Rail deal 'misunderstood' by Welsh ministers, says Cameron
David Cameron has said Welsh ministers have misunderstood a funding deal to upgrade the railways in south Wales.
The prime minister made the statement in a letter to First Minister Carwyn Jones, seen by BBC Wales.
In the letter, Mr Cameron said Westminster was never going to directly fund the electrification of railway lines in the south Wales valleys and between Cardiff and Bridgend.
The Welsh and UK governments have been arguing over who will pay for the work.
On Wednesday, Mr Jones said there had been "no misunderstanding".
Mr Cameron previously told the BBC that the UK government was "putting the money into the electrification of the railway line all the way up to Swansea and, of course, the Valley lines".
But Westminster sources pointed to an agreement between both administrations in 2012, which said that funding for the work would be recovered from the railway itself.
In his letter to the first minister on March 14, the prime minister says the UK government will pay for the electrification of the Great Western line from London to Cardiff and from Bridgend to Swansea.
There will be "indirect financial backing" for Network Rail to carry out other work, including the electrification of the Valley lines and the main line between Cardiff and Bridgend, he says.
"It appears that a misunderstanding has arisen that the Valley Lines electrification will be directly funded by the UK government but that was never the case," Mr Cameron writes.
The prime minister goes on to say that Network Rail will raise the money, as part of an agreement between the Department for Transport (DfT) in Whitehall and the Welsh government in July 2012.
The cost will be recovered from increased track access charges paid by train companies who use that part of the network, he says.
The access charge is the fee that train operators pay to use the track.
The Valley lines are part of the Wales and Borders franchise, currently operated by Arriva Trains Wales which receives a subsidy from the Welsh government.
A new franchise is due to begin in 2018.
Mr Cameron said: "Responsibility for the Wales and Borders franchise costs is devolved to the Welsh government."
However, the Welsh government said it wanted further clarification following public statements by the prime minister and other UK government ministers that Westminster will foot the bill.
The UK government announced that electrification to Swansea and the Valleys will be carried out at a cost of around £350m in July 2012.
But the UK government now says the current estimate for the cost for infrastructure on the Valley lines is £588m.
Mr Cameron's letter came in response to a letter from the first minister to Downing Street.
Mr Jones wrote on March 6 that "the statements made by you confirming that the UK government is paying for the project may not have been properly communicated to the DfT and Network Rail".
He said he had been told that Network Rail would put work on hold "unless they are given clarity on the funding position by March 17".
Network Rail has previously declined to comment about the increasingly bitter row over the scheme, saying it is simply carrying out work on behalf of its clients.
In his letter to Mr Cameron, Mr Jones says the UK government could either directly fund the work or transfer money to the Welsh government to cover the track access charges.
At question time in the assembly chamber on Tuesday, Mr Jones restated his position that responsibility for funding the work was not devolved and that the UK government had said it would pay for it.
On Wednesday the first minister told BBC Wales: "There's no misunderstanding.
"Where you have a level of government that is responsible for a particular thing, and has the budget for a particular thing, of course, it's going to be right that it's assumed that they pay for it.
"In the same way, for example, if it's an issue to do with health, it's devolved. It's a matter for us as the Welsh government.
"The UK government made it very clear that it was their investment, their money, the secretary of state [then Cheryl Gillan] said £350m, that was the UK government's investment.
"The present secretary of state [David Jones] said it, the leader of the opposition here in the assembly [Andrew RT Davies] said it was a sign of the Conservatives investing in Wales, and the prime minister in October said we are paying for the electrification to Swansea and the Valley lines.
"You could not have a more public, a more explicit and a clearer commitment."