Climate Change, Environment, and Infrastructure Committee

Wel, croeso nôl i chi i gyd i'r pwyllgor. Rydyn ni'n symud ymlaen at yr eitem nesaf, lle byddwn ni, wrth gwrs, yn cynnal sesiwn graffu olaf y Senedd hon gyda Thrafnidiaeth Cymru. Dwi'n estyn croeso cynnes iawn i Vernon Everitt, y cadeirydd, aton ni, hefyd James Price, y prif weithredwr, a Heather Clash, prif swyddog cyllid, llywodraethu a gwasanaethau corfforaethol. Croeso i'r tri ohonoch chi. Rŷch chi'n gyfarwydd â'r broses erbyn hyn. Mae gennym ni, fel roeddwn i'n dweud, awr a hanner ar gyfer y craffu yma, felly gwnaf i gychwyn, os caf i.

Mae gennych chi, wrth gwrs, lythyr cylch gorchwyl, remit, ar gyfer tymor y Llywodraeth yma, neu tan 2027, beth bynnag. Efallai wrth jest edrych yn ôl ar gynnydd o safbwynt delifro elfennau o hwnnw, beth fyddech chi'n dweud rŷch chi wedi ei wneud yn effeithiol ac efallai ble mae yna heriau neu risgiau?

Diolch yn fawr, Chair. Bore da to you and members of the committee. If I may, can I start with just some high-level reflections on your question? I think what we've tried to do, with reference to the remit letter that we've got up to 2027, is to continue to bear in mind that transport enables everything else. It's not an end in itself, it's there to deliver economic growth, connect people to homes, jobs, opportunities, tackle social exclusion and so on. So, that's been a core theme that has run through each element, really, of our remit. And I would say that solid progress has been made against the remit. We would be the last people to say that it's perfect. This is a garden that needs constant tending, and it will do in future Senedds as well. But I think that there has been solid progress on performance.

Journeys on Transport for Wales rail services are up, and in fact they're back to at or nearly above, I think, James, pre-COVID levels. Revenue is up as well, both on the rail network and on the bus network. Performance, especially on the CVL—the core Valleys lines—has significantly improved. And, actually, when you look at the CVL relative to other train operating companies, we're in the top echelon now of performance on the CVL. The same cannot be said of everywhere else on the railways, and maybe we can get into that a bit later on. So, there's a lot of work to do there.

There remain, however, huge challenges for James and the team, and the board. That especially relates to bus franchising, where there's an enormous amount of work to do to land bus franchising so that every part of the country feels the benefit of bus franchising. And we're going to continue to focus on performance, on safety, including the safety of women and girls, which has got a specific focus at the moment.

We are looking at our rolling stock—finishing off the CVL, getting the 398s actually out onto the railway, getting them into passenger service, getting those toilet provisions sorted out across the CVL, landing everything on network north Wales. And as you mentioned in your introductory remarks, Chair, there's a huge agenda for rail infrastructure investment and the reform side of railways across the country. We're also, from a board perspective, working with James to seek that the organisation of Transport for Wales is able to cope with that work, those new responsibilities. We're confident that they are, but it's going to require a constant focus on the resilience of the organisation, and the capability of the organisation, having the right skills within the organisation.

So, they would be my high-level reflections, Chair, on performance against the remit. It's one of solid progress, but continuous improvement is required.

Thank you very much. You referenced the board there. During your pre-appointment hearing, you told us that you had some ideas about potential changes that you might want to make to the board's approach. Could you update us somewhat on what might have progressed in that space?

Yes. So, one of the things I committed to was to take the board around the country and have meetings in different parts of Wales. Since I last saw you, we've held board meetings in Carmarthen, Wrexham, Llandudno, Newport and Pontypridd. We're shortly to go to Shrewsbury, given the importance of the Marches. And we will then go on to Machynlleth, and Swansea as well. So, we've got around, and we will continue to get around.

I think the really beneficial part of that is that we've invited local councillors, corporate joint committee members and others to come to those boards, so that we can have a session and get a blast of local reality about what their constituents are actually contending with. So, that I think has been enormously helpful, for all members of the board. We talked in detail about bus franchising, the network north Wales, Burns—all sorts of stuff that is helping us make sense of what the different needs are of the communities around the country.

So, we've done that, and we'll continue to do that. And the board itself, actually—again, reflecting on the period of this Senedd—has evolved enormously. The original members of the board have served their two terms and have rolled off. So, we've got pretty much a new board over the last 18 months, and my predecessor and I have been very thoughtful about who and what skills we need around the board table.

So, we've recruited a number of new board members. There is one more space on the board that I've decided to hang on to until after the elections, and after we've done a full audit of the board's skills and capabilities, just to make sure that we use that final place to round out the board. I hope that helps, Chair.

Yes, absolutely. Joyce, did you want to come in?

I was really pleased to hear you mention safety, personal safety, as one of your top priorities. Moving on from that, I'm also pleased to hear that you've been getting out and about. In those board meetings, where you've said you've invited people from the community to come and advise you, I'd be interested to know about the focus on groups that represent your top line, and hearing from them about the safety of women who feel quite vulnerable, and also children and any disabled person who've helped inform you, because that's obviously what you're wanting them to do.

Yes. Thank you for the question—it does remain a core area of focus. We've picked it up in several ways. We always raise this. We start every board meeting with a safety moment and, very often, it will be about something about behaviour on the network or something like that. So, safety is embedded, it's the first major agenda item for all the board. So, in addition to going around and talking to people, regionally, about this, on 20 November last year, we held a specific summit in Ponty on this subject, and the Cabinet Secretary came to open it for us. And that was really focused about tackling harassment, in all of its forms, around the network. And we had the national adviser for violence against women and girls there. We had the unions, we had the British Transport Police, we had representatives from TfW's advisory panel and access and inclusion panel, and representatives from bus and rail groups. And the upshot of all of that were about half a dozen things that flowed from it, but one was that we need to be better, collectively, at following up on incidents. Well, actually, if I take a step back, first of all, we need to preserve the physical human presence that there is around the Transport for Wales network out there. I've not seen a closed-circuit television camera break a fight up, but I have seen staff do that. And the fact that we have a member of staff on all of our trains, and you go to any of our stations and there are lots of people in red jackets—they are available to people who might be feeling uncertain or if there might be an incident.

Now, we're helping train them to recognise what harassment looks like. And I know it sounds a rather obvious point, but it's not necessarily that obvious, unless you've been trained in it. So, it's training, following up on incidents, liaison with the police, encouraging reporting. And we've got a great role model. James's chief operating officer is Marie Daly, who's part of an industry group, a pan-UK industry group, and they have been looking at the use of body-worn video, again, better staff training, and ensuring that women's voices are heard when stuff is being designed, because that's where you have to start, not retrofit things.

Absolutely.

So, we'll keep this rolling, and I've asked—. We have various sub-committees of the Transport for Wales board, and I've asked one of them to take a specific look at this area to come up with a report, identify any gaps, just to make sure that we're on track to make continuous improvement there as well.

Thank you.

Delyth wants to come in on this, and then maybe, James, you can pick up. Delyth.

Thank you. Forgive me that I'm not there with you in the room. Can I welcome, very much, everything that you've just said on that point? I really appreciate and lots of us really appreciate what you're doing. I'm a regular user of your services, and your staff are a credit to you. They are kind, they're polite, and I've seen them be, when situations have arisen with different passengers, very compassionate. And so I think that that training that you're offering to them, in terms of empowering them as well, will really help. But their manner with people, which I've always seen, is really excellent. So, I really want to congratulate them and you on that.

When you've appeared before us, when we've talked about issues about safety, one of the things that we've mentioned, and the challenge that you've taken, is that, sometimes, when it is dark, people can become more vulnerable. Joyce has mentioned women, particularly, and how, actually, particularly—. We're going to be coming on later to cancellations of services and things, so perhaps there should be different metrics used in the hours of darkness that are increased during the winter—that you're not going to be stranding people and making them vulnerable, particularly after dark. You have taken that challenge back, and I know that there have been things that you have done as a result. Is there any update that you could give us on that, please?

I'm happy to cover that one, and then I'll just come back to team safety as well, which I think is the only thing I wanted to add. Yes, absolutely, we have taken on board the feedback, and I think there's more to do, and we would want to do more. If we just start thinking about infrastructure and what it feels like to be on and around the network, certainly the bits of the network that we own and control we have really tried to take that on board.

If you go to one of the new stations that we have built, you'll find that it has been built to create clear, open spaces, not nooks and crannies where people can hide, very good lighting, lots of visible closed-circuit television—albeit I take on board Vernon's point that that in and of itself doesn't do anything, but it is a deterrent. I can't really speak to what it feels like, but as someone who might be there on their own, sometimes branded with TfW gear on, it feels a lot safer to be there than it does somewhere where we haven't been able to put those interventions in. But you can see from places like Taff's Well what we would like the whole network to look like. So, that's the first thing.

The second thing is on service patterns. There are a number of areas around the network where we have chosen to give different instructions to the control team when they have to abandon a service, which typically means that they abandon a service where there are staff and premises available, not, as you described earlier, where people are left in the middle of nowhere. So, that is the direction we're going in. Obviously, we would never want to abandon a service anywhere, but when things like suicides might happen on the track or other natural events, some of these things will never be completely preventable. But it's a journey that we're going on.

The final thing, if I may—

Yes, briefly.

—is just on our team, because it's really, really important. People will have noticed that we've got an increasingly diverse team, with quite a lot of younger women in front-line-facing roles, including on conductor services. They are the face of us, but they are also the people who are in charge of those services, quite often very late in the night. The good news is we're not seeing patterns of bad behaviour against them. We are giving them training, body-worn cameras, et cetera. But we have started an approach basically of zero tolerance towards abuse of any form to our team members, and every single incident is being properly reviewed and followed up. The big thing we're trying to do is to encourage everybody to report everything, because there's a legacy of people who've been on the network for a long time who will accept people spitting at them, or this type of thing, and that's not acceptable.

Thank you. I can see a number of hands going up. I think we've spoken about this now. I think we need to move on to other areas, if Members are content, I'm afraid. I can testify, actually, that I witnessed somebody being dealt with very effectively by a member of TfW staff on my journey home last week. So, as far as I can see, it's working in practice as well.

Can I just ask how TfW is embedding the multimodal culture and organisational changes required for delivery of the T network, and what measurable progress has been made since the remit letter update was issued in 2023, please?

Absolutely. I think the headline message I would give is that there is not one thing that we need to do, because if you think about the way that transport is delivered, mostly around the world, and certainly in the UK, people have a swim lane of a particular mode, and that's how they perform their career. And typically, organisations are modal specific. What we have said, partly from a value for money perspective, partly because we want to force integration, and partly because of the unique characteristics of Wales and some of the thought processes like the Well-being of Future Generations (Wales) Act 2015 that sort of make you think in a different way, is, 'No, we want to bring that together.'

One of the things we have done is co-create a series of values with our team members that genuinely are beginning to feel like they are their own. These values aren't things that we have told people they need to have. These are things that people have. That would be things like 'one network, one timetable, one ticket, one team', 'we are one', 'we do the right thing', 'we challenge ourselves'. We have changed the structure of a lot of our teams. For example, the finance team covers finances for everything we do, the procurement team covers procurement for everything we do, the safety team covers safety for everything we do, the ticketing team does ticketing for everything we do. I could go on.

As part of that, we do a lot of listening to the teams about what does it feel like when you bring different teams together. A lot of experiential training. What I think we have completely avoided is having anything that we've branded as a kind of sheep-dip training programme for people. We are trying to hit every single part of the organisation with a gradual change programme, including myself, including the executive leadership team, and including the board, because there is no blueprint for this and no-one's done it before. I'm sure that this is a journey that will probably be never-ending as technology and society changes continue.

Constant evolution. Okay. Thank you. We'll make progress now. Janet, do you want to take us into another area?

What are your views on the proposed memorandum—. Where am I? Sorry.

I thought we were going to move on to budget.

Yes. I'm right now. Will TfW have the budget it needs to meet its obligations in 2026-27? Are any projects, programmes or commitments at risk for the coming financial year and how are you managing that risk?

If I start with that, and then Vernon may well want to come in with a board perspective. And Heather will certainly, I'm sure, come in on some very important strategic finance points.

The fact is, as I sit here today, against the published budgets that you will have seen, there is a gap, both on capital and revenue, against what we think we need to deliver the services that we are being asked to deliver for next year. That, I think as I've said before, is nothing new; that has happened every year, and there are some good reasons for that. I suppose the biggest reason is the Welsh Government wanting to put some competitive tension into the process to encourage us to drive efficiencies and encourage us to reduce costs. My view, though, is that even after we have done that, we will still face a gap. Year on year, where I'd like to get to is a place where we don't have that uncertainty, because it's better for planning—which probably takes us into a different thing, which is around longer term budgeting, et cetera, but maybe we'll talk about that later.

The other thing, though, that may significantly impact in a positive way the potential challenge we have next year is if we are able to take any Welsh Government underspends at the back end of this year legitimately by bringing forward some procurement activity. So, I think we will manage it. Obviously, we'll be talking to a different Government than the Government we're talking to today, so I don't really want to predict too much about that, but on the basis that we are open and honest and transparent and prepared to do anything that the Government needs us to do, I don't think there's a fundamental problem and I don't think that the public will see any fallout from the gap that we have.

Great. Last year, James, you told us that TfW's budget process had become more streamlined, but, unlike other arm's-length bodies, you still don't operate on a single budget. Why is TfW treated differently and has any more progress been made to address this and further improve the process?

I will definitely bring Heather in on this in a minute, but I will just give a couple of openers, because I know this is a thing I keep going on about. In some ways, it's something that may not help me, but I think it is something that would help the public purse, which is why I keep describing it. To start with the question of why do we not have a single-line budget, I think it's because TfW evolved, rather than was created, if you think about it. We were set up to do a procurement of a franchise and now we're running a whole load of things. It happened through the pandemic, a whole series of different reactionary decisions—and that's not a bad thing; I think it has led to a good outcome. But I think if there was an Act of the Senedd that said, 'We are going to create a TfW', probably one budget line would have been created.

The way we're funded, therefore, is via, as you know, quite a lot of different lines from different policy areas. We present back a consolidated budget, but the thing that that does not allow the board, or the board to challenge me, or me to do, necessarily, is to say, 'Here's our total budget, here's the list of all the things that we need to do, and we will build, without any restrictions, the best organisation to deliver that', because we have to report in different parts. It's a bit like, I guess, old European funding, when you had different schemes, and they had to be kept separately. However, we are working collaboratively with Welsh Government officials to break down those barriers wherever possible. I think it's at that point that I would hand over to Heather to talk about that.

Thank you. In previous scrutiny committees, I have talked about how we've approached budgeting, so I won't repeat. But James is absolutely right on the basis of we've become a multimodal organisation, and therefore we've had budget lines added every single year. In terms of how we manage that, we work very closely with the Welsh Government. Where we can, we are merging lines as practically as possible, and we are looking to simplify the process. Clearly, one single funding line would underpin a multi-year funding solution as well. You need one and the other together. But, essentially, we cannot vire between different budget funding lines. But when we need to, we obviously have those discussions with the Welsh Government, and we work in a very practical and transparent way.

I think it's important to say that you can't land on a postage stamp in terms of the kind of activity that we deliver in terms of cost. We do come in very, very closely, and it's well managed and well governed from that perspective. But I kind of would say that, wouldn't I? I think it's really important just to acknowledge, though, that there are influences that impact budgets, as they do for each of the budgets within the Welsh Government and arm's-length bodies: extraordinary events around inflation, material costs, wider economic impacts.

Notwithstanding that, we do have a funding gap for next year, both for revenue expenditure and capital, and the way we approach that is we prioritise projects. We move them in terms of different phasing. We plan them very well. And then we also look at cost efficiencies. And just one thing to note, and one particular piece of information I'd like to share with you: in terms of the rail operating costs, when we look at operating cost per passenger kilometre, it has reduced from two years ago. Even though we've provided further services, new rolling stock, et cetera, we are cost-conscious and managing our costs in an efficient way.

Just as a supp on that, I've raised questions before about delayed trains and the compensation you pay out, and I've always felt you're far too generous. Has that ever been looked at?

And we noted in correspondence from the Government response to our budget report that it was quantified at £2.3 million in the last 12 months, which is not an insignificant sum.

We do absolutely discuss that, look at it. I don't think there's an easy answer to it. Why was it put in originally? It was put in originally to penalise commercial operators to run a better service, I think. But it was also put in to create better customer culture. Because if you go to Tesco and you buy—. Tesco might be the wrong—. There's certainly a store—I can't remember which one it is—and you take it back and they'll say, 'No questions asked, you get your money back because what you bought you didn't get'. England have also got this. The conversations that we have had have mainly been around customer sentiment, customer satisfaction, and the balance between not paying that money and potentially losing customers, because customers do not believe that we're focused on the right output. In the context of a public service, your question is very valid, and maybe we should take it away and consider it again, and maybe the Government would want to do the same. But I genuinely think there are arguments both ways, and I don't think it's a simple conclusion.

We've touched on this as a committee previously in terms of at what point does that penalty kick in, but we don't want to get into the weeds of that now; I think there are bigger things that we need to discuss today.

No, but as long as you don't forget, because I just feel you're far too generous.

It's part of the constant conversation that the chair might want to—

Briefly from the chair on this, then.

Thank you, Chair. Could I just comment a little bit on the future as well and your question about budgets? One of the things that I'm keen to do—and we've started to talk to the Welsh Government about it—is to move to longer term funding settlements as well for Transport for Wales, both from a revenue and a capital perspective. Because we believe—. And Heather has already pointed out some of the results that are already going from better cost management and getting the revenue up. But transport is a long-term business and you have to take multi-year views of things, particularly when it comes to capital, particularly when it comes to things like ordering rolling stock and having a strategy that reaches out over, very often, actually, political cycles, not just a few years.

So, having longer term settlements for both capital and revenue would have several benefits: I think we'd be able to plan better; I think we'd be able to work with the supply chain better, because they would have confidence that there wouldn't be stop-start around projects, and they'd invest in things like apprenticeships and all of the other things you can do if you think you've got a steady stream of investment coming; and I think we'd deliver better value for money. So, we're actively looking at it.

There are challenges. It's not a slam dunk, because, of course, there are things that happen in the world that are outwith the control of Transport for Wales. So, we've seen over recent years the impact on commodity prices of global conflict, for example. We've seen inflation rising here, the cost of materials, changes in Government policy. So, you have to be able to absorb that and deal with that somehow as part of taking this longer term view. But we believe there to be a significant price in doing so, both from a revenue and capital point of view, and we'd like to carry on—well, we will carry on—that discussion with Welsh Government into the future, and see where we can get to.

Thank you.

Thank you. Last year, we discussed the challenges involved in moving to the multi-year forward-look budget process required by the Welsh Government. What progress have you made towards adopting that approach?

Yes. James, do you want me to—?

Yes. Go ahead. I think, broadly speaking—

Forgive me, I covered—

That's what I was going to say—that's exactly what you just told us.

Can I talk about that?

Yes, Heather could talk in more detail about it.

Okay. So, in terms of the practical steps that we've taken, over the last couple of years, we have provided multi-year planning and forecasting. But, of course, you have to improve as you go, in terms of lots of learning. So, I've built a team, within my existing team, but we've focused a team on that multi-year funding, multi-year planning, forecasting. It provides insight to Welsh Government colleagues for their planning purposes, as well as ourselves. So, it is a transparent process. We are actually sharing with the board in March our next set of five-year plans. They're very important, the next few years, because it will include, obviously, bus associated with it. There will be future phases of capital projects to be looked at in terms of prioritisation. So, it's really insightful. There are, as Vernon talked about, other influences that we won't be able to reflect, because assumptions need to be made. But we have really focused on that, and it's really setting us up to that potential for the multi-year funding.

Thank you very much. Your 2024-25 annual report says you publish corporate key performance indicator results quarterly and annually, yet your corporate KPI webpages provide limited data—in most cases, just two quarters, and no longer time series or annual figures. Why is this, and when will we see more comprehensive reporting, showing changes in performance over time?

So, if Heather can answer—well, you can answer all of it if you want, but—the technical bits, and then I'll talk about the longer term.

Yes, if you can. So, you are correct. I have to give apologies to the committee—we should have the previous quarters and years of KPIs that are loaded. You'll see them for rail. So, if you go into rail, you can see them as far back as 2021, in terms of that trended performance. As you know, rail performance is provided every four weeks as well on the website. In terms of the corporate KPIs, we are focused on trying to provide that insightful information, but we should have the previous quarters in. We are in the process of loading those, and we go back as far as 2022-23. So, they are replaced rather than added to, and we are going to rectify that.

Thank you. James, you told us—

Did you want to talk about—?

So, you asked about the longer term KPIs.

Yes. Sorry.

So, firstly, can I apologise for that, because I didn't know that the historic ones weren't on there? Certainly, in the stuff we look at, and we look at it for publication, all the historic stuff is there. So, that must be some technical error.

There's been some issue, which we're resolving.

Okay. I apologise. Longer term, where we're trying to take—. To take a step back, what are KPIs for? I think KPIs need to be something that we can use to run the business, and everyone can engage with and know when they're doing a good job. And also something—. And ideally, it's the same set of data that people like yourselves can scrutinise us on, and the general public can see and our customers can see. So, we are trying to evolve our KPI suite in light of our changing remit. You'll see we've got lots of rail stuff, a bit on bus, quite a bit on corporate, but not very much on multimodal. That is the area that we're developing, and that will be the area that you will see become more visible. We need to just keep that under constant review, again, as we move into another Senedd term, but also recognise that we don't want to change them around too much, because time series are really important to understand are we getting better, are we getting worse, et cetera.

Thank you. James, you told us last year that you didn't think you'd got KPIs entirely right, and they would be reviewed to ensure they're genuinely useful in driving the right behaviour. What stage is your review at, and what is changing as a result?

So, for quite a few of our corporate KPIs, we have changed our approach already—and Heather could talk to this if you would like—particularly in the way that we engage with the Welsh Government. And I guess my frustration last year, just being very honest—. And this wasn't from Ministers, actually, it was from various parts of the civil service, who, almost for something to do, were just coming up with different KPIs that we could report on. But they were mostly things that couldn't be used to drive the business and we didn't really engage with, therefore, they weren't really KPIs.

The Welsh Government official view at the minute, led by Peter McDonald, is that the KPIs absolutely need to be useful for the board and need to be useful for me in driving the business. Otherwise, they are not interested in them. That is obviously the right answer, I think, and is very refreshing. And that is what we have been doing and those are the conversations we have with Welsh Government.

All the KPIs on rail are used. Every rail board—. There's a rail board—or as we've rebranded it, operational board, because we cover bus matters as well in it—this Friday. We will look through all the stuff and measure people's performance, including mine, against that. Heather, is there anything you would want to add?

The only thing I'd like to add, just to build on what you said, is that the TfW board have challenged us, alongside the committee, to look at what represents the health of the business—that's the corporate KPIs; and we have some revised KPIs that are currently in draft and are being reviewed—and the ability then for the board to be able to drill down and then home in on particular areas. That will provide both that higher-level view, and also to be able to understand the detail that sits within it and home in on a particular area. That's our ambition and we are in progress at the moment. I expect us to be able to deliver that in the new financial year.

And if I could—sorry, you've just reminded me—jump back in, the two key areas that are a bit gappy at the minute are around, in my view anyway, people and culture. We have taken some significant steps this year, including our first all-business culture survey. I don't really want to talk about the detail of it, not because it's not good—it actually is very good—but because we committed that it was for the people who filled it in, and I want the people who filled it in to hear about it from their managers, rather than from me. I didn't do it so I could show off—I did it to learn from them.

Sure. If we—

We could provide it to you.

—note that in our correspondence to you following the session, then you can provide it at that point, yes. I fully respect that. Okay, thank you. We'll move on, then. Carolyn.

Okay. Thank you, Chair. I'm going to talk about bus reform and franchise readiness, if that's okay. Does Transport for Wales now have the capacity to deliver the bus franchising? What steps have you taken to increase your organisational capacity, and what else needs to be done?

Okay. Shall I go first and then I'll bring Vernon in? If I may, just for one minute, take a step back and say, ‘Why are we doing franchising?’ or ‘Why do we really believe in franchising?’, we're doing it because it's the law, or going to be the law, but it's also the right thing to do, and having a deregulated bus market is the weird thing in the world. Doing what we're about to do is the normal thing in most parts of the world. And why is that? It's because, in order to create a network that works, you need to have some control over it, you need to be able to ensure that different modes talk to each other, they join up. So, that's why we're doing it, and we're doing it in a multimodal way, as described earlier, because that's the best way, we think, to ensure it is joined up, and it's the best way to drive value for money.

On the value-for-money piece, as a result of the original Welsh Government impact assessment there were some very big numbers bandied around about how much it was going to cost to run franchising. I do not believe that it will cost anything like that as an overhead to run franchising, and the challenge that the business has been given is that we should be able to do it within the resources that we already have, albeit, remember, that that's a challenge. And I recognise that we will have certain gaps that we need to fill. So, we're not going to use, if you like, amateurs or first-time people to do really important things on bus franchising. But we're not going to balloon as an organisation and drive significant costs.

So, what have we done? We have probably brought in, I would say, around 10 people who have significant bus experience, either from operators or from local authorities or from client organisations around the UK. Some of those are relatively senior people, and some of them are younger but highly professional people. They have been in the business now for at least two years, and they have been upskilling other people around them. Probably the best example of that would be in the team that does our pricing and our yielding and our ticketing products. They feel now like they fully understand the bus market. I'm sure there's more for them to learn, but real knowledge transfer has occurred there, and the information we're getting out is genuinely really good.

The final piece for me in that jigsaw is that we need to bring on a very senior operational bus person, and ideally, for me, someone who has run one of the big bus companies in the UK or in Europe that we're about to let contracts to. I want a poacher turned gamekeeper. I won't announce the name today, but we did make an appointment for that role yesterday, and they will be starting in February. I don't think they will be particularly public facing. They will be driving sensible bus and commercial behaviour within the organisation to make sure that we get a very good deal with the private sector, particularly the big private sector groups that we'll be letting contracts to, and they will be facing off against them. [Interruption.]

I'm going to ask a question.

More generally, we've made really good progress on network design. We've had the network signed off for south-west Wales, as you have seen, including by the local authorities there. I'd like to thank the local authorities for working really collaboratively with us on that. We've got a clear plan for depots and for fleet, and we're working very closely not only with local authorities, obviously, but trade unions and with operators.

And the final just opening statement—because I can see people want to ask other things, but I think the final bit is really important for me, and I want to put it out there from a transparency perspective—having gone through the last two weeks of fairly intense conversations with trade unions, operators and the people who are doing the policy instruction for the secondary legislation, and taking into account the fact that the primary legislation has not yet received Royal Assent, my strong suspicion is that the secondary legislation is going to go through in the next Senedd term—early, I assume—rather than this one, because of the detail, which is necessary to do it right. Once it's done, it's there for the next 40 years, so it's got to be done right. And I think that will mean that the procurement that we start in south-west Wales might start marginally later than we had said, but the overall programme for bus franchising will still hit the same milestones that we have set. That's not new news. The local authorities that are relevant are aware of that, but I thought it was just useful for you to be aware as well.

Thank you.

Thank you. My second question was about funding. I feel a little bit reassured that you're hoping to do it in the existing budget. During the budget scrutiny, the Cabinet Secretary said perhaps the greatest threat to bus services is having enough money. I know he's concerned about the ageing fleet as well that's in Wales, so it's ensuring that there is that capital funding, as well as revenue, to run services. So my question was: is there enough money in the system to deliver bus franchising?

So, can I come back on that? And I will bring Vernon in. We have based all of our modelling on the money that is currently in the system. So, the plan that has been set off for south-west Wales, as an example, should be deliverable within the existing funding envelope for bus—so, that's the stuff that used to be the bus services support grant, plus concessionary funding, plus the amount that local authorities put in, plus the farebox. We also have an assumption that there will be capital funding, in addition to that made available on an annual basis, to improve things like the quality of the bus, move to more carbon-neutral technologies, improve things like bus infrastructure on the road, bus stops, information provision et cetera, et cetera, and we've assumed that's about £60 million a year. The challenge I'm putting into the team at the minute is how we can demonstrate a real benefit for that additional capital expenditure. Can I just hand over, because Vernon can also give a UK perspective on this?

The board is looking for assurance across all of this. So, as you can imagine, we are going very deeply into all aspects of franchising, and working really collaboratively with Lee, James and everyone else, and Heather, on all of it. I've lived bus franchising in greater Manchester, so I bear some of the scars, alongside all of the success, actually, that franchising has delivered in terms of higher patronage and delivering all the sorts of things you want out of a bus service. So, one of the things that I've challenged, or the board has challenged, James on is to assure us that, first of all, the programme is comprehensive, and the person that James mentioned that we're bringing in will add yet more scrutiny to make sure there aren't any gaps in that programme. And one of the core things I want to make sure is that we are ready for live operation. It changes at some point from being a programme of procurement, of local engagement and so on and so forth, into, 'You are running the buses.' It may sound an obvious point, but you really need to plan for that handover when the baton gets handed over from the programme into the live operations.

In addition to that, there is a degree of complexity here in Wales that isn't evident in many other places, in that there is a very central role—and I'm not criticising this, it's just the case—for local authorities, for CJCs, as well as for Transport for Wales, the Welsh Government and the operators and the unions. So, it's quite a complex tapestry, really. I have, on behalf of the board, written to Welsh Government with a big list of who's going to be accountable for what, so that there is no scope for ambiguity when we get into the live operation, because you don't want to be working that stuff out when you're in live operation.

I think there's a huge amount of work still to do. I'm confident that James and the team are on it, they're all over it, the board's all over it. I'm confident that we'll get through and we'll deliver bus franchising to the benefit of everyone in Wales successfully, but we will continue to scrutinise it very, very heavily.

That's reassuring, because we want to manage people's expectations with this as well. And it feels like you considering that going forward, which is really important, and that accountability, because very often we get a lot of book passing as well. So, people need to know who's responsible, whether it's local authority or Transport for Wales.

I just want to move on to small and medium-sized enterprises, because we need them to deliver school transport, every single one of them. They are important local employers as well. That was one of the biggest concerns for us. Thank you for your letter that you sent to us in December updating TfW's approach. The concerns they raised with us were: expertise when tendering—some of these large tenders and having that expertise within a small business; meeting policy requirements—these huge health and safety, et cetera, policy requirements are an issue, and I remember that in the local authority, even, with tendering insurance.

We visited Manchester as well, which is really interesting; we learnt a lot from that. So, on what basis are you now confident that these measures will be sufficient, and why do you believe these mean we will be more successful than Manchester in ensuring we bring them along with us and engage them in franchising?

Thank you. Shall I deal with that, Chair?

Yes. I just want to make the point that we're halfway through time and we're nowhere near halfway through the areas we wish to cover. So, don't not answer the question, but I think we all need to be a bit more succinct. Thank you.

Right, I'll rattle through it. We are committed to preserving a thriving and dynamic small and medium-sized enterprise market in bus. Wales is quite different, actually, from many other places in the United Kingdom in that regard, given the proliferation of small and medium-sized enterprises. So, we've designed the procurement process from the bottom up, to overcome precisely some of the areas that you've just described. We don't want this to be a hugely bureaucratic process for an SME who might have one or two buses serving a route. We're using what, in the jargon, is called a 'dynamic market', where you qualify with a relatively low threshold and you get on a list. The benefit of that is there's no set timetable for it. Whereas in big franchises you go, 'The franchise date is this, we need your bids in by this', and there's a very strict process for the award, that isn't the case for small and medium-sized enterprises. So, that's designed to not overburden them with the sort of issues that you described.

Particularly with the south west, we've been holding local sessions, and we've been working with the industry representative groups and SMEs themselves. Those engagements have included direct feedback from some SMEs, and we are really trying to make sure that the packages of work available are conducive to being done by an SME. So, as I mentioned, some of the packages already are two buses. Some of them have been eight buses, and the feedback has been, 'Well, you need to make those packages smaller if you want the smaller players to play in that market', and we are looking at all of that.

Now, I cannot guarantee to you today that there will be a complete carbon copy of the SME market post franchising, because people will make choices for all sorts of different reasons. What we're trying to ensure is that, in and of itself, the procurement process should not be a reason why SMEs no longer want to participate in the market. And as you described, they are very often doing school services, they're running commercial coach services, they're doing a range of other things as well. Honestly, if there's something we're not doing at the moment, now is the time to raise that with us, and we're listening. Thank you.

Thank you. Last question, Carolyn.

Will you have a unit to assist them, going forward?

Yes, we do. Business Wales is there to help guide people through the process. We'll do it ourselves, we'll do everything we can, but if there is something that we're not doing, the trade associations should raise that with us now, or whoever—

A couple of new ideas came through just yesterday, actually, so there's a good example of that. The only thing I'd add is the public sector is really bad at engaging with SMEs, if you think about it. How many times have you heard, 'We want to make this SME-friendly', and then sort of the opposite happens?

I think that's why we're worried. [Laughter.] But you are reassuring us.

I'm going to take a new impetus—we've got it anyway—on the back of this: let's really do the very best we can.

Thank you.

The other one was—

This is your very last question now, which I've already—

Yes, okay—it was asset transfer and fleet ownership. So, in Manchester, everything was transferred. But do you think that there will be a hybrid approach, so that some of the assets can remain with the local SMEs, maybe?

So, I'll outline the broad plan, and then I'm happy to go into more detail if anyone asks further questions. So, the broad plan is that, eventually, we will own all of the buses on the network. Eventually. The reason for that is that, always, the cost of capital to Government is lower than the cost of capital to the private sector. And where Government tries to con itself that it can get borrowed money from the private sector cheaper, well, I've never seen it work. So, I think that we're taking a very pragmatic approach on that. But because of the amount of capital available, that is going to take maybe 10 or 12 years before that happens in its entirety. These are 2,000 buses that we are talking about, and a bus might have a lifespan of 15 years. So, you can see where we are on that.

A subset of that is that we are developing something called a residual value mechanism, which should allow operators that will sign up to it to make their buses available to an incoming operator, i.e. guaranteed to sell their buses to an incoming operator at a previously agreed price. We are wanting to not use our capital for that. So, that would be a transfer from one to another, albeit we might buy some.

And then the final piece, if we're keeping it very high level, is around depots. Our strategic view on that is that we do need to own some, but not very many, and we will own the minimum necessary to ensure that we can provoke competition in an area, because what you don't want—. We'll use a fictitious thing: there's an island owned by Wales in the Bristol channel that has got lots of buses on it with a huge depot. We do not want the one operator that is currently there to block out competition by not making it available to us. So, that's the strategy.

That makes sense.

Holding you to ransom, effectively.

Yes.

Yes. Okay, lovely. Thank you so much for that. Joyce.

I'm moving on to rail, and more specifically, rail infrastructure investment. We know that, this year, you've had £445 million, announced by the UK Government spending review, for rail infrastructure. I'm going to ask a silly question, but I'm going to ask it anyway. Do you think that it's enough, and do you have an alternative figure?

Vernon, do you want to—?

So, it's a good start, but it doesn't match the level of our ambition. I think that one of the great benefits of what was argued for and won in the 2025 spending review is that it has unlocked a series of projects that were otherwise just marooned and weren't moving anywhere, so the package of work around Burns in south Wales, of course; doubling the services along the north coast main line; improvements in Cardiff West; the Wrexham-Liverpool line enhancements. So, I think that what we've got to do is use the money that we've got and the schemes that have already been identified, and deliver those supremely well, and quickly, and earn credibility around then getting more funding in future spending reviews. So, that's one of the reasons why we want to publish—hopefully, with some of you present—our vision for rail in future, which would describe the journey that James and Heather and the team have been on to deliver the benefits thus far, to explain how we're going to spend the £445 million, or however you want to describe it, effectively in the meantime, but also then list all of those other things that we want to win the case for funding for.

Now, at that point, we won't have prioritised them, but we want to demonstrate that there are—. You can't attract funding unless you can describe what you're going to spend the money on. So, that's the purpose of that next document—to be able to explain where it is that we would put the money. Then, it will be up to the Welsh Government and others to work out what the priorities are, informed by recommendations from the Wales rail board. I don't know if we'll come on to that, but maybe we will. That is a mechanism whereby we can make all of this stuff happen. So, I would describe it as a useful start. It's unlocking stuff, it's giving us the opportunity to demonstrate we can deliver to build on everything that James and the team have done on the CVL. But no, it's not enough, and we need to keep making the case for more.

You mentioned your vision, which you're going to publish very soon, and also that the Welsh Government have talked about rail board project pipelines being published soon. Are they one and the same? Have you had conversations?

Shall I?

Yes, if that's okay. I'm happy to come in.

I think they're one and the same from the way that you've described it. The Wales rail board has done a good job. It's historically been a forum where DfT officials, Welsh Government officials and TfW and others have got together to look at the enhancement programme across Wales's railways and so on. I've been asked to chair that, so I'm now chairing it. And we had our first meeting—blimey, when was it—a couple of months ago, where we had the Secretary of State for Wales, we had the UK rail Minister and we had the Cabinet Secretary come along and sort of recast what it is that the Wales rail board is going to do. Its primary purpose is to make sure that that money that you described earlier on is spent effectively and quickly and with the least amount of bureaucracy that we can possibly muster, so that the users of the railway actually start feeling some benefit from it. But it will also be the place where we're able to start putting some priority and order around the pipeline. So, it is designed to produce a pipeline. It won't just be handed down by the Wales rail board. Clearly, Welsh Government are going to have a view about this stuff, corporate joint committees are going to have a view about it in their areas. That pipeline will be co-created, but the whole idea is to produce a pipeline of work and decently outlined business cases, which you can then win the funding for when the next spending reviews come up. And then we just need to be on that treadmill, a constant pipeline of stuff, which is recognised and we know how much it's going to cost.

You've already told us that you are the chair of the Wales rail board. The question for us is how do the public get that information about what that board is doing? You've outlined roughly how it operates. Where is the resource and the support coming from?

First of all, on your point about transparency, that's absolutely one of the things—. We are going to be discussing this at our next meeting, because this needs to be transparent. It can't be a black box into which something goes and then suddenly it gets produced at some point. That is not the intention. So, we are working through how all of the people—and I mentioned some of them just now—that have got a stake in shaping Welsh railways in the future are at the table. More on that after our next meeting. In terms of the resource, I've got colleagues at Transport for Wales who are supporting me on this, including some of James's existing team. So, Geoff Ogden, who you'll all know, in a planning sense, is at the table as well at the Welsh rail board, and the DfT and the other parties have their own teams as well. So, we're trying to create a single team ethos, drawing on all of the resources that are currently available from those organisations to drive all this forward.

It seems from everything you've said that the new board will become the core part of the rail planning framework for Wales under the new reformed rail system. Do you agree that there—? You've already said there should be greater transparency on its operations, but also on the consultation and the engagement. You mentioned about consultation and engagement, but that also needs an element of transparency.

Completely. The vision document that we're intending to publish shortly has been widely shared across Wales to ensure that it's captured the potential pipeline of projects that everybody would recognise. Now, it won't capture absolutely everything anybody's ever raised in terms of what they'd like to see happen on Welsh railways, but it will have, I think, everything that the CJCs would recognise as the natural—. And we've worked through that with them collaboratively. I think the rubber hits the road a little bit when we start talking about how we're going to prioritise this stuff, and all of that. And I can assure everybody around this table and across Wales that that will not be done in a black box, that will be done together.

Thank you.

Can I just ask one final question?

Very, very briefly, then, Joyce, because we're running out of time.

It's very brief. This new board that you're now sitting on—do you see that as a positive move forward to get Wales's voice heard more widely?

Yes, I do. And it's already providing a forum for different types of conversations and discussions. It's not perfect, and there are all sorts of things that we need to work our way through, but as a place where all of the right people are in the room and all of the right issues are being discussed, then, yes, I think it's a step forward.

Thank you.

Thank you. So, just for clarity, then, the launch that's happening in a fortnight in Newport is basically the publication of that pipeline.

It is.

It is. There we are. Okay, thank you.

Well, the potential pipeline.

Potential. Yes, yes, it's all dependent on funding and everything, but it's the way that you see where the strategic need or where the investment is needed.

Exactly.

And not prioritised in any particular way, because obviously—

It isn't prioritised.

It's a long list of schemes.

Yes, that's fine. Okay, we look forward to seeing that. Julie. Thank you.

Thank you very much. I'm going to ask you about the UK Government's Railways Bill and the implications of that. In the House of Commons Transport Committee, the Welsh Government's director of transport and digital connectivity said the Railways Bill takes us further in terms of operation of the current devolution settlement, but it doesn't move Wales and the Welsh Government along the devolution spectrum. So, what are your views on that? Do you think it does move us ahead? What do you think?

Shall I start on this one, and maybe take a step back? So, the step-back position, I guess, is that it is the Welsh Government's policy position that rail should eventually be devolved. Personally, and I think in my role corporately, I would say that that's the right thing to happen. If you look at the performance of the core Valleys lines, where we own and run all of it, in comparison with Wales and cross borders, the gap is about 20 percentage points. So, that's a real gap. That is not me in any way doing a disservice to the people who work very hard in Network Rail to run the Wales and cross-borders network. It's just about an integrated railway, controlling mind, and people feeling that they own it, including one Government owning the services and the track.

So, that's the direction that we want to go in. The Railways Bill is really an enabling framework, and the detail that follows I think is what determines how effective it is, I would say, both for England and for Scotland and Wales. For Wales, the minimum we have to have, in my view, is that the ability to work more efficiently across track and train that GBR will be granted in England needs to be granted to us for CVL in Wales. The Welsh Government have clearly stated that that is what they expect to see through, in effect, the enactment of some secondary legislation. All of the conversations we've had with the DfT have been positive on that, but obviously until it happens, it doesn't happen. So, we have to have the ability to integrate CVL and remove some unnecessary bureaucracy.

The second thing that we have argued for is around the creation of an empowered business unit within GBR for Wales. Now, this would still be ultimately accountable to the UK Government, because it's non-devolved, but at least we would have an entity that is similar—well, it would be smaller than TfW—but that, in theory, ought to be able to keep pace with us. At the minute, if we want to do things with a huge public body in England, they cannot keep pace with us, just because of their corporate governance. Frankly, Wales is on the corner of their business, so they're not very interested.

But, really, what we would want is to get that empowered business unit, at least in part accountable to TfW, so it is, in turn, accountable to the Welsh Government and to committees such as this. If you think about it, infrastructure exists for the trains that run on the infrastructure. The trains that run on the infrastructure exist for the benefit of the people and communities who use them. So, to have an edifice on which you say the track is the thing that's really important and we won't integrate it is just really quite weird.

So, I am hopeful that we will make progress. The legislation allows for progress to be made, but the detail of what is in the memorandum of understanding, what is in that secondary legislation and, frankly, the behaviour set and the instructions given to GBR will be really important as we move forward, and I don't think this is a one-time option either. I've heard a lot of people say that this is the only time that we can make any changes in rail. We think about what the Welsh Government did on CVL. The Welsh Government did that, actually, at a time of differential politics between Wales and the UK, and through hard work without a process, we got something devolved. So, I think we should get everything we can out of this, and then I think we can constructively go back for more.

Thank you.

I—. Sorry, carry on, I'm just conscious of the time.

Yes. Well, congratulations on what you've done on the core Valleys lines, because I think that's superb, really. We've mentioned the memorandum of understanding between the Secretary of State and the Welsh Ministers providing a framework, but, obviously, does that have sufficient legal status, do you think, to make sure that Welsh interests are protected?

So, the secondary legislation on the CVL, if it is put in place, should, yes. I think the MOU depends upon the wording in it, and, objectively, it would be better to have it written in statute, wouldn't it? I can't argue anything other than that. But the stronger the wording in the MOU, the bigger the benefit we're going to get.

And then the partnership arrangement between TfW and GBR's Welsh business unit, as you've mentioned, will be critical, but, again, that's not statutory.

That is correct.

So, what about this partnership? What work has been done towards developing the partnership to date?

I think I can present good news on that, as in the team in TfW genuinely work well with the team in the Network Rail Wales route. We have been meeting monthly for probably nine months now. We're meeting this Friday after the rail board that Nick Millington sits on, along with Marie Daly. Since Christmas, really, quite significant progress has been made. I visited the new chief executive of Network Rail literally in the week just before Christmas and put a fairly impassioned plea for a number of things, and I was genuinely pleased with the response that I got. So far, they have followed through with that.

So, what did I ask? I asked that the Wales route could be more empowered than they were. We worked on a paper with the Wales route to take to their executive board, which has been signed off this week. It's got to go to their main board, but on the basis that, I believe, they have been asked by Lord Hendy to be positive towards this, I'm expecting that to be signed off. I think the weak point is that it's based around relationships rather than anything that's written in statute. So, what we want to do is to log that down so that it's not based on the fact that James can get on well with Jeremy. It's good for the future whatever.

Well, that sounds like good progress.

But I am happy that the people we are working with are doing, I think, their best to make the best of not a perfect landscape. Sorry.

Vernon.

Just, hopefully, to provide some additional reassurance, I'm in touch with the chairs of Network Rail and of the DFTO, the DfT Operator. So, when the train operator companies are going back into public ownership, it's the DFTO that runs them. I'm in touch with them as well, so we're tackling this at multiple levels of the organisations as well.

Yes, thank you. And moving on swiftly, in terms of non-devolved passenger services in Wales, do you think there's going to be sufficient influence? Will Wales have sufficient influence on those, and also, of course, sufficient freedom to operate the services into England?

Okay. So, the simple answer is the same answer as I gave before, just thinking about the timing—as in, it depends what's written into the MOU and how binding the MOU is, and the behaviour set of GBR. Something that I think is really important for the committee to realise, though, is that granting access over rail infrastructure is not a free good. Lots of rail infrastructure is highly congested in Wales, particularly as you go in and out of Wales, and therefore this is a really important point, because something that is granted to maybe an open‑access operator or to an operator that might benefit England, which is taking up capacity on the tracks that is no longer available for us, is no longer available for us. And I think that should be granted equal strategic thinking and challenge as investing in new infrastructure, because it's often the thing that stops us. So, if for example, we want to run services into Bristol, in order for us to get into Bristol we are competing with other west country services. And who decides that? GBR, in the future. So, the influence that Welsh Government is able to have over that decision-making process and what's in the MOU is of vital importance. So, I just maybe hope that that is some useful strategic context.

Yes, thank you.

It is, yes. Thank you. So, just finally, is the Bill robust enough to provide a stable statutory system that will operate well for Wales, regardless of any change in Westminster Government? Have you got any sort of specific area of concern?

I have no specific areas of concern, no. It's a weak answer, I know, but I think we'll just have to wait and see. And as I said before, I don't think it's our last opportunity, because we did do things like the CVL outside of a process like this.

Thank you.

Thank you very much.

Excellent. Diolch yn fawr iawn. Thank you, Julie. Delyth. Can we unmute Delyth? There we are.

Diolch. Bore da—it is still bore—so, bore da.

It is, just.

'Just'—I know. I wanted to ask you about services, please. Now, I know that you've noted that recent figures, the Office of Rail and Road figures, show improvements in performance, but on cancellations they remain mid table, comparing across different British operators, and they do show that the improvements follow significant increases in cancellations after 2020-2021. Could you talk us through, please, any performance targets you've set, how you're hoping to improve on that, and any particular issues you'd like us to be aware of about why that change has been, in addition to what you've already said on this?

So, I think, if it's okay, I'll answer this quickly, but I'll break the network down into core Valleys lines and Wales cross-border. The core Valleys lines, as everyone knows, are everything north of Queen Street. The performance on core Valleys lines has got better on all metrics, and the main reason for that is down to ensuring—. It's very basic, actually. Running a railway is not as difficult as people would have you believe. It is: you need the right number of drivers, you need the right number of trains, and you need infrastructure that isn't going to break all the time. And then it basically works, because it's a system. So, why has CVL worked? It's because the infrastructure is working, we've got the right number of trains, and we've got the right number of team members to deliver that.

On CVL, and this is why I wanted to break it down, as we move forward, the cancellations number—and I'd want to discuss this with you in a longer session, if it's okay—may become less important. And you might say, 'James, that's a bit of a weird thing to say.' The reason I'm saying that is if we get, in the core of the network, which will happen, a frequency of about one train every three minutes, and then we skip a stop, so the worst thing that's going to happen is someone is waiting six minutes rather than three minutes, that one stop that is skipped would have the same percentage impact on our cancellation figure as if we cancelled something on the Heart of Wales line. Now, to me, that doesn't make any sense, and it's not a very good key performance indicator, because on the Heart of Wales line, someone's going to be waiting, potentially, for four hours, not six minutes. So, we are doing okay on cancellations on CVL, but we're looking at how we measure across the network.

On the rest of the network, the thing that is driving cancellations at the minute is one-off incidents, which are either train related or infrastructure related. It's about 50:50. It's marginally more infrastructure than train related. But it does not tend to be an everyday problem linked to not having enough trains or not having enough staff, which it was when we inherited the service. It is now linked to a unit failing in service, normally or an infrastructure issue, such as a tree coming down on the line, points failing or a significant flood. So, yesterday, when the flood water came up very quickly on the Marches, all of the trains that weren't running would have counted towards our cancellation figure, as an example.

Notwithstanding all of that, we know that we need to try and get the cancellation figure down, as well as the performance figure up. But for the Wales and cross-border network, and all the conversations we had around having a Wales route that's empowered, having accountability back into TfW, I think in the next control period, having more funding for them—because they have still got Victorian era signalling on a lot of that network—is going to be vital to achieve that.

Just to tell you all that we have 10 minutes left, and we have a few more questions. Delyth.

I'll be super quick. Diolch. On revenue funding, your accounts for 2024 and 2025 appear to show revenue subsidy to be about 60 per cent of total revenue. Is that where you want to be, or do you have a target for subsidy as a proportion of revenue? Could you talk us through that briefly, please?

So, I think—. We do not have a target for the proportion piece, although that would be an interesting potential thing from Government for us, absolutely. We do have a target for the absolute amount of revenue that we are trying to bring in and, in essence, what we are doing is stretching ourselves every year to try and bring more revenue in. We, of course, don't do that in an unconstrained way, because that would lead to something that was no good for society. In essence, our strategy is to try and even out the price of rail fares across the entire network on a distance-based model. We're still some way away from that. So, the north of the country pays more than the south of the country. That's nothing to do with anything that we have done. That's to do with the legacy that was inherited, probably 20 years ago, and then the fact that the fares are regulated. So, you can never massively change anything because they're regulated by the same percentage, so you're always working off the same base. But we're changing a lot of that.

Pay-as-you-go is really interesting because we brought down the price of the ticket, but we have seen greater income as a result of that because more people are riding the service. But we are also doing things—. And I think this is completely societally acceptable. For those who can and want to and are willing to pay, we are providing added-value services such that we can cross-subsidise elsewhere. The best example of that is the first-class service to Manchester, which is able to cross-subsidise other things. I could go on, but—. We've also got—and Heather is probably going to talk about this because I should have started with it—a significant programme of pressure on costs to bring them down. Heather.

Briefly, then.

Well, just to pick up on the rail passenger growth, we're in double digits. We're ahead of industry and the industry benchmark, which we review on a monthly basis, obviously, and it's all because of all the reasons that James just outlined. Pay-as-you-go has had a significant impact around the 95 stations that have been developed for that, but also we're introducing them into the north of Wales as well, and we have about 100,000 passengers every week who use pay-as-you-go. They've either transferred or they are new customers, and we can clearly see that they're new customers. That's really important—

And it's still growing very fast, isn't it?

—to grow that top line. In terms of our cost management, we have measures—and I talked about one of them earlier—around our subsidy cost per kilometre of journey. That's a really important measure for us because it compares the right trigger in terms of the volume that's being used against our cost base. And of course there have been a lot of changes over the last two years as well in terms of the introduction of new services, et cetera, and how we manage those around the core Valleys lines. But, we continue to manage our costs and we are absolutely looking at future cost efficiencies and programmes. We will still develop and deliver the customer experience and the services that are needed, but in a cost-efficient way.

Thank you.

Thank you. And just finally from me, if there is time. You've already mentioned the delivery of the new rolling stock, about the trams. Is there anything further that you feel we should know in terms of any update on that, please?

Two things, if I may. Well, I've covered the 398s and the 197es, so I won't say that, but it is important—what I said. I think that the biggest thing that I would like to play out is that, because of the very high growth rates that we are now seeing, we will not have enough rolling stock for five years' time, so that's just something to think about. I don't think that anyone has necessarily factored in the fact that, if you run a service that people want to use, you need to continually grow it. CVL, for example, will see pinch-points in four to five years' time if we don't increase the number of carriages that we have. We're in discussions with Welsh Government about that now. I want to broaden that out to a discussion with the corporate joint committees and think about it from a regional economic development perspective. But, on the basis that there's a three to four-year lead-in time to do anything about it, we shouldn't wait until it's a problem.

Okay. Thank you. Can I just ask then—? On the core Valleys lines, you wrote to us in 2023 explaining that the estimated final cost would be £300 million more than was anticipated, to around about £1 billion. You tell us in your paper that the final section will go live early this year, so can you just tell us whether it's on track to be delivered within that revised budget that you put forward in 2023?

So, the latest accounts, when I looked at them in preparation for this committee, show that we've spent just over £1 billion on what we have delivered to date. The base scheme is nearly finished—so, for example, electrification is 99 per cent complete. But there are a couple of stations left in Cardiff and there is the Queen Street resignalling that is needed. In my view, that will be probably another £150 million total cost by the time it's all done. We are delivering it more slowly than we originally planned, to fit within Welsh Government and affordability constraints, which is one of the reasons why the cost is going up, which is partly to do with inflation. So, the real cost is not quite as high as it sounds. I suppose I can't answer the question until we finish, but there are live reviews going on. We know that we are between 30 per cent and 70 per cent lower cost than the UK average per unit of delivery, which is a good thing, and we know that we have got significantly greater growth in ridership than we thought. So, I think the business case looks really strong, but we need to continue to do our best to control those costs.

Very, very briefly, Heather.

I just wanted to add that there's a lot of cost avoidance as well that we've introduced. We've avoided reconstructing 65 bridges. There would have been a much higher cost associated with that. We've also avoided having to reconfigure three key stations. That would have been several hundred million pounds. We've also built Taff's Well depot, which we all know, and there are many other things that we've built as part of that cost that we could write to you on.

We'll certainly be following up in correspondence, I'm sure. Thank you. Carolyn.

Can you update us on the delivery of the north Wales metro? We've heard about the core Valleys lines. We want to see investment in north Wales as well. What level of investment is flowing into that scheme, and can you outline key dates for delivery?

We have about three minutes left, so it will have to be very top level, I'm afraid.

Very quickly, the north Wales metro is at the stage that the south Wales metro was 10 years ago, because it's a new concept. But we have been able to accelerate the delivery as a result of our experience on the south Wales metro. We have spent about £16 million to date. I don't think that's a very good metric to explain, because it's the benefit that's important, not what we've spent. But I think the key things that we have achieved are sorting out the level crossings on the north Wales main line, which will allow the timetable to be uplifted significantly; new services between Wrexham and Chester, which are now in; pay-as-you-go is going to be rolled out really very quickly across quite a bit of that region; and significant planning work with the Liverpool city region about getting a south Wales metro-style service from Wrexham all the way through to Liverpool. That's a reasonably sized project, probably £400 million in and of its own right, and that is therefore something to be considered in the future under the next Senedd term, alongside everything else, and it's in the brochure described earlier.

Thank you very much. In the remaining 90 seconds that we have left, I think Janet wants to come in on something.

Just a quick one. You emphasised, about the bus franchising, the bigger companies. I'm really proud of my smaller companies in Aberconwy. I know you've got a pilot going on, but they've heard nothing, and I was really shocked when they said they've had no engagement with the Welsh Government at all. Why would that be? With you or the Welsh Government.

That can only be a mistake on our part. That's poor. We have definitely been engaging with a lot of SMEs, probably focused on the south-west Wales area, because—

Again, that's so frustrating for us in the north.

I understand. If you can provide—. The reason for the south-west Wales—

I'll write to James.

—is because that's now. The others are for three or four years' time. But give me the list and we'll be in touch.

As you say, it's a staggered process. But maybe there's another discussion to be had there to address that issue.

Can I thank you so much for your testimony this morning, candid and thorough as always? We really appreciate that as a committee. We as a committee as well recognise that the work that you deliver is on a positive trajectory. I'm sure you would admit there's always room for improvement.

Definitely.

But certainly, we are quite confident that things are in good hands at the minute, and we look forward to seeing that prosper and grow over the years to come. There's much work that is happening and will continue to happen, particularly over the next few years. Thank you very much.

Diolch yn fawr, Chair.

No problem. We'll follow up in writing with any areas that we haven't been able to cover, or any areas we wish to maybe pursue further. But on behalf of this committee, given that it's the last time that we'll scrutinise you in this current Senedd, I thank you very much and look forward, as we all will be, to continue to use the services that you provide, as well as maybe scrutinise the services that you provide as well. Diolch yn fawr iawn. Thank you.

Thank you very much indeed, Chair.

The committee will continue with our work whilst you leave us.

There are papers to note. There are four papers in total. Are Members happy to note those collectively? Yes. Diolch yn fawr iawn.

We'll move into private session.

Dwi'n cynnig, yn unol â Rheol Sefydlog 17.42(vi) a (ix), fod y pwyllgor yn penderfynu cyfarfod yn breifat am weddill y cyfarfod. Ydy Aelodau yn fodlon? Hapus. Diolch yn fawr. Mi oedwn ni am eiliad tan inni symud i sesiwn breifat. Diolch.