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A UK Government minister who said “something is amiss” with Wales missing out on HS2 funding has confirmed the nation will not receive a multi-billion-pound windfall.

Peter Hendy, UK minister of state for rail, gave evidence to the Senedd’s infrastructure committee today (October 16) – rowing back on his previous position on HS2.

Carolyn Thomas pointed to 2022 comments from Jo Stevens, now the Welsh secretary in the UK cabinet, who said it was illogical to designate HS2 as a Wales and England project and estimated Wales was owed £4.6bn in consequential funding.

The Labour Senedd Member also raised Lord Hendy’s 2023 comments that “something is amiss” with the way the Barnett funding formula is applied to HS2.

Lord Hendy replied: “At the time I made my previous comments, I wasn’t a minister in the government – now I am and… the whole way in which the Barnett formula and Barnett consequentials work is about the devolution statement and a matter for wider government.”

‘The facts haven’t changed’

Appearing to read from a script, the life peer added: “Heavy rail is reserved in Wales, so that any heavy rail scheme the department delivers should always be classified as England and Wales when the formula is applied, which includes HS2.

“And that’s different from Scotland and Northern Ireland where heavy rail is devolved and, therefore, they do get Barnett-based funding.”

Lord Hendy told the committee this is consistent with funding arrangements for all the other policy areas reserved in Wales but devolved in Scotland and Northern Ireland.

He said: “The context of everybody’s remarks on this was the previous UK Government had not in fact given enhancement spending in Wales in any meaningful way and this one is.”

He would not comment on changes to the Barnett formula but clarified none are proposed.

Delyth Jewell, Plaid Cymru’s deputy leader in the Senedd, said: “You said your previous comments on HS2 were made before you were a minister. We appreciate that – the facts haven’t changed though, have they?”

‘Fair and reasonable’

Lord Hendy replied: “It’s very possible to interpret the Barnett formula as people have in your position as being disadvantageous…. I think what’s changed is that this government has decided to commit a very significant amount of money to rail enhancements in Wales.”

Pressed further, he added: “I’m a realist and pragmatist,” reiterating claims of a change in context since 2023 with UK ministers announcing significant investments in Wales.

Asked whether Wales has received “fair and reasonable” investment in rail infrastructure, Lord Hendy said: “This government recognises that railways in Wales have recently, historically, seen very low levels of enhancement spending.

“That’s why we’ve worked really hard with the current Welsh Government to put that right.”

The politician argued the UK spending review and ten-year infrastructure strategy recognise Wales’ long-term rail infrastructure needs, with at least £445m earmarked.

Lord Hendy, who chaired Network Rail for nine years, claimed: “I don’t think we’ve seen anything like the commitment to railway infrastructure investment… in the spending review.”

‘Injustice’

Llŷr Gruffydd, who chairs the infrastructure committee, asked: “Do you understand people’s frustrations in Wales that they feel that there’s an injustice here? Because, obviously, they see consequential money going to other parts of the UK.”

Mr Gruffydd contrasted the £445m commitment with funding provided to regions of England which “firmly tells us we’re pretty much bottom of the table”.

Lord Hendy recognised frustrations but said: “Until recently, Wales got virtually no railway enhancement spending, now it is – so, I think that’s a significant improvement.”

Pressed about the £445m commitment being spread over a decade, the transport executive said the funding will cover new stations in south Wales and more services in north Wales. He stressed the fund is not constraining and it will be at least £445m.

He told the committee: “I think that actually –  out of a relatively limited total pot for England and Wales which is related to the state of the economy the government inherited when it took over a year ago last July – I believe this is a significant settlement.”

Asked whether the investment is enough to address historic underfunding of Wales’ railway infrastructure, Lord Hendy replied: “You have to start somewhere.”