Two Great Western Stories

A couple of things to do with the Great Western rail link between south Wales and London caught my eye. The first is Vaughan Roderick's post today on the electrification of the line.

In short, there have been some persistent rumours that the Tories will scrap the electrification when they are in power at Westminster, as part of their programme of spending cuts, and in an attempt to reduce the levels of public borrowing. And even that Labour, by approving the scheme, were more concerned about setting a trap for the Tories than actually delivering the electrification. His point was that this line must go through at least a dozen marginal constituencies that the Tories would hope to gain, so the Tories would be fools to scrap it.

It's a fair point. However when the scheme was announced, Lord Adonis did make it particularly clear that this would be a self-financing scheme ... that the investment cost would be recouped within 40 years because electric trains are cheaper to maintain than diesels. So I don't think so much depends on today's report from Network Rail. It simply needs to confirm that these sums do indeed add up. What then needs to be nailed down is the mechanism to support that borrowing. If Network Rail simply borrows through the government, it will go down on the books as public borrowing, so the danger is that this electrification could be steamrollered by a Tory party that is so focused on reducing borrowing for headline reasons that it fails to see the detail, and merits, of this particular scheme. £1.1bn is too juicy a cherry to ignore if they end up struggling to meet a self-imposed target for borrowing reductions.
 

The second story that crossed my eye was a debate in the Commons yesterday on the redoubling of the short, 21km stretch of line between Kemble and Swindon. The Hansard record is here.

Redoubling is generally considered desirable, if not essential, as a back up for services to south Wales (the Severn Tunnel is closed for maintenance one day a week) as well as allowing a much better daily service from Gloucester and Cheltenham to London. As Elfyn Llwyd said:

I congratulate the hon. Gentleman on obtaining time for this important debate. He realises that we in Plaid Cymru have no designs on Swindon, but the impact on south Wales would be severe if there were no redoubling. I remind him that an emergency such as a crash or a tunnel collapse would also have a severe impact. More to the point, redoubling would mean an hourly service for 17 hours a day between London and south Wales, which would be important economically. What he is saying has broad acceptance and goes much wider than the Swindon area.

The gist of the story is that redoubling will cost between £50 and £60m. £20m is available from the Regional Funding Allocation, and at least £20m (perhaps £30m) would be available if the money saved by scrapping the nearby Westbury bypass was vired (i.e. transferred) to this scheme instead. But it still leaves a shortfall of something like £15m.

The government minister who answered the debate was Chris Mole. His line seemed to be that yes, it's a good idea ... but the government have no idea where the money is going to come from. The problem is that the £20m RFA can't be carried over, and will just go back to the Treasury if it is unspent, and similarly the money that was allocated for the Westbury bypass. So it's a question of "use it or lose it". A decision needs to be made quickly.
 

Both stories highlight just how inadequate funding arrangements for infrastructure in the UK are. Both these schemes are very important for both SW England and Wales, but it is only central government that can release the funding. Even if the local economic case is overwhelming, such schemes can only go ahead at the "grace" of central government.

So for the sake of £15m or so of funding (the interested parties, including of course the Welsh Government, have commissioned a detailed study from Network Rail, which is due out in December) we are in danger of losing a £50m or so project. With good will on all sides perhaps the money can be scraped together from various budgets. But that remaining £15m could probably be raised very easily if the Welsh Government, or the south west of England were allowed to borrow.

It's simplistic, but nonetheless true, that there is "good" and "bad" borrowing. Good borrowing pays for itself in the longer term, and should be used for things like infrastructure improvements. In this situation, the Welsh Government does at least have a large budget, and so could probably afford to bridge this funding gap out of the block grant. But it is madhouse economics because there isn't any mechanism by which we could recoup the investment. We would just be giving our money to that part of England because the UK government wasn't prepared to do it instead. The sad thing is that we might end up having to.
 

But perhaps there is one way out of the impasse, which neatly draws the two strands of this story together. When the electrification work is done there is bound to be disruption, and that will especially be true when the Severn Tunnel is electrified. An extra £15m is peanuts compared with the £1.1bn cost of electrification and could easily be included in it. It could be justified as work necessary to minimize disruption to services, and I'd be very surprised if there weren't other items of a similar nature in there already.

It just needs joined-up thinking.