Fri Nov 21, 2014 1:17 pm
The operating costs may be lower, but I don't think the fares will - they are relying on an increase in revenue (perhaps through more passengers) and a fall in operating costs to fund the Welsh Govt's contribution to the project.
I'd say the UK government won during these negotiations - even though they contributed £125 million (I'm not gonna count the £105 million for the Cardiff-Bridgend section. That had to be done for the London-Swansea electrification anyway, so it would be double counting the UK government's contribution).
Why? Because this always should have been 100% funded by the UK government in my view. It passed cost-benefit analyses that Dept. for Transport uses for funding projects. And rail infrastructure investment is not something that is devolved - the Welsh government gets no block grant to cover it, the Transport Department's budget is meant to cover Wales too.
The counter-argument is that investment in electrification will reduce operating costs and boost revenue, which will reduce the amount of subsidy that needs to be provided to Arriva Trains Wales. Wales will pocket this reduced operational subsidy (rail 'resource' spending is devolved even though rail 'capital' spending isn't), so should make a contribution to the investment. Otherwise it is pocketing the savings but not picking up any of the tab.
However, I think the likelihood is that it will increase demand on rush hour services more than "leisure time" services. Rush hour services are already overcrowded so new services will need to be provided. This might require extra subsidy: operating cost per service falls, but extra services need to be run, which might not be fully covered by extra revenue. The UK government has pushed all the risk of this on to the Welsh Government's budget, which is a little unfair given limited borrowing and taxation powers.
Ultimately, I think the current half-way house of rail devolution is not sustainable. It should be fully devolved, with Wales getting a population share of the Network rail grant (as Scotland does), or it should be fully undevolved.