£1bn funding row threatens 'right deal' for Welsh rail

A £1bn funding row could lead to a rushed job in getting the "right deal" for the future rail network in Wales, a leading transport expert has warned.

The UK government has threatened to put bids for the Wales and Borders franchise on hold amid a dispute with the Welsh Government.

But Prof Stuart Cole said any delay could leave ministers just three months to secure the right deal.

He said the deal was "complex" as it included the new South Wales Metro.

Meanwhile Welsh Conservative leader Andrew RT Davies claimed the Welsh Government was not "up to speed" on arrangements for taking control of the franchise.

The Wales and Borders franchise - which is one of the UK's most heavily subsidised, receiving between £110m-£160m a year - has also seen passenger numbers rise from 18 million in 2003 to 30 million.

It runs most of the passenger rail services in Wales, including the south Wales valleys network, the north Wales coast line, rural services, and mainline services between Wales and major English cities, except for inter-city services run by Great Western Railway and Virgin Trains.

The bidders for the next franchise are Abellio, Arriva, KeolisAmey and MTR and they had been due to submit tenders on 18 August.

In a leaked letter, released on Sunday, the UK Secretary of State for Transport Chris Grayling said he wanted the date moved back to 26 September while a dispute over who gets cash for rail improvements is settled.

• What's wrong with Wales' trains?

The current operator of the network, Arriva Trains Wales, pays an annual rebate of about £67m to the Department for Transport (Dft) - which is then given to Network Rail for improvements. It amounts to about £1bn over the 15-year course of the contract.

But the Welsh Government say it should get the cash when it gains responsibility for the franchise when it is devolved to Wales from 2018.

Chris Grayling told Welsh Transport Secretary Ken Skates he could not "cut corners" before he approves the tender stage proceeding

Prof Cole, professor of transport for the University of South Wales, told BBC Radio Wales' Good Morning Wales the funding row could push back the handing of rail powers to Cardiff Bay to September.

He said this would leave the Welsh Government with just three months to secure the deal for the 15-year contract - if it wanted to announce the winner in January and taking Christmas out of the equation.

"It's not just a very simple franchise as normal - there's also things like electrifying the valleys line to really work out" he added.

He said there were "complex elements to do with infrastructure and not just running the trains" that needed to be worked out as part of the deal and he was concerned getting it wrong could affect rail passengers.

"We have to have the right franchise this time," he added.

"We didn't get it right last time [with Arriva Trains Wales], we need the right franchise and that will take, in my view, more than three months."

Prof Mark Barry, of Cardiff University, tweeted that if the funding issues were not resolved there would be no South Wales Metro or Cardiff City Deal.

When the Wales and Borders franchise was awarded by the UK government in 2003, the current contract with Arriva was based on zero growth in usage. That means the route has the same number of trains it had when it began operations - something which has been regularly criticised by train passengers.

A Welsh Government spokesman said the DfT's approach "jeopardises the Welsh Government's ability to award a replacement for the current Wales and Borders franchise, which, if unresolved, will be a major issue for rail users".

He added: "Being willing to subject people to the prospect of continued overcrowding and poor quality rolling stock to resolve a budgetary issue of their own making is no way for the UK government to behave."

A DfT spokeswoman said: "We remain committed to the principles agreed with the Welsh Government in 2014 to devolve rail powers."