TfW Summary Business Plan up to 31 March 2020

June 2018

1.1. This summary business plan describes how we will develop Transport for Wales over the next two years.

1.2. This document provides an overview of our strategic objectives, how we are organised and our supporting activities.

Our purpose

2.1. Transport for Wales exists to Keep Wales Moving safely by delivering customerfocused services, expert advice and infrastructure investment.

Context

2.2. A better, more integrated public transport system is a key driver in the delivery of the Welsh Government’s national strategy: Prosperity for all. Transport connects people and communities, underpins sustainable development and enables economic growth. Better public transport services will result in real benefits for people, including better access to employment opportunities and better integration of services, such as education and health, with the public transport system.

2.3. Transport for Wales is a not-for-profit company, wholly owned by the Welsh Government. Across Wales and its borders, we collaborate with other transport providers, partners and stakeholders to deliver a safe, accessible, reliable, affordable and low carbon integrated transport system.

2.4. Transport for Wales does not set policy, nor do we exercise any statutory functions ourselves. However, we are the Welsh Government’s expert adviser and advocate for transport-related matters. We provide technical advice to allow the Welsh Government to develop policy. Everything we do is discharged within the Welsh Government’s policy framework.

Our vision

2.5. Our aim is to create a transport network of which Wales is proud.

Our values

2.6. We will create trust with our stakeholders, customers and staff, founded on:

▪ Being Safe: Health, Safety and Well-being.

▪ Being the Best: High performance. Pace.

▪ Being Positive: The right Attitude: Can Do, Will Do.

▪ Being Connected. Enterprising. Networked.

▪ Being Fair: Treating people well. Integrity. Equality.

▪ Creating Shared Success: Passion for the best deal.

3.1. There are several strategic objectives that we seek to achieve over the next five-toten years in support of our Vision and aligned with our Purpose. Our annual reports will provide updates on progress over that period:

▪ Improved customer services: we will develop a common customer service ethos across transport services in Wales and its borders focused on the needs of people, involving communities and business to deliver safe, reliable, affordable and low carbon transport.

▪ Fully integrated: we will focus on continually improving integration between different modes of transport. Integration requires reliable information provision, simplified ticketing and joined-up services where interchange takes place, as well as thought-through and, wherever possible, co-located services e.g. bus and rail stations located together.

▪ Reinvesting in transport: As a not-for-profit company wholly owned by the Welsh Government, we will ensure that any surplus from our operations is reinvested in transport services and infrastructure for the benefit of customers - building on the Welsh Government’s commitment that the transport network in Wales will be increasingly directly owned or operated by Transport for Wales.

▪ Ensuring we serve all of Wales effectively: We will ensure that we maximise our understanding of local and regional needs across Wales for the benefit of current and future transport users. Our immediate plans to achieve this include a North Wales Business Unit and the establishment of our headquarters with key partners at Pontypridd.

▪ Developing skills sustainably: The success of Transport for Wales relies upon the development of skills for delivery of services and infrastructure. We will look at ways to procure infrastructure and services that lead to even greater local and regional benefits. We will work with SMEs and larger organisations in an alliancing approach to maximise direct value for money through efficient and effective delivery, as well as wider sustainable economic benefits.

▪ Connecting communities: Our approach to many of our objectives will underpin our aim to ensure communities are properly connected. Beyond transport links, the focus on regeneration and placemaking opportunities to support sustainable growth and our commitment to the Welsh language will support this objective.

▪ Transport modelling, land-use planning: We will establish an evidence-based approach to support decision-making associated with infrastructure investment. We will support the Welsh Government by working to ensure opportunities to maximise the amount of residential, business and leisure space within walking distance of public transport and to improve connectivity and increase transport’s contribution towards the lowering of carbon footprints are fully understood.

▪ Environment/Carbon: We will deliver on the Welsh Government's policy by decarbonising our transport networks and improving the air quality of the communities they serve, seeking to prevent the associated negative impact on health.

▪ Playing our part in Prosperity for All: the Economic Action Plan: In addition to the objectives detailed above which support Prosperity for All, we will work with the Welsh Government to maximise the benefit of the commitment to a longterm (five-year) programme of transport capital funding to deliver projects in the most efficient and effective way whilst maximising the public sector’s considerable purchasing power.

3.2. We are ready to grow to meet the above challenges and to take on further responsibilities in supporting the Welsh Government’s commitment that, wherever an acceptable business case can be made, current supply arrangements will be consolidated into Transport for Wales.

Summary of legal and policy context

The context in which Transport for Wales operates can be broadly summarised into three key areas:

3.2. Legal and statutory duties:

These legal and statutory duties include those which apply to any company or organisation and place direct responsibilities on Transport for Wales, its directors and employees and include (but are not limited to):

▪ Company law.

▪ Employment law (including Equality Act, Employment Rights Act, TUPE Regulations, National Minimum Wage Act, Pensions Act, Working Time Regulations). ▪ Health, safety and welfare legislation.

▪ Environmental legislation, including the Environment (Wales) Act.

▪ Data protection legislation.

▪ Relevant EU law (for example, the EU Railway Packages, Regulation 1370). In addition, as Transport for Wales is exercising public functions there are further public law duties and responsibilities requirements which Transport for Wales must comply with and these include (but are not limited to):

▪ Procurement legislation.

▪ Relevant EU law (for example, the EU Railway Packages, Regulation 1370).

▪ Nolan principles (7 principles of public life).

▪ Welsh Government’s Policy Statement (December 2017) on Accessible and Inclusive Public Transport Objectives

3.4. Assisting Welsh Ministers to meet certain contractual commitments and Statutory Duties: These commitments include (but are not limited to):

▪ Wales and Borders Agreements (a series of agreements between the Welsh Government and Department for Transport concerning operation of the new rail service)

▪ The Rail Services for the Future document, published by Transport for Wales in September 2017, stated that “we are committed to meeting the requirements of the Welsh Language Standards by providing better Welsh language services.” These commitments have been carried forward into this Business Plan.

▪ Well-being of Future Generations Act - duty to act in accordance with the sustainable development principle. ▪ Active Travel (Wales) Act – Welsh Ministers must exercise their functions under this Act in a manner designed to promote active travel journeys, and secure new active travel routes and related facilities and improvements in existing active travel routes and related facilities. (Transport for Wales has said that it will “improve integration with active travel routes making it easier for people to walk or cycle to and from stations.”)

▪ the duties of Welsh Ministers under the Transfer of Functions Order, Agency Agreements and the ODP Grant Agreement

3.5. Obligations set out in the Welsh Government’s remit letter and the Management Agreement between the Welsh Government and Transport for Wales: There are a series of further non-statutory requirements which are set out in the Welsh Government’s remit letter and the Management Agreement between the Welsh Government and Transport for Wales, which include:

▪ Code of Practice on Ethical Employment in Supply Chains (Transport for Wales is a signatory to this Code, which includes annual anti-slavery statement, ethical employment policy statement, written policy on whistle-blowing)

▪ Welsh Ministers’ Policy Framework

▪ Welsh Government Policy Documents:

▪ Taking Wales Forward 2016-21.

▪ Prosperity for All: The National Strategy.

▪ Prosperity for All: The Economic Action Plan.

▪ WelTAG 2017.

4.1. Transport for Wales’ key governance arrangements to support delivery of our objectives and this business plan are detailed below. They comprise Transport for Wales’ Board and its committees and the Executive team.

4.2. The Board is responsible for providing strong governance and strategic vision, including:

▪ Establishing vision, mission (purpose) and values.

▪ Setting strategy and structure.

▪ Promoting high standards of public finance, upholding the principles of regularity, propriety and value for money.

▪ Delegating to management – including holding management to account against delegations – governance and delivery.

▪ Exercising accountability to the Welsh Government as sole guarantor member and being responsible to relevant stakeholders, supporting and providing constructive challenge to the Executive.

▪ Holding to account the Executive team on delivery of the business plan and the key deliverables of the business, i.e. safety, service, costs etc.

▪ Helping the Executive team by offering advice and mentoring to develop the business strategy and continue to improve business performance.

▪ Ensuring that adequate resources are available and that senior-level succession is well planned.

4.4. The Executive team is responsible for:

▪ Running the company – including Finance, HR, Health and Safety, and Legal matters within the agreed governance framework.

▪ Performance and delivery of projects.

▪ Performance and delivery of day-to-day business e.g. Rail Services.

Relationship with the Welsh Government

4.5. The structures and governance arrangements for Transport for Wales and its relationship with the Welsh Government have been developed in accordance with the guidance on managing relationships with external partners found in Chapter 7 of Managing Welsh Public Money and Annexes 7.1 – 7.4. UK Government Cabinet Office guidance on establishing public bodies has also been considered.

4.6. The structures and governance mean that Transport for Wales has a clear, legal identity within a robust and well-established framework, putting it at a clear distance from the Welsh Government and allowing it to make independent operational decisions.

4.7. The Welsh Government still controls the overall goals and performance of Transport for Wales at a strategic level, making sure that the Company is behaving efficiently and continues to act in the public interest.

4.8. Transport for Wales’ current company structure also offers significant flexibility in case there is any need to modify these elements in the future. The model is also more familiar to the commercial organisations with which Transport for Wales will need to work closely.

4.9. Transport for Wales is publicly funded, however it is envisaged that the Company could generate relatively low levels of additional income from external sources. Where the Company provides additional services to others, the Welsh Government expects these would generally be on a cost recovery basis. It is envisaged that any additional efficiencies generated by Transport for Wales beyond those anticipated in this case would be available to Transport for Wales to be reinvested in the transport network.

Relationship principles between the Welsh Government and Transport for Wales

4.10. Transport for Wales will be treated as a trusted delivery partner and the conduct of business between the Welsh Government and Transport for Wales will take due account of the Company’s role and functions and its plans as the primary delivery body for the Welsh Government’s transport policy. Transport for Wales will be encouraged to contribute to the workings and the management of the Welsh Government’s sponsor and client teams. The following principles will govern relations between the Welsh Government and Transport for Wales.

5.1. The 2017/18 Business Plan identified several core outputs that Transport for Wales’ advisory and consultancy services would support.

5.2. Procurement of the Operator and Development Partner (ODP) has continued. ITSFT responses were received in December 2017 and have been evaluated. The contract was awarded on 4 June 2018. The overall programme for commencement of Rail Services in October 2018 remains on target.

5.3. The OJEU notice for the appointment of Infrastructure Deliver Partners (IDP) to our Sustainable Transport Infrastructure Delivery (STrIDe) Framework was issued in January 2018. This framework is on target for award. This has been delayed slightly to align with the ODP procurement.

5.4. A set of commercial principles associated with the asset transfer of the Core Valley Lines were agreed with Network Rail prior to the issue of the Invitation to Submit Final Tenders in September 2017. The next step, the Transfer Framework Agreement and Hold Harmless Agreement, are currently being developed for agreement with Network Rail.

5.5. The Transfer of Powers process has progressed with the Department for Transport, with two Agency Agreements underpinning the procurement process so far. Agency Agreement 3 is to be agreed before ODP contract award. The Transfer Function Order is progressing through the parliamentary process for completion by June 2018. Transport for Wales' team has been expanded to recognise the management requirements for mobilisation towards the rail service commencement in October 2018.

5.6. New projects have been set up for Rail Service Continuity and Rail Service Improvements to focus efforts on taking this forward. The team is growing with a number of employees, including 3 Executive Directors appointed on a permanent basis. Recruitment is ongoing for the remaining roles in the senior team and associated support roles.

6.1. The table below summarises Transport for Wales’ strategic objectives and supporting operational plan for the period of this Business Plan (2018-2020). They have been aligned to Transport for Wales’ three core themes:

▪ Customer-focused services.

▪ Expert advice.

▪ Infrastructure investment.

Image: table featured in the TfW Summary Business Plan (2018-2020)

7.1. A two-year budget has been developed reflecting Transport for Wales’ strategic objectives and operational plan and aligned with the programme structure. The budget has made the following key assumptions:

▪ Rail Operations commencement 14th October 2018

▪ Transfer of CVL asset 2019/20 financial year

▪ Move to new offices in Pontypridd 2020/21 financial year

Additional Requirements and projects will be subject to further remit changes (which are not reflected in the budget) and further approvals, as appropriate, by purchase order.

Profile of expenditure is subject to further review with the ODP and IDP.

7.2. To deliver Transport for Wales’ strategic objectives, expansion of the team is planned over the next two years both on the delivery side and supporting functions.

8.1. The resource and capital expenditure budget for 2018/19 and indicative budget for 2019/20 are summarised in the table below. The annual plan will develop during the financial year according to remit.

Image: Resources expenditures expressed in thousands for 2018/2019 and 2019/2020.

Resource Expenditure (£'000s)

Rail Services 2018/19 Plan: 99,682

Rail Services 2019/20 Plan: 176,776

Central Services 2018/19 Plan: 1,111

Central Services 2019/20 Plan: 1,908

New Services 2018/19 Plan: 993

New Services 2019/20 Plan: 2,049

Resource Expenditure 2018/19 Plan: 101,787

Resource Expenditure 2019/20 Plan: 180,734

Resource Expenditure Non-Cash 2018/19 Plan: 106

Resource Expenditure Non-Cash 2019/20 Plan: 222

Image: Capital expenditure in thousands for 2018/2019 and 2019/2020.

Capital Expenditure (£'000s)

Rail Infrastructure 2018/19 Plan: 45,208

Rail Infrastructure 2019/20 Plan: 132,189

Corporate Infrastructure 2018/19 Plan: 1,836

Corporate Infrastructure 2019/20 Plan: 4,783

New Services 2018/19 Plan: 7,798

New Services 2019/20 Plan: 10,712

Capital Expenditure 2018/19 Plan: 54,842

Capital Expenditure 2019/20 Plan: 147,685

8.2. Rail Services includes the cost of the Commercial, Communications and Customer Services, Safety and Sustainability directorates and an allocation of Central Services (Corporate Services and Finance).

8.3. The resource non-cash budget relates to depreciation on fixed assets.

8.4. Within the capital budgets, Rail Infrastructure relates to the delivery of the South East Wales Metro infrastructure interventions; including capital spend for the Core Valley Lines and the Llanwern Station and Stabling project. The Corporate Infrastructure budget relates to the implementation of systems and the establishment and fit-out for the new Pontypridd office.

8.5. New services includes the cost of:

▪ Establishing and utilising the Analytical Unit and within the capital budget, the cost of developing Mid and West Wales and North Wales Transport Models.

▪ Establishing a North Wales Business Unit.

▪ Recruitment of a Bus Services Director and Bus Services Coordinator to lead on future bus strategy and integration. ▪ Providing network management advice.

▪ Development of the North Wales Metro and non-Metro infrastructure interventions, such as the Bow Street Station project.