Doubt over future transport schemes

12 April 2012

Fresh doubts have been raised over the future of big transport projects as a leaked document revealed a potential £29 billion budget shortfall - the day after plans to nationalise East Coast Main Line were announced.

The transport industry memo, seen by The Guardian, warned of "looming spending cuts" which could lead to schemes being delayed, downsized or scrapped.

According to the newspaper, projects likely to be affected include the £6 billion road building programme including the extension of motorway hard shoulders; proposals for a high-speed train line; and the rail fare cap of inflation plus 1% which could be removed, leading to higher fares.

The Department for Transport's (DfT) finances suffered a major blow on Wednesday when National Express announced it was handing its £1.4 billion London to Scotland rail franchise back to the Government.

The firm's refusal to continue funding the loss-making East Coast Main Line beyond the next few months was described by Transport Secretary Lord Adonis as "regrettable and disappointing".

And he warned there might be grounds to terminate the two other National Express rail franchises - East Anglia and the London to Tilbury and Southend operation c2c.

With National Express's funding for East Coast expected to run out later this year, Lord Adonis has set up a new public organisation - East Coast Main Line Company - which will operate the line.

Lord Adonis said the Government planned to tender for a new East Coast franchise operator "from the end of 2010".

He said: "It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."

National Express had been contracted to run East Coast until 2015 and this is the second franchise termination on the line following the early ending of GNER's stewardship in 2007, which also followed financial problems.

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