Chancellor John Healey has confirmed in his Budget a £30m funding allocation towards the Cardiff Parkway mainline railway project. The scheme, which has planning consent for four platforms, will be delivered by Transport for Wales, working in partnership with Network Rail, the Welsh Government, the UK Government and its Department for Transport (DfT).
The station, which is on undeveloped fields on the east of Cardiff, is aimed at boosting development in the area and attracting major employers. It was not originally planned as one of the Burns stations, which are hoped to reduce pressure on the M4 and wider road network by allowing connections between residential areas along the south Wales mainline and the centres of Cardiff and Newport.
Funding and Delivery
Parkway will now be delivered alongside the first of the Burns stations at Undy and Magor. This was one of the five stations recommended by the Lord Burns Commission, established by the then Labour Welsh Government under Mark Drakeford to improve public transport following its decision not to proceed with a £1bn M4 Relief Road in 2017.
The first allocation of funding for Parkway, on the outskirts of Cardiff at St Mellons, will come from £455m announced last year for rail projects in Wales over a four-year period by former Chancellor Rachel Reeves in the current spending review period. After accounting for items such as £90m to help develop new rail projects, £77m towards upgrading Cardiff Central station and improvements to the relief lines on the South Wales Main Line, around £300m remains for rail enhancement projects in Wales over the period.
There is currently insufficient funding from the UK Government for the other planned Burns stations at Newport Road in Cardiff and Llanwern, Newport West and Somerset in Newport. Rail investment is not a devolved responsibility. Those projects remain at an early design and pre-planning stage.
Political Commitment and Private Sector Role
In the run-up to the Senedd election, then Prime Minister Keir Starmer said he was committed to funding £14bn of identified rail projects in Wales, although he did not specify a timeframe. However, that was a political commitment rather than a funded programme, and it does not constitute a formal funding allocation from the Department for Transport and more importantly the Treasury.
The next spending review, which is under way ahead of its publication next year, will be the acid test of the UK Government’s commitment to addressing decades of underinvestment in new rail projects in Wales. Private-sector funding for Parkway has taken the project through planning and land assembly, as well as covering the additional costs associated with the Welsh Government’s insistence on two public inquiries.
The Budget document states: “£30m to progress delivery of Cardiff Parkway railway station, working with the Welsh Government and the private sector to enhance the growth potential of the Cardiff Parkway development.”
Project Costs and Development Plans
Plaid Cymru were looking for the Chancellor to commit at least £1bn for rail investment in Wales in his Budget. The Cardiff Parkway station project with four platforms was previously estimated to cost around £120m. Its cost is now being reassessed. As Transport for Wales is to deliver the project, the original funding model - which would have involved securing private finance against long-term car parking income and TfW taking a long-term lease to operate the station - has been shelved.
The Welsh Government’s Transport Minister, Mark Hooper, recently confirmed that Cardiff Parkway and Undy and Magor were being prioritised as the first Burns stations. The proposed integrated business park at Parkway will be delivered by Cardiff Parkway Developments Ltd, which is majority-owned by financial services giant Investec. The other equity holders are the Roberts family and the Welsh Government, which has a 10% interest.
Rolls-Royce has appraised the site and considers it to meet the key requirements for a major hub investment, underpinned by the availability of a railway station and the security offered by a location outside the city centre. Its submarine division already has a satellite office nearby at St Mellons Business Park. If Rolls-Royce were to invest at Parkway - and it is understood to be evaluating a number of sites across the UK - the development could create thousands of highly skilled jobs.
Chairman of Cardiff Parkway Developments Nigel Roberts said: “I welcome the Chancellor’s shout-out on Cardiff Parkway, and we are working hand in glove with the Welsh Government, Transport for Wales, Network Rail, the UK Government and DfT to ensure the speedy delivery of this game-changing project.”
Investment Zone and Business Rates
Parkway is included in the newly established investment zone for the Cardiff Capital Region, which will receive £160m in UK Government funding over the next decade. The zone’s other elements include Imperial Park in Newport, which is home to leading commercial players in the cluster, including Vishay Intertechnology, IQE and KLA, as well as part of the adjoining Tredegar Park, which houses the Office for National Statistics.
The third element covers the Central Quay regeneration scheme, south of Cardiff Central railway station, and the Atlantic Wharf project in Cardiff Bay. Alongside a new indoor arena, the latter includes a masterplan for up to one million square feet of mixed-use development. However, in terms of the additional business rates generated within the zone, the city region will be able to retain only 50% for reinvestment, with the Welsh Government receiving the other half. This contrasts with UK Government-backed investment zones in England and Scotland, where 100% of business rates generated within zones can be retained.
Cardiff Capital Region, which has lobbied for 100% retention, is exploring the possibility of funding projects within the zone by borrowing against anticipated future business rates through tax increment financing. However, the scope for this approach will be limited by the Welsh Government’s current business rates retention policy. The Parkway business park could use tax increment financing to fund the necessary infrastructure works, which are expected to run into tens of millions of pounds.
In his Budget Mr Healey also announced £2.5mn to expand the M-SParc science park in Anglesey, North Wales, subject to business case, delivering additional space and support for SMEs. Article continues below £20m to support UK reindustrialisation and high-value jobs in AI hardware, building on existing strengths in semiconductor clusters including South Wales; and £11m to replace the Port Talbot Aberavon Bridge.
