West Coast line stripped of £1.5bn

The beleaguered project to upgrade the West Coast Mainline railway faces a major setback, as backers prepare to slash £1.5bn from its budget

John Armitt, chief executive of Network Rail, and Richard Bowker, chairman of the Strategic Rail Authority, are close to finalising the cut that will lead to an increase in the proposed journey times between London and Glasgow.

At its peak, the project, which caused the collapse of Railtrack, was budgeted at £13bn. It was later downgraded to £9.9bn. After the latest review, Network Rail and the SRA have agreed to spend £8.4bn. "We are currently very advanced in our thinking with the SRA," said Mr Armitt. "We will reduce the budget by looking at things which we can defer or take out of the project."

The West Coast upgrade was hailed by the Government as a model for the UK's railways. It will allow Virgin to operate tilting trains at 125mph. However, the latest cuts will force Network Rail to reduce some of its planned rail renewals work, which in turn will force Virgin to run its trains at slower speeds on certain sections of the route.

Virgin has already received £106m in compensation from the SRA for previous project delays. A Virgin spokesman said: "We want this project to go ahead as planned to bring the benefits to our customers."

It currently takes five hours and 35 minutes to travel from London to Glasgow. The first phase of the project, due to be completed next September, was to shave 30 minutes off the journey time. The second, by December 2005, would see journey times cut to four hours and 53 minutes. Mr Armitt said: "There are improvements which, for example, will be made in the Trent Valley; do we defer those? There are improvements to the alignments which would result in significant changes to the station at Rugby; is there a trade-off in the benefits there?

"There are line speed options, where instead of going for 125mph we go for 110mph. The overall impact on the journey time? A couple of minutes. Is that vital or not?"

The news comes as the rail regulator, Tom Winsor, prepares to rule on how much money Network Rail can spend. Much to Mr Bowker's chagrin, he has suggested Network Rail delay the West Coast project to save £1bn. But Mr Armitt hinted the latest £1.5bn cost cut might placate Mr Winsor.

Separately, Mr Armitt and the Network Rail board are set to miss out on their executive bonuses - collectively worth £315,000 - because of poor train punctuality.

In the year to 31 March 2004, some 82 per cent of trains must arrive on time to trigger the payments. But the punctuality figure is currently at 79.6 per cent. "I wouldn't put money [on meeting the target] today, that's for sure. I think it is going to be a real challenge," said Mr Armitt.

The Lowdown, page 7