Treasury issues HS2 funding update for Wales
If you were waiting for a categorical answer to what a Labour-led UK Government would mean in Wales, here is your answer. The Labour-led Treasury has confirmed it will not recategorise the HS2 rail project, nor pay millions of pounds in a consequential to Wales.
In her first Welsh questions in the Commons last week, Welsh secretary Jo Stevens was asked by Plaid Cymru MP for Dwyfor Meirionnydd Liz Savile Roberts about whether, having said in 2022 it was "utterly illogical" to designate HS2 as an 'England and Wales project, whether Ms Stevens' party would now "cough up".
Ms Stevens responded: "We cannot go back in time and change the way that project was commissioned, managed and classified by the previous Conservative Government. They need to accept responsibility for the chaos, delay and waste on their watch. What we can do, though, is work closely with our Senedd and local authority colleagues to develop and invest in transport projects that improve services for passengers right across Wales."
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Ms Stevens had refused to be drawn on the issue in the wake of her party's election victory. After Welsh questions, we asked the Treasury if it would revisit classification and or pay the consequential.
A spokesman confirmed: "We will not revisit the classification and we therefore will not adjust their Barnett funding."
They added: "The UK Government is responsible for heavy rail infrastructure across England and Wales so spends money on this in Wales rather than funding the Welsh Government to do so.
"This approach has always applied and will continue to apply to our investment in HS2 and is consistent with the funding arrangements for all other policy areas reserved in Wales as set out in the statement of funding policy."
HS2 has been one of the most-discussed issues between the UK and Welsh Governments.
HS2 project was designated an "England and Wales" scheme by the UK Treasury under the David Cameron administration. It meant it did not trigger the Barnett Formula - where the Welsh Government gets money as a result of UK government spending money on projects in England that are devolved in Wales.
Scotland and Northern Ireland did both get consequentials but Wales did not, with the justification being that Welsh people will benefit from improved journey times to London due to changes at Crewe. No track for HS2 was ever planned to be built in Wales. However, last October, then Prime Minister Rishi Sunak announced the cancellation of the parts of HS2 from the midlands to Manchester.
There has been a debate about exactly how much Wales has lost out on. Plaid Cymru had said it could be as much as £4bn, but earlier this year, Wales' then finance minister, Rebecca Evans, said the amount Wales had lost out on was £350m.
She told the Senedd: "£350 million has been lost to Wales as a result of the misclassification of HS2. We’ll continue to press the UK Government – any UK Government – to reclassify HS2 as an England-only project and to provide us with our fair share of the consequential funding."
Mrs Evans explained: "When we first saw the HS2 project, as originally envisaged, then we could be looking at those higher figures, in the billions of pounds, and we've used them ourselves as Welsh Government. But as the project became smaller and smaller, and looking at what's been delivered over the period since the project started, then the figure, I don't think it could be argued, is £350 million."
In October 2023, Mark Drakeford had said his government was considering all options, including possible legal action over Wales not receiving additional cash due to spending on HS2 in England.
The following year, in the Senedd, Mr Drakeford - then First Minister - said: "If, as we keep reading, HS2 is to be cancelled from Birmingham to Manchester, then the fiction on which the UK Government has relied that, somehow, that line is of advantage to Wales will be completely exploded. At that point, we need to have the Barnett consequential of the money that has been spent to date".
After Rishi Sunak scrapped the rail scheme, Mr Drakeford said: "The UK Government now needs to step up and give Wales the money we are already owed from this failed project."
A Welsh Government spokesman said: “We are working with the UK Government to ensure a fair approach to the application of Barnett in relation to rail funding and we would welcome a review of comparability with the Department for Transport and of the Network Rail Investment Pipeline processes. We will work closely with the UK Government to develop an agreed pipeline of rail infrastructure investment across Wales, including improvements for north Wales, via the Wales Rail Board.”