The UK government has admitted that Welsh railways have been underfunded in recent years. For anyone familiar with Welsh politics, this is no revelation, with railway funding—in particular with relation to the funding of HS2—proving to be a topic of contention in relations between the Senedd and Westminster. The statement came in the form of a letter by UK Transport Secretary Heidi Alexander to the First Minister and Welsh Transport Secretary Ken Skates. In a committee meeting with Welsh MPs, Welsh Secretary Jo Stevens reiterated this sentiment, announcing that her priority for the upcoming spending review was to ensure that “Wales receives its fair share of funding [in order to] tackle the historic underfunding in rail infrastructure”, attributing this deficit to fourteen years of Conservative rule.
Welsh railways are funded in two ways: rail infrastructure is funded and owned by Network Rail, meaning that levels of funding and decisions on new routes are not determined by Wales, but directly by Westminster; the operation and management of rail services, however, is overseen by the Welsh government through Transport for Wales. The budget of the Welsh government is determined by the Barnett Formula, wherein the UK Treasury calculates the percentage by which a policy area is devolved to Wales, multiplied by the increase in funding received by the equivalent department in Westminster.
HS2 was particularly controversial, as the Treasury designated it as an England and Wales project, meaning both countries would benefit from its construction and Wales would not receive an associated increase in funding. In contrast, Northern Ireland and Scotland did receive extra funding from the Barnett Formula. Treatment of areas of infrastructure under the jurisdiction of Network Rail have also led to claims of inadequate funding for Wales, with only 2% of Network Rail’s rail enhancement project spending targeting Welsh lines, despite the country having 10% of the total rail network.
This move is likely to be linked to a desire by UK Labour in Westminster to ease relations with Welsh Labour in the Senedd, who have faced pushback from UK Labour for their calls for the devolution of justice and policing to Wales and the payment of HS2 consequentials. Earlier this month, First Minister Eluned Morgan spoke to Sky News, talking about her efforts to lobby Keir Starmer for increased funding for Welsh rail infrastructure, with a hope of seeing extra funding prior to the May 2026 Senedd elections.
The exact size of any extra funding the UK Government may grant is unknown, with estimates of the funding deficit ranging from £4 billion (according to Plaid Cymru), £500 million (according to Cardiff University’s Wales Governance Centre), and £350 million (according to to the Welsh Government itself). Despite the disagreement on exact figures, the underfunding of Welsh railways is a bipartisan issue, with the Welsh Conservatives, Welsh Labour, the Welsh Liberal Democrats, and Plaid Cymru all previously criticising the UK Government for its provision of devolved finances.
This admission and pledge by UK Labour suggests that having a Labour government in power in Westminster gives the Welsh Government greater bargaining power than it held against a Conservative one. Opposition parties aren’t convinced, with the Welsh Lib Dems critiquing the letter for neglecting to mention Mid and West Wales, and Welsh Conservatives attacking Eluned Morgan for accepting “whatever scraps her counterparts in London throw our way”.
With a number of rail projects underway, notably the South Wales Metro—although one can dream of a North–South line—the Welsh Government will be grateful for this extra cash injection, though it remains to be seen what impact this will have on rail infrastructure in Wales.