Up to one in 10 train services are to be axed in large parts of the country because of a growing financial crisis.
The Strategic Rail Authority (SRA) is also insisting that operators use buses instead of trains where possible in a desperate attempt to cut costs.
Companies bidding for new, enlarged franchises in East Anglia, northern England and Wales have been ordered to draw up plans for a dramatically reduced timetable.
The financial crisis follows soaring costs on the network and a decision by the Government last year to cut more than £300m from the authority's budget.
The decision to slash services leaves the Government's 10-year plan in tatters. Three years ago the Deputy Prime Minister, John Prescott, predicted a 50 per cent increase in the number of passengers using trains by 2010, but the financial crisis means that the Government will be lucky if the network achieves half that number. Virtually all the £33.5bn of public money earmarked for the network until 2010 has already been spent, much of it on rail maintenance in the aftermath of the Hatfield crash in 2000.
All four bidders for the new, enlarged Wales and Borders franchise have been told that on top of a 10 per cent cut in the timetable, around £100m will be slashed from the state subsidy over the 15 years of the franchise.
Richard Bowker, chairman of the SRA, has also insisted that services from Carmarthen to Waterloo in London, which links west and south Wales to Eurostar cross-Channel services, must be severely curtailed. Under the plans, ostensibly aimed at easing congestion, the services will start from Bristol.
Recently Mr Bowker refused to give details of the cutbacks to the Commons Welsh Affairs Committee on the ground that they were commercially confidential, even though all four bidders had been informed and the successful candidate had already been chosen.
Mr Bowker's plans will encounter fierce opposition from the Welsh Assembly, which will be furious over the cutbacks in services which are almost certain to affect "socially excluded" towns in the valleys.
Assembly members will also be angry over the Principality losing its direct link to Eurostar services.
Stephen Joseph, of the campaign group Transport 2000, said the cutbacks in the Wales and Borders area constituted the first salvo in a battle which would affect railways all over Britain. "It seems that the SRA does not take local and regional railways seriously, but they are vital to social inclusion and to taking traffic off the roads," he said. Mr Joseph pointed out that the cutbacks came at a time when the Welsh Assembly was re-opening lines.
A spokesman for the SRA refused to be drawn on the exact level of cost-cutting required by the authority. However he conceded that bidders had been asked to draw up plans for a 10 per cent budget reduction as one of a number of scenarios. "We are taking cost-cutting very seriously. We are definitely interested in getting better value for money," he said.
The four bidders for the Welsh franchise, due to begin in November, are Connex, which was recently stripped of its licence in South-east England; Arriva, which lost the Merseyside franchise; a joint bid from Serco and the state-run Dutch railways, which won the Mersey licence; and National Express, Britain's biggest rail operator.
The spokesman confirmed that the SRA had the power to call for bus services to be used instead of trains where that amounted to "a better use of money". It is known that the cost of operating trains is far higher than buses.Reuse content