Upgraded InterCity train plan on hold until after the election

Finance troubles are complicating the deal, Transport Secretary says

Plans to replace Britain's ageing InterCity trains are being postponed until after the general election, the Transport Secretary, Lord Adonis, said yesterday.

Despite the choice of Agility Trains as the preferred bidder for the multi-billion-pound, 30-year InterCity Express programme this month, financing complications have slowed progress to such an extent that the deal must now wait for the next parliament. Lord Adonis said: "Over the course of the procurement there has been a reduction in the capacity of the debt market to support the transaction as originally envisaged, and passenger growth has also slowed."

The Government's recent commitment to electrify the Great Western main line from 2016 also needs to be factored into the investment plans, he said.

The complications mean the deal could not be completed before the middle of March, leaving too little time before the election. "The negotiations are for a contract of nearly 30 years, a multibillion-pound spend over the course of many parliaments," Lord Adonis said. "In all the circumstances, the Government does not believe it would be appropriate to enter into this particular contract in the immediate run-up to a general election."

Instead, the Government is commissioning the former Audit Commission controller Sir Andrew Foster to undertake an independent assessment of the credibility and value for money of the proposed scheme, which will buy 125 new trains for the Great Western and East Coast main lines. Sir Andrew will report back within three months, and both his conclusions and the Government's response will be published.

If the assessment confirms that the current plan is "better than the alternatives", the project will proceed in the next parliament, Lord Adonis said. "The existing rolling stock dates back to the 1970s and needs to be replaced," he said.

Agility Trains – which is a consortium of John Laing, Hitachi and Barclays – expressed "disappointment" at the delay yesterday, but confirmed its commitment to the deal. "We will continue our ambitious planning for production and maintenance facilities in the UK to support the programme, in anticipation of concluding the contract under the next parliament," the consortium said.

Rail industry representatives are pushing for greater involvement by train companies to improve the scheme. "The best way to get value for money would be to give train companies a greater role in buying their own rolling stock," Michael Roberts, the chief executive of the Association of Train Operating Companies (Atoc), said yesterday. "This would get things done quicker and cheaper, ensure that the right rolling stock gets to the right places at the right time and give passengers and taxpayers the best deal."

If the Intercity Express programme goes ahead on schedule, the first of the next-generation trains will run on the East Coast main line from 2013. The new trains will be between 15 and 40 per cent lighter than those they replace, consuming less fuel and adding an extra one million seats per year to the East Coast line alone. Agility Trains is to spend 70 per cent of the contract value in the UK, and expects the programme to create 2,500 skilled engineering jobs as well as securing up to 12,500 more in local supply and services industries.

Full steam ahead? Looming decisions

*Franchises: Not only is the East Coast contract handed back by National Express still up for grabs, but the whole structure of franchise deals is under review after calls for longer contracts to boost investment.

*Electrification: In July, the Government agreed to the £1.1bn electrification of the Great Western main line. But the industry is pushing for more, including the full electrification of the Midland main line.

*High Speed Rail: The Government's HS2 company will report next month on plans to link London with the Midlands. The Tories support the concept of a second line, although not necessarily as proposed. Network Rail also has its own ideas, and is touting a £34bn plan to link London to Scotland.

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