Railway Infrastructure in Wales Contents

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5The implications of Covid-19

Financial effect

108.Covid-19 has had a profound impact on the operation of rail services in Wales. On 22 October 2020, the Welsh Government announced the nationalisation of TfW rail services from February 2021. Ken Skates MS said that the Welsh Government had decided to act to “stabilise the network and keep it running” as the Covid-19 pandemic had “significantly impacted passenger revenues”.164 Simon Jones from the Welsh Government explained to us that “the funding model for our franchise” had “completely fallen apart”.165 Mr Jones noted that the arrangements in Wales are now similar to those in Northern Ireland and some parts of England and explained:

We were reliant on 50% of the revenue coming from passenger fares. That dropped to less than 5% at one point at the height of the first lockdown. [ … ] It broke the financial model, and it was unsustainable, frankly, for the operator to stay in place.166

109.Whilst it is possible to quantify the immediate impact of covid-19 on rail services it is more difficult to evaluate the long-term impact on the rail network’s infrastructure requirements. The full economic consequences of the pandemic have yet to be realised and there is not yet a sense of the extent to which this could limit spending on infrastructure projects. The Rail Freight Group, however, did express concern that the budget for rail enhancements which would benefit freight could be negatively affected by the reduction in passenger traffic and income.167 The Rail Industry Association argued that “continued and accelerated investment in rail” is required to “support economic recovery and achieve the UK Government’s aim of ‘building back better’”.168 Professor Stuart Cole pointed to research which suggested that “it is expected that 80% of previous demand will return”.169

110.Efforts should be made to develop synergies between climate mitigation efforts, such as protecting against rising sea-levels, and measures to protect transport infrastructure. Noting that significant Welsh transport infrastructure lies either adjacent to the coast or runs along valley lines (often alongside rivers), we believe there are significant opportunities to link efforts and budgets to protect transport infrastructure to wider community protection.

Demand for rail services

111.James Price, the Chief Executive of Transport for Wales (TfW), said there was potential for rail and sustainable transport to be used more “aggressively” than before, especially in relation to climate change and emissions.170 Railfuture Cymru told us that although “it is likely that peak travel will fall” they anticipate that “off peak travel will not be subject to reductions of the same order”. They said that the pandemic should not be used as a pretence for “long term cancellation or delays to rail investment, which must be enhanced as part of the national drive towards more energy efficient carbon neutral transport.171

112.Commenting on the de-facto nationalisation of rail services in Wales, Chris Heaton-Harris MP said he “would certainly never criticise” TfW and the Welsh Government “for doing what it believed right for its franchise”.172 The Minister said that “[f]ranchising is essentially gone, dead in the water” and that the UK Government was now attempting to evaluate how the passengers would respond in a post-pandemic environment.173

Conclusions

113.COVID-19 has posed an unprecedented challenge to the rail network and rail operators across the UK. Significant investment has been required from governments to keep services operational at a time when many workers have had to work from home as a consequence of the pandemic. The medium to longer term implications of the pandemic for work habits, namely whether it will result in a permanent shift towards working from home, at least on a more frequent basis, are hard to predict at this stage. However, what has not altered as a result of the pandemic is the long-term need to decarbonise, improve air quality and reduce congestion by moving passengers away from cars and towards public transport on key routes such as the corridor between Newport and Cardiff.

114.We are concerned that Covid-19 should not be used as a pretext for halting investment which, in the long term, would only further cement the car as the transport mode of choice in Wales. Instead this should be an opportunity for the Department for Transport, Welsh Government, Transport for Wales and Network Rail to take stock and consider the role of rail Wales’s future transport network. Using the Wales Rail Board we have recommended, this process should:

• establish immediate infrastructure investment priorities;
• consider how passenger services can be improved without inadvertently reducing freight capacity; and
• determine on a route by route basis what improved services will mean for passengers in terms of frequency, speed, and cost.