At the end of last week, Westminster decided that, over the five years from 2019 (known as Control Period 6 or CP6), the Scottish Government should be given £3.6bn for the development and maintenance of the Scottish rail network. Sounds like a lot of money, doesn’t it? After all, as the Westminster tells us, it is a 20% increase on the previous five years (or CP5).
But the Scottish Government are not happy with the settlement as they believed they should be getting £4.2bn. So, what’s the justification for their claim?
Well, first of all, there’s inflation, which eats up about 12% of the increase. So just to keep up with inflation, the CP6 requirement would be £3.36bn. That means £3.6bn settlement represents only a 7% real terms increase, not the 20% figure that Westminster are keen to talk about.
Perhaps the comparative figures for England and Wales can shed some more light on the Scottish figures. During the current 5 year period (CP5), Network Rail were given £24.5bn for development and maintenance of the network in England and Wales and this has risen to £34.7bn for the next 5 years. That represents a 42% increase in gross terms and a more than 26% increase in real terms, dwarfing the Scottish figures. Actually, the difference is much worse that even these numbers suggest, as the much higher population density in England and Wales means Network Rail can get a much higher level of income from passengers than is possible in Scotland.
Historically, the proportion of Westminster rail spending going to Scotland has been 11.17% of the UK figure, based on the size of the network in Scotland compared to the level of population. This was put forward by the Office for Rail and Road (ORR), the independent rail body, as part of the original settlement when spending power on rail networks was devolved in 2005. As can be seen from the figures, the settlement of £3bn for Scotland for the current period represented 12.2% of the England and Wales figure or 10.9% of the UK total, whereas the proposed settlement of £3.6bn for 2019 represents 10.4% of the England and Wales figure or just 9.4% of the UK total. Perhaps you can see now why the Scottish Government are unhappy. Their requested figure of £4.2bn for CP6 would have been 12.1% of the England and Wales figure or 10.8% of the UK total, similar to the CP5 figures, though slightly lower.
It seems as if the Scottish Government are justified in their expectation of additional funds. The reduction of £600m appears to be part of a deliberate decision by Westminster to reduce Scottish rail funding from the historically agreed 11.17%, based on the size of the network, to a figure closer to a population share of 8.4%.
Yet another blow to “pooling and sharing”? The broad shoulders of the UK again seem to have developed a distinct slope when it comes to returning money generated in Scotland to the Scottish Government for devolved matters.