£7.5bn Intercity train upgrade under threat

The proposed £7.5bn plan to overhaul the ageing trains on two major lines has been put on ice until October, sparking fears that the whole project could be axed.

Sir Andrew Foster, who was called in by the Department for Transport to review the Intercity Express Programme (IEP), yesterday called for further scrutiny of the programme as well as viable alternatives.

In his 41-page report, Sir Andrew called for a "pause for reflection" to explore the options for new trains on the East Coast and Great Western main lines to investigate whether there were "credible alternatives" to the existing plan.

The Transport Secretary, Philip Hammond, said the future of the plan would be determined in October, as part of the Government's spending review. "As expenditure on all rail projects will be reassessed in the context of the spending review, it would not be sensible to make a decision on IEP in isolation at this time," he said.

The Intercity Express Programme was launched five years ago as the costs and risk of maintaining the InterCity 125 trains – many of which are more than 30 years old – began to mount. The aim was to develop a "new generation of trains".

Following consultation, the Government decided to put a contract for a new fleet of trains out to tender, and Agility Trains, a consortium backed by Barclays, Hitachi and John Laing, was selected as the preferred bidder in early 2009.

It had pledged that 70 per cent of the contract would be carried out in the UK and that it would build a new factory to employ up to 500.

The delays have raised fears for the plan that the previous government had called "the UK's most significant investment in rolling stock for over 30 years".

A spokeswoman for the consortium remained confident. "We have expressed our commitment to continue working with the Department for Transport to respond to the points in the report, and to find an affordable solution which meets the Government's objectives," she said.

Michael Roberts, the head of the Association of Train Operating Companies, welcomed the report, but added his frustration that the Government had spent £21m in consultancy fees since 2005 "and has so far failed to produce a single train. Now the Foster report points out that alternatives to these trains could provide better value for money and produce benefits much more quickly."

In the report, Sir Andrew explored why the programme – which had passed technical value for money tests – was viewed so negatively by the industry. He was told that technical questions remained unresolved, and viable alternatives were not looked at closely enough. Some also raised concerns over the Department for Transport's management approach. "In short, there is a good deal about the programme as it stands that is unresolved, unproven, uncertain and carries risk," Sir Andrew added.