£2.2bn injected to save railways

The Government today handed an extra £2.2 billion of public money to Britain's railways in an attempt to turn the struggling network around.

Transport Secretary Stephen Byers announced the cash injection today after Chancellor Gordon Brown agreed to release the funds during talks at the weekend.

The additional investment is a lifeline to Mr Byers, who has staked his political reputation on securing an improvement in rail services before the next election.

A spokesman for Mr Byers said: "This is new money. It is the result of discussions between Byers and the Treasury, which have been going on for a while."

A Treasury spokesman confirmed the move, and said the money was an advance on the allocation that would go to Mr Byers's department in the three-year spending review to be published this summer.

However, it could take years before the impact of the extra spending is felt by hard-pressed commuters. The money will be added to the Government's Ten Year Plan for transport, lifting its total value from £180 billion to £182 billion.

Mr Byers said: "We have always said that transport would be a priority for our second term in Government. I am pleased to say that we have been able to put this extra money into the railways without cutting spending on any other area of transport."

Today's move follows a announcement two weeks ago that planned public spending on the railways in the period up to 2010 would be increased by £4.5 billion, from £29 billion to £33.5 billion.

At the time, the Government said that the additional sum would have to come from the emergency reserve within the Ten Year Plan, because there was no new money available. Now, half of the extra spending will be met by the Treasury, leaving more money in Mr Byers' reserve fund for additional rail projects or other transport schemes.

The investment plans, set out by the Strategic Rail Authority, focus largely on London and the South-East. They involve early investment in station improvements, followed by longer-term upgrading of rails and signalling to improve reliability.

Around half of the £4.5 billion put into the rail pot two weeks ago represents money already handed by then transport secretary John Prescott to Railtrack in April last year.

The decision by the Treasury to release new money to Mr Byers means that the department will be able to reallocate the money to further projects, sparing passengers some of the pain that could have followed the decision to put the infrastructure company into liquidation.

At the same time as he unveiled his extra cash, Mr Byers set out to rebut charges that he double-counted some of the funds included in his announcement two weeks ago.

The spin exercise led to confusion today at the Department of Transport, Local Government and the Regions, with some officials initially claiming that there was still no new money available.