You can almost hear the sirens going off all over Wales. Emergency, emergency, this is not a drill – because the hunt is on for oven-ready infrastructure projects.
In his 23 November Autumn Statement, chancellor of the exchequer Philip Hammond is expected to announce a series of investments designed to take the fiscal sting out of Brexit. Up to £40bn could be allocated.
Theresa May’s government is preparing a mighty about-turn in economic policy and it is one urgently needed in Wales. The country is western Europe’s poorest nation and the one most dependent on European Union funding. So does South East Wales have the infrastructure projects that central government needs?
Answering that is where the problems begin. The South Wales Metro is going nowhere fast, the M4 relief road is trapped in a political tailback, and the City Deal is in administrative limbo (see below).
For those with big sites linked to the Metro, this is worse than frustrating. Cardiff’s expansion into new settlements such as Plasdwr, the largest of the strategic housing sites offering 7,000 homes on land owned by Earl of Plymouth Estates and developed by Redrow; and Junction 33, where 2,000 homes are planned on a 191-acre site, mostly delivered by Persimmon.
Gareth Hooper, Cardiff-based chief executive at planning consultant DPP, says developers don’t know whether to include Metro station and track alignments or not.
“The Metro is far from oven-ready, and there are housing sites in North Cardiff included in the local development plan predicated on new public transport including the Metro. But there’s so much uncertainty.”
Persimmon sounds frustrated about the fate of its Junction 33 site. Director Martin Smith says of the uncertainties: “It lead to a delay at the start of the planning process in 2014/15. We left a 2.4m strip of land which will safeguard the provision of the Metro. Until the Metro is established, this land will be a grassed verge. If the Metro never materialises, or it is decided that it will be ‘on road’, it might mean that this land is never utilised and is therefore lost for development purposes.” And that of course means a substantial loss of revenue.
Redrow prefers not to comment, but Andrew Gardner, managing director at Cooke & Arkwright, makes it clear that uncertainty is nobody’s friend.
“Ideally you would have the infrastructure first, then the development sites, but life doesn’t work like that,” he says. “The fact is that housebuilders want to get on with building, and introducing infrastructure projects that delay progress creates frustration. And you can be forgiven for asking if these infrastructure projects will ever happen.”
Habitual bigging-up by politicians is blamed, along with the technical problem that projects approaching £1bn stretch the political and financial capacity of the Welsh government.
The obvious direct consequence of slow progress on projects such as the M4 relief road and the Metro is that South Wales property values are depressed, which means less incentive to invest.
Peter Constantine, regional senior director at Bilfinger GVA, says: “The M4 relief road would be a huge stimulus, but we’ve lived without it for so long, it’s hard to point to specific hardships it creates. It probably depresses property values because occupiers would rather locate west of the traffic hold-ups in Bristol, than east in Cardiff.
“Improve the transport, you see better values, and more investment, better buildings and more of them… it’s chicken and egg.”
Alison Williams, associate at Carter Jonas, believes this could be costing as much as £30 per sq ft on the capital values of second-hand industrial space – and that’s a big help for cost-conscious occupiers.
“The lack of infrastructure has had a massive impact on the capital value of industrial space. It is far cheaper and labour is more readily available than in nearby locations such as Bristol and its surrounding areas. This has proven to be a huge pull for businesses,” she says.
The paradox is that by improving the infrastructure, South East Wales may lose its price advantage.
“It could be a double-edged sword,” Williams says of resolving the M4 congestion problem.
Chris Sutton, lead director at JLL Cardiff and vice-chair of CBI Wales, says the UK government could help fund a few quick-win infrastructure projects – a £10m-£20m motorway junction improvement here, a relief road there – and some assurances on the big projects, particularly the Cardiff-Swansea electrification, would be welcome.
Yet Sutton also suggests the focus on infrastructure can become unhelpful. “The big factor is education and skills,” he says. “If you don’t have the skills, you won’t get the business, and creating a successful economy is about all these things.
“Yes, the EU funding issue is a problem, but it’s only 8% of the City Deal, and more important for us in Wales is access to the single market, and 10- to 20-mile queues on the M4 are having a corrosive effect on our economy.”
Frustration and anxiety are everywhere as the (Mrs) May Day sirens sound. Whether Wales secures the quick wins and long-term assurances it seeks is as uncertain as ever.
Oven-ready in North Wales
A package of cross-border transport improvements is meant to boost the 12m cross-border commutes each year. A few million would improve speed and reliability on the key Wrexham to Bidston line; £750m would electrify the North Wales main line, and could promote 70,000 new jobs.
Ashley Rogers, chair of the North Wales Business Council, is leading the Growth Track 360 campaign. He says his plan is oven-ready. “We’ve a good mix of short-term, medium-term and long-term projects, and if the government gave us some funding to work up the longer-term plans, we’d have some quick wins like Wrexham-Bidston ready, too,” he says.
Projects going slow
Cardiff City Deal
The £1.2bn City Deal was announced in March, with a £743m allocation for the South Wales Metro at its heart. Seven months later, the governance arrangements – supposedly a cabinet of 10 council leaders – have yet to be put in place. With no one running the shop, the chance of rapid progress on the Metro, or the other £495m of schemes, is slender.
M4 relief road
Costed at £1.1bn, the 15-mile road is supposed to ease congestion at Brynglas. The plan has run into opposition from a range of political and environmental groups, and new rules on calculating traffic volumes. The result is that the public inquiry into the compulsory purchase orders has been pushed back to March 2017 – and there’s a long way to go before construction begins, pencilled in for 2018.
South Wales Metro
Initial bids for the first £3bn-£5bn contract, which will electrify the valley lines, closed in September. What comes next is far from clear because route alignments, connections with northern suburbs, even the form of propulsion (guided bus or trains on rails?) all remain debatable. (Also see: Cardiff City Deal, above.)
Cardiff-Swansea electrification
Some fear this has been shelved so funding can be spent on the Metro instead. The project has been pushed back as far as 2024, and may never happen because it has a low rate of return (just 5% of Swansea to London passengers use the line).
Projects going faster
Brynglas Tunnels
The 0.4km M4 motorway tunnel at Newport needs a major overhaul – and the good news is, it’s getting it. The bad news is that it will take until February 2018 to complete. Meantime a notorious bottleneck gets worse, although most of the refurbishment work is after dark.
Cardiff-London electrification
Work on the Severn Tunnel is now complete, and overhead wires appearing. Completion of the £1.2bn project is anticipated by mid-2019, improving journey times and reliability of Cardiff to London and Bristol services.
Eastern Bay Link Road
Work is now under way on the £57m half-mile link between the A4232 at Queens Gate roundabout and Rover Way at Ocean Way roundabout in Tremorfa. The road opens up the bay, the enterprise zone and some useful industrial/logistics land.
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