start from a position where there is close engagement between TfW and Network Rail Wales and Borders. We start from there. We've had some very good engagement, both at official level with the Welsh Government, and at ministerial level—and Ken Skates and I have talked about this several times face to face—so that we get a position on rail reform in the Bill that is acceptable to the Welsh Government, and therefore the Welsh Government can consent to it in line with the way in which Bills that cover Wales and Scotland need Senedd approval. We've discussed how to integrate the railway better, what the practical implications for reform are and the future relationship, and that's one of the reasons why I keep talking about the Wales rail board, because Ken Skates and I both agree that what's really important is that there is a meaningful, high-level place in which the future of the Welsh railways and future investment in the Welsh railways can be discussed.

So, we're committed to ensuring that GBR remains accountable to Ministers across the UK, including in Wales and Scotland. We're committed to making sure that it aligns with the national transport strategies, including the Welsh transport strategy, and we're committed to meaningful collaboration and clear governance arrangements. We are working through how to express those, both on the face of the Bill and in other documents and agreements that would go with them, and I think that we're nearly there, but I won't take the Cabinet Secretary's position away by outlining that now. But, very soon, I'm very optimistic that we'll be able to say that we've got an agreement with the Welsh Government on how it all works, and he will be able to tell the Senedd all about it.

So, in a nutshell, Transport for Wales and Welsh Government are involved, talk is ongoing in preparation for the Bill, and we ought to be able to see, somehow, through those talks and papers, how that has changed, where it needed to—

Absolutely. Absolutely. You're much less loquacious than I am, and that's probably a huge advantage. But what you've said is absolutely accurate.

Good. Okay. Thank you.

Thank you very much. Janet.

Thank you. The consultation emphasises evolving relationships between GBR and TfW, as well as the two Governments. What does this mean, and what safeguards will ensure that Welsh transport priorities are not overridden by GBR’s centralised, national decision making or changes in UK Government over the long term?

I think the first thing to say is that, of course, GBR will have some sort of corporate centre, and it will have to be run as national organisation, but the very strong intention of this, and what you'll see, I think, when the Cabinet Secretary's fully in a position to tell you, is that we're committed to a GBR that is regionally based. As an infrastructure, I know there's already currently a Network Rail Wales region, which is run by Nick Millington. We expect to see a GBR Cymru, which will face off with Transport for Wales in a practical way so that GBR won't be some remote, centralised organisation, but will have people with real authority and power at a point where the collaborative working between GBR Cymru and Transport for Wales will produce the right results for the passengers and the railway. That’s really important to me, because if I was sitting here and saying I envisaged some massive centralised organisation, you would all rightly say, ‘Well, how is Wales's voice heard in that way?’ But my vision of GBR—. You won't see much of this in the Bill. What you will see in the Bill is the necessary wording for the arrangements we will have agreed with the Cabinet Secretary. The Bill won't tell you how GBR is organised in detail. But what I can say to you is that we’re absolutely determined that parts of GBR, like the infrastructure in Wales, like GBR Cymru, are equipped managerially and financially to face off against TfW so that the necessary decisions are made on a level that is good for Wales.

Thank you.

Joyce, do you want to come back in?

Thank you. I'm just trying to get my head around GBR Cymru and wondering whether that's another body, an interim body, or does it just signify that Wales has had a voice, and then that's GBR Cymru? I'm trying to work out between the Wales rail board and also GBR where GBR Cymru fits in, and if you can help with that I'd be most grateful.

Of course. So, GBR Cymru—. I'll just turn my phone off so that it doesn't ring during this hearing. Network Rail at the moment owns and operates the infrastructure of the railway in Wales, except for the core Valleys lines. That has to be replaced by GBR doing it, and one of the things that needs to be done in the course of Network Rail, and for that matter the English train operating companies, coming in to form GBR is to make sure that the business unit that operates the railway infrastructure other than the core Valleys lines, which I've called GBR Cymru for obvious reasons, is fully equipped to deal with Transport for Wales.

I think that the relationship is pretty good now. I speak to Nick Millington now and again, as I do with James Price, to ensure that at a practical level the railway in Wales is working satisfactorily. I think that the appointment of Nick as the manager of the present Network Rail Wales route has been a significant improvement, and that's what I'm seeking to build on with GBR Cymru. It certainly doesn't replace TfW, because TfW will continue to be the railway operator, but what we've got to do is to foster a collaborative engagement between the infrastructure owners and the operators such that the railway in Wales is operated to its full potential. That's what I'm really describing. I'm not describing some mysterious new arrangement that is four times the size and seeks to exert power over TfW. I'm describing something that is suitable to interface directly with TfW so the infrastructure and operations are run as seamlessly in Wales as we expect them to be in England.

Thank you for that. I’m just conscious that we have around 15 minutes left, so I'll ask us all to be brief and to the point as best we can. Delyth, would you like to pick up on a few issues?

Yes, certainly. Can you hear me still?

Of course.

Right, thank you. Hi again. I wanted to check: in terms of passenger services, which we've already been talking about, is it your anticipation at the moment that future passenger services will be planned and operated once all franchises are nationalised by 2027? That is, will they continue to be planned on a regional or route basis similar to franchises, or as a single set of GBR services? In terms of what you've been talking about here with GBR Cymru, I’m just wondering if that is how it's going to work in the future.

Thank you. In the particular case of Wales, I'm expecting GBR Cymru to properly run the infrastructure in partnership with TfW to maximise the benefits of the railway in Wales. Elsewhere, in England, as the franchises are coming into public ownership, we're beginning to change the structure so that one person is in charge of both, and that would be on a route and operating company basis. So, it's not franchising, because franchising is a very clear demand from—. Well, franchises are very clearly set out requirements for particular services. I'm expecting that to be, in GBR terms, managing directors of operating companies and routes, who put their arms around both the infrastructure and the operations, and take an intelligent view, subject to the amount of public funding and the fares income, about how much they can run and what they can do best for the economy and housing and jobs in their local region.

The Welsh circumstance is a particular example of that. But I'm very encouraged, because if I thought there was anything wrong with the partnership that there already is between Transport for Wales and the Network Rail Wales route, I'd do something about it. But I do check regularly, because I know both James and Nick, that things are working well, and I would expect, in the future, for them to work better. They will interact in places like Shrewsbury with train companies that will increasingly be run as both the operations and infrastructure by one person. I don't see that as difficult, actually. I think that the relationships will consequently be easier. Every meeting I ever went to at Network Rail always had 20 people in it, because there are so many people with contractual interests. In a case like Shrewsbury, I would expect whoever's going to run West Midlands Railway, both the track and the infrastructure, to interface quite seamlessly with James and Nick and that, actually, that will be a better relationship, which hopefully will result in a better train service for both England and Wales.

Thank you for that. Finally from me, the Cabinet Secretary here has called for full autonomy over Wales and borders services. We obviously appreciate that GBR will need to have some input into planning those Welsh services, as you've just been alluding to. Is it your hope and your plan that there would be a more collaborative approach to planning those cross-border services?

Absolutely. I think the present arrangements make it quite difficult in some cases. Franchise holders—for example, let's look at Avanti, on the west coast main line—are currently working out their franchise on a set of requirements that was specified by this department some time ago. I would expect in future it would be much easier to put in appropriate variations. There's only one conditionality, which is, of course, as you'll all know, that parts of TfW services do directly serve stations in England, and, in those cases, of course, there has to be some right of GBR to agree with TfW what the service levels are, and so forth. I know that there are arrangements already to make sure that that's done, like on the borders line, where some stations are in Wales and some stations are in England. My belief is that works pretty well, but it will have to continue, because there are obviously English interests to all of this. I met the MP for Shrewsbury yesterday. Shrewsbury is a station mostly served by TfW, but, clearly, in Shropshire. So, there has to be those arrangements, but I don't believe that any of that is difficult. That's why I've spoken to James extensively, as well as to Ken, and to Nick Millington, to make sure that I understand how well it's working now, and nobody's told me that none of that works. I think that we hope that it continues to work as well, and better.

Chair, if I may, I know that we're very short on time, but just very briefly. Shrewsbury is a station that lots of people in my area of Wales would be familiar with if they are trying to get to somewhere that is actually nowhere near it. Because if you were to travel from where I live in the south Wales Valleys to Aberystwyth, which is the west of Wales, you have to go via England in order to get there. It's almost like a triangle, which goes like that, and then like that. Would it be your hope that we would get rid of a bizarre anomaly like that so that those travelling distances don't have to go so—? As beautiful as the countryside is.

It's a whole other subject, about the extent of the network in Wales. One of the things that I think that TfW have done astonishingly well is to look at those main routes in Wales that haven't had a railway service for most of our lifetimes, and look at how alternative connections by bus can be effectively produced. I'm sure, unless somebody contradicts me, I'm the only person on this call who has been by train to Lampeter. I've been by train to Lampeter, I've been by train to Green Grove in the summer of 1972 on a railway that was wholly in Wales. I've seen advocates for its reinstatement, but it took three hours to get from Carmarthen to Aberystwyth.

I think that the network that TfW is putting in place—which is of long-distance, reliable, dependable bus services to do those journeys in an economic and satisfactory way—is probably a decent twenty-first century answer. That isn't to say that you shouldn't go from south Wales to Aberystwyth by train, because it's not a bad journey, and it's a lot more comfortable and reliable than it was 10 years ago. But only to say that I think that the prospect—. Well, it's up to the Welsh Government, not up to me. If you asked the Wales rail board to make a decent economic case for replacing long-distance railway lines in west Wales, I'd be awfully surprised if you could get a decent business case out of it, compared with some of the other things that are really pressing for the economy of Wales.

Thank you very much for your time.

Janet next.

The Cabinet Secretary called for a formal role in specifying and performance managing rail services like Great Western, which include Welsh services but aren't controlled by the Welsh Government. Will the Welsh Government have such a formal role?

Certainly, the way in which the operations will be run post the franchises expiring will be different, and part of the discussions that we've had are about the level of influence that the Welsh Government and TfW will have on those services. I'm not going to spoil the Cabinet Secretary's pitch when he puts forward to you, hopefully, the agreements we've reached about rail devolution in respect to the railways Bill, but what I would say is that I expect it, in future, to be easier, simply because the operations will be under the control of GBR, which will be a public body, and how the operations work, how reliable they are, what the details of them are, ought to be much easier to fix in future than they've been in the past.

I think what you will hear the Cabinet Secretary set out is, hopefully, an agreement between us that represents a better way of doing business. And in the course of that, it's quite right that the Welsh Government should have a strong influence on how that service is provided. It's not feasible to have total control, simply because a train from Swansea to London is partially in Wales and partially in England. But what I'd expect out of the agreement that we will reach on the railways Bill is that there's more influence and there's sufficient influence to make sure those services serve Wales and Wales's economy and society better than they do now.

Thank you.

Carolyn.

Earlier we talked about working cross-border, and the Welsh Government is focused on a 'one network, one timetable, one ticket' approach. So, how will rail reform, in particular, integrate with and support this approach with cross-border services?

I think the approach that TfW and the Welsh Government have taken on this is really very good. I think that there is a model in there for quite a lot of provincial England where railways and buses don't work together. One of my privileges this week was to finish the Bus Services (No. 2) Bill in the House of Lords, most of which is an England-only bill, because Wales does have devolved power over buses. I hope that we can replicate some of the really good work that has been done by TfW in England. I don't see any likelihood that the establishment of GBR will make that worse. I think the likelihood is that we can make it better. We know that fares reform, for example, is overdue on the railway, and many people don't understand how fares are calculated nor understand how they work. I think a lot of the work in Wales has really been very good, actually, and I hope, through the Government's integrated transport strategy and through railway reform and also through bus reform in England, that we can get to a position where, actually, the railway is easier to use wherever you are, that it's the preferred method of travel, that it's reliable and it therefore generates revenue, and also that we reduce the cost of it.

Yesterday, I noticed there's a tap on, tap off service available now on part of the route, as I travelled back to north Wales on the train, which is very interesting.

Excellent. TfW, lest anybody think otherwise, I think is doing a great job. It had a difficult start, but actually some of the innovations that it's bringing in are really, really worth while, and in particular an integrated ticketing system. You've just appointed a chair of TfW, Vernon Everitt, who used to work for me at Transport for London. You couldn't have got anybody better. He did all the development work on Oyster and pay as you go. But an integrated ticketing system that is tap on, tap off, where you're guaranteed to get the best price, where it's easy to travel, will do no end of good for Wales, not only in terms of patronage on the railway but in terms of the way in which the transport system serves Wales. I think it's a really good thing, and, actually, the faster you go, the better example you can set to the rest of us, and we'll get on with replicating it.

Excellent. Okay, we're drawing to an end now. Just a couple more questions, I think. Janet, you wanted to come in.

Do you recognise the difficulties, though, involved for the Welsh Government in delivering an integrated transport network with limited influence and control over the development of Welsh rail infrastructure?

I've recognised the difficulty in the past, when the UK Government was not minded to invest in Welsh railway infrastructure at all. I think what we've been discussing this afternoon is a position where, actually, there is both investment coming now, there's the prospect of more in the future, and, if we use the Wales rail board properly, then Wales will be able to put forward future enhancements that have decent business cases that get near to or at the top of the list for future spending reviews. I think that's the real difference that we're discussing today.

Thank you.

So, are we looking at potentially giving Wales its own periodic review process then, as in Scotland? Is that something that's being pursued?

No, the nature of the devolution agreements for Wales and Scotland are different. But I think what I'm describing is a process where this Government is committed to both real investment now, enough extra money in order to start producing business cases for the future, and the use of the Wales rail board at a very senior level in order to guide and decide which of the investments are most worth doing and to put them into an RNET plan, which much better will ensure that they get proper consideration and get funded in the future.

Fine. Okay, thank you. Now, Wales and border rail services on the Welsh Government-owned and operated core Valleys lines of course perform better than those owned by Network Rail. So, how do you respond to the suggestion that the Welsh Government is better at managing and operating Welsh rail infrastructure than the UK Government and Network Rail?

Well, the two things are very different. I've now seen the effect of the cumulative investment in the core Valleys lines, and I think it's very impressive, and I'm not surprised that performance has dramatically improved, because of the huge amounts of investment that have been made, and I think that Wales should be very proud of that, because it's a completely different railway than the railway 10 years ago. You can't easily compare the performance of high-intensity, relatively short services to main lines that are 400 miles or 500 miles long, and it goes without saying—lest that people in other parts of the country are listening—that not every enhancement that anybody else wanted to make on their railways has been capable of being done with the money that we've got available. So, I'm not surprised that the performance varies. I am expecting the performance of GBR to be better, because of the integration of infrastructure and operations, and I'm expecting future money to be better spent. [Interruption.]

I'm sorry. You might have to put up with this, because I can't actually stop it.

That's fine.

But you can't compare those two things. [Interruption.] It won't take long. [Interruption.] I do apologise.

No, it's reassuring to know that the systems work. That's fine.

I should have told you that that was going to happen. I hope it doesn't appear in the transcript of the hearing; it'll look very peculiar. [Laughter.]

So, what I was saying was that I think that Wales should be really pleased with the investment in and the performance of the Valleys lines. I think that they are different, because of the nature of the network, from other parts of the UK rail network. We aspire to better performance everywhere, which is one of the reasons for GBR, but I don't think it's directly comparable, simply because the nature of the network is so different, and also the level of comprehensive investment has been so great.

Thank you. I think that's probably a good place for us to finish this session. Can I thank you, Lord Hendy, very much for your attendance this afternoon? We very much appreciate the evidence that you've shared with us. It'll greatly enrich our consideration of the situation here in Wales, and we certainly do share, I think, that aspiration that you outlined at the end for better services. You will, of course, be sent a copy of the draft transcript to check for accuracy and to check whether that interjection from the test of the fire alarm will be included, but, with that, can I sincerely say diolch yn fawr—thank you for being with us this afternoon?

Thank you for all of your time. Thank you. And I would say, through you, thank you for the very constructive engagement that we've had here with the Cabinet Secretary about both the railways Bill and the future of railways in Wales.

Indeed. Excellent. Diolch yn fawr iawn. Thank you for joining us.

Thank you.