Engineering giant Rolls-Royce has appraised the scheme’s business park element as ticking all the right boxes for a major hub with the potential to create thousands of high-skilled jobs
(Image: Wilkinson Eyre)
The planned Cardiff Parkway new mainline train station at St Mellons in Cardiff is expected to secure a major boost from the UK Government.
The project, which secured planning permission last year from the Welsh Government, would be integrated into a business park that, over the long term, could see around 900,000sq ft of new employment space built – with the potential to support thousands of new jobs.
The funding is expected to be additional to the £445m announced by Chancellor Rachel Reeves in her three-year spending review last summer, which takes effect from April, for rail enhancement projects in Wales.
The Chancellor also referred to the Parkway project, although without a funding commitment, in her Budget back in November and again a month later at the Welsh Government’s Investment Summit.
In the spending review the UK Government in comparison has set aside £1bn towards development work for rail enhancement projects in the north of England, which over the long-term is expected to see investment of £45bn.
The Parkway announcement is expected to be confirmed alongside publication of Transport for Wales’ new vision document, endorsed by the Wales Rail Board, which will outline a pipeline of rail enhancement projects seeking further UK Government funding.
It is understood that the vision document, which was expected to published later this week, has been pushed back a few weeks. Projects included will be the removal of level crossings to speed up train times on the North Wales Mainline, increased services from Wrexham to Liverpool, and further phases of the South Wales Metro, where the £1.1bn electrification of the Core Valley Lines is close to completion.
Further investment is need to ensure four services per hour (currently just two) on the most densely populated parts of the network on the Coryton and City Lines that run through Cardiff.
READ MORE: Largest ever number of renewable projects in Wales backed in UK Goverment auction roundREAD MORE: Admiral invests in fund backing growth of UK mid-market firms
The Cardiff Parkway project is being driven by Cardiff Parkway Developments, which is owned by financial services giant Investec, the Roberts family and the Welsh Government, which has a minority 10% interest.
Due to the protracted time it took the Welsh Government to make a favourable planning decision – for which a number of previous ministers had little appetite to see approved – the cost of the train station element and required rail corridor investment has increased from the initial projection.
Work is still required on the final design of the station, as well as confirmation of the number of trains that could call there.
The station would serve some of the most deprived communities not only in Cardiff, but across Wales, including Trowbridge, Rhymney, Llanrumney and St Mellons.
The funding required for the train station and related road and utility infrastructure to serve the business park – where buildings would be developed on a pre-let basis – is around £180m.
Transport for Wales (TfW) would take a long lease to run the station, with a privately funded securitisation deal against future rents providing upfront capital. TfW’s leasing costs would be covered by increased rail ticket sales and car parking income.
More detailed work is required to assess the number of trains that could stop at the station, which in turn would impact car parking offset income.
For the business park element, as the site is included in the Cardiff and Newport UK Government-backed investment zone, some of the required infrastructure could be financed through tax increment financing.
This allows borrowing against future business rates generated by new companies attracted to the park.
Unlike investment zones in England where 100% of business rates are retained for further investment, the Welsh Government intends to keep half of the rates raised.
The zone will be overseen by the Cardiff Capital Region.
A simpler funding model for Parkway Station would be for Network Rail to take over ownership of the station itself, or potentially for Transport for Wales (TfW) to do so as a devolved asset.
This would allow Cardiff Parkway Developments to focus on attracting new investment into the integrated business park.
There is already strong interest from engineering giant Rolls-Royce, which has appraised the site as ticking all the right boxes for a potential new hub investment that could create thousands of high-skilled jobs.
It has appraised Parkway’s planned business park positively due to its own train station, access to a skilled workforce, nine universities across south Wales and the west of England, and the security afforded by a 200-acre site with close rail proximity to both Cardiff and Bristol.
The company has already established a satellite office at a nearby business park in St Mellons for its Submarines division, which will eventually create 200 jobs.
While it continues to assess the site for further investment, clarity around the station would only strengthen the case for a hub development.
Of the £445m announced last year by the Chancellor for rail enhancement projects, £90m is allocated for development work to build cases for further investment.
It also includes £77.87m from the Department for Transport for the upgrade of Cardiff Central Station.
The remainder of the cost, despite it being a non-devolved rail asset, will be funded by the Welsh Government and the Cardiff Capital Region. This leaves only around £300m from the spending review allocation for Wales.
The planned Burns stations between Cardiff and the Severn Tunnel – recommended by the Lord Burns Commission, set up by the Welsh Government after it decided not to proceed with the £1bn M4 Relief Road – have an estimated cost of around £70m each (with Magor expected to be lower).
As a result, there is insufficient funding to deliver all of the Burns stations, let alone other projects.
However, an announcement on Parkway would be a step in the right direction, although it would need to be followed by further fundingcommitments from the UK Government.
Speaking recently to the Senedd’s Climate Change, Environment and Infrastructure Committee, TfW chairman Vernon Everitt said the current spending review envelope of £445m for rail projects in Wales needs to be built on significantly.
