Work on the electrification of the Midland Mainline has been halted by the Government.
The move comes after Network Rail admitted it had been “overly optimistic” about completing the five-year, £38bn plan.
Transport Secretary Patrick McLoughlin responded by announcing that the plan was being “reset” because it was “costing more and taking longer”.
He told MPs that electrification work was being “paused” on the Midland Mainline, which is the line through Corby, Kettering and Wellingborough, and on the Transpennine route between Leeds and Manchester.
He also announced a shake-up of NR management with chairman Richard Parry-Jones being replaced by London’s Transport Commissioner Sir Peter Hendy.
Mr McLoughlin also said that none of NR’s executive directors would receive a bonus for the past year and that he was intending to end the role of the not-for-dividend company’s “members”, who in the absence of shareholders hold the company to account.
In addition, Mr McLoughlin said he was appointing former Eurostar chief Richard Brown, who oversaw a review of rail franchises recently, as a special director of NR who would update Mr McLoughlin on the company’s progress.
The Transport Secretary also said he was asking economist Dame Collete Bowe “to look at the lessons learned”.
His statement came after NR chief executive Mark Carne said: “During my first year in the job I have looked closely at every aspect of our business and it has become clear that Network Rail signed up to highly ambitious five-year targets set by the regulator.
“Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan, especially given the complexities of a network that is at full capacity much of the time.”
Mr Carne went on: “On the big items like electrification and capital projects, it was always part of the regulatory process that the costs and programme would be revisited as projects became properly defined.
“Unfortunately when these reviews have occurred, the more detailed project costs have been higher than assumed at the earliest stages of definition.
“As a result, the total enhancement programme cost now exceeds the available five-year budget. Some projects are also delayed beyond the original dates.”
Mr Carne added: “I recognise that these delays will cause disappointment for some passengers, for which I can only apologise.”
Mr McLoughlin said the problems that NR have faced “could and should have been foreseen” and that in parts of its improvement programme the company’s performance had “not been good enough”.
Much of the work needed on the railway should have been done decades ago, Mr McLoughlin said.
He went on: “Successive governments failed to invest the sums necessary in our rail network and that is why we find ourselves in the situation we are in today.”
He said NR’s spending should stay within its funding allowance, that electrification of the Great Western line was a top priority and that better services could be delivered on the Midland Mainline before electrification.
A spokesman for NR said about £2
bn worth of projects had been paused and about 20% of the company’s overall expenditure plans were being reviewed.
He added: “The vast majority of our work and hundreds and hundreds of projects across the country to improve and expand the railway continue.”
Transport Focus chief executive Anthony Smith said: “Passengers will be disappointed by this announcement, which follows years of above-inflation fares increases, crowded carriages and engineering works.
“Long-term plans and investment are important and welcome, and passengers have put up with much inconvenience in the expectation of a better, more reliable, and more comfortable rail service.”
He went on: “What passengers will want now is a clear plan of action, setting out exactly when NR will start to deliver some of the promised improvements.
“They want to know that somebody is getting to grips with this.”
Michael Roberts, director general of the Rail Delivery Group, which represents train operators and NR, said: “Britain’s railway is carrying record numbers of passengers and freight and in some places is virtually full to capacity, making continued investment crucial.
“In delivering a better railway, NR signed up to some highly ambitious targets and improvement plans which we now know have proved too optimistic.
“People and businesses rely on rail and some will be disappointed by the news that certain planned improvements will be delayed.
“The majority of proposed enhancements will still go ahead, and it is important that the industry, government and regulator learn from this situation to ensure we do better in delivering the future improvements the railway needs.”
Managing director of East Midlands Trains Jake Kelly said: “We are naturally disappointed at the news that the Midland Mainline electrification scheme is being paused.
“However, the Secretary of State clearly recognises the urgent need for more capacity, new rolling stock and faster journey times on our network, underpinning economic growth in the East Midlands and South Yorkshire.
“Today’s announcement confirms the infrastructure needed to support these improvements will go ahead as planned.
“This will be reassuring for our communities, customers and stakeholders who have worked hard to secure them.
“Faster journeys to London and more capacity on our network are the biggest priorities for our customers.
“We will continue to work with the DfT and Network Rail to support their plans to procure new rolling stock and secure the improvements needed for customers using the Midland Mainline route.”
Philippa Oldham, Head of Transport at the Institution of Mechanical Engineers, said: “It is disappointing that so much of the vital work needed to upgrade the UK rail network is being delayed.
“Passenger numbers continue to rise and we need to address the fact that we need much more rail transport capacity.
“The UK Government needs to drive a step change to revitalise the country’s rail network.
“An urgent review is needed to get a better understanding as to why costs have escalated and timings missed.
“Government needs to press ahead not just with these upgrades, but with delivering new projects such as HS2.
“We need to remove the bottlenecks in our transport infrastructure, to improve the efficiency and increase capacity, which will help to bridge the North South divide.
“Government would do well to learn and build on the experience of Crossrail – a project that is being delivered on-time and on-budget.
“We need to be able to use the knowledge and people skills developed from Crossrail to ensure other rail projects in the UK can be delivered more effectively and efficiently.”
A spokesman for East Midlands Councils, the consultative forum for local authorities in the region, said: “Despite having a very good punctuality record, the Midland Mainline is the slowest of any of the inter-city lines and due to continual under-investment, Midland Mainline trains are rarely able to reach their top speeds.
“The investment is essential if this region is to have a modern, efficient rail system – and is key if we are to widen access to the proposed HS2 network.
“Money has already been invested and work is under way with piling and bridge construction preparing the way for new overhead lines.”
The decision to pause the electrification of the Midland Mainline and continue with other projects represents a “blatant lack of respect” for the region, according to a Wellingborough business leader.
Chamber president David Cross said: “This is a serious blow to both the East Midlands and Wellingborough.
“Work has already been done on the bridges and now it goes on hold.
“What a turnaround by our newly elected government.
“Why hasn’t work on the Western Main Line been ‘paused’?
“This decision represents a blatant lack of respect for our region and is another example of the East Midlands being shunned in favour of the south.”
Chairman of the Liberal Democrats East Midlands Cllr Phil Knowles said: “The programme and the promises were laid out and seemingly moving forward.
“Now it seems this multi-billion pound scheme is set to come in over budget and much delayed.
“When will the scheme be completed?
“How much over budget is anticipated and importantly, can we have cast iron assurances that all of the long awaited parts of the scheme will actually be delivered?
“I am sure my worries and questions will be echoed by a considerable number of people as the news spreads.
“Will the delay in delivering the scheme impact negatively on those who are considering investing in the East Midlands?
“Our region has so much to offer and does not deserve yet another disappointment.”
Part of the electrification work saw the Pytchley Road bridge over the railway line at Kettering raised in height in 2014.