Concerns raised over potential repayment of Welsh Government loan for railway infrastructure project in Blaenau Gwent Council

CONCERNS have been raised that Blaenau Gwent Council could be left having to repay a Welsh Government loan if a railway infrastructure project “hits the buffers.”
At a meeting of Blaenau Gwent County Borough Council’s Governance and Audit Committee on Wednesday, July 12, a further delay in singing off the accounts for 2021/2022 was agreed.
When looking at the accounts, Audit Wales found historic problems with the valuation of assets and cost records at the council.
The issues are due to the council not regularly reviewing its assets in the past.
One of the items that has caused concern in the accounts is a loan from the Welsh Government to the council for the upgrading the railway between Newport and Ebbw Vale.
The report stated that the “fair value” of the Ebbw Vale railway infrastructure loan in 2020/2021 had been overstated by £17.464 million.
This comes from a £70 million loan from the Welsh Government given to the council to fund the project.
This has had a knock-on effect on the usable financial reserves the council holds.
This had been reviewed and the error was agreed to be corrected in the 2021/2022 accounts.
Cllr Wayne Hodgins said: “Is the amount left enough to complete the project without having any financial implications for the authority?”
Cllr Hodgins understood that the loan is underwritten by the Welsh Government and Transport for Wales and would be paid through the train fares of people using the line.
Cllr Hodgins said: “If it does hit the buffers – would the scheme be extended, or would we have to pay for it ourselves from capital funding pots?”
He believed a briefing from officers “more directly involved” in the project or a report to the committee would be helpful and give assurance to the committee about the situation.
Resources chief officer, Rhian Hayden said: “I am not aware that the project is facing any significant financial difficulties at the moment.
“I’m fully expecting the £70 million to be sufficient, and if it isn’t we would be going back to Welsh Government and asking for more.”
She explained that there was “significant contingency” built into the project’s finances.
Ms Hayden said: “I have no concerns about the council’s ability to repay this loan we have signed up to an agreement with the Welsh Government and Transport for Wales (TFW) and have a guaranteed income stream from TFW to enable us to repay this loan over 50 years.
“This starts following completion of the project – if footfall and journey numbers are not sufficient to cover that income TFW would have to find alternative resources to cover that – the guaranteed income is not dependent on journey numbers.”
Cllr Hodgins said: “That’s reassuring as there are wider economic problems in the construction industry at present as costs are spiralling through the roof.”
The Ebbw Vale line reopened in 2008 after being closed for 40 years.
The £70 millon investment is supposed to allow hourly trains services between Ebbw Vale Town and Newport.
A huge programme of work is being conducted along the entire length of the line including: ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

Managing vegetation alongside the railway;
Setting up site compounds and access points near to the railway which will be used throughout the duration of the project;
Laying approximately two miles of new track between Aberbeeg and Crosskeys to create a seven-mile passing loop;
Building new platforms at Llanhilleth and Newbridge – just over the border in Caerphilly County – stations and extending the existing platforms so that they can potentially accommodate longer trains in the future. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

By BBC LDRS ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​