Alistair Darling, the Secretary of State for Transport, is to face a potentially damaging and expensive High Court review of his decision to kill off the project to bring trams back to Liverpool.
Mr Darling withdrew £500m of funding late last year from three projects - the Leeds Supertram, the South Hampshire tram scheme and Merseytravel - over fears of rising costs. Leeds and South Hampshire have accepted the decision but Merseytravel decided to fight.
It was due to receive £170m from the Department for Transport but was told it could not have the money because it could not guarantee that there would be no cost overruns.
Merseytravel sought a judicial review, saying two local authorities had underwritten £48m towards any overruns.
In a hearing lasting just 12 minutes, Mr Justice Silber found there was a case to answer and the High Court will consider it in the week starting 30 January.
Merseytravel, which has already spent £30m in preparatory work for the scheme, needs to begin work by the end of March or else risk losing agreed deals with contractors.
Mr Darling has halted five tram schemes in England since he became Transport Secretary. But in Edinburgh, where he is an MP, a tram network is being built despite its cost soaring from £473 to £714m. Funding for this is the responsibility of the Scottish Office. Mr Darling is also Secretary of State for Scotland.Reuse content