THE company behind the country's newest heritage railway line is to make its workforce redundant because of a cash crisis.

Weardale Railways Ltd, which launched Weardale Heritage Railway, in County Durham, during the summer, yesterday confirmed that all 36 of its staff would lose their jobs because of delays in accessing public money.

Redundancy notices sent to workers, ranging from management to cleaners, will take effect from January 26.

Bosses have been locked in talks with business advisors and major funders since before Christmas to find a way out of the financial crisis.

Company director Steve Raine said: "It is with deep regret that we have had to take this decision at this time, but because of continuing cash-flow difficulties we have no other option.

"Overall, the project will cost £5.5m - £3.5m from grants - but so far we have only had £1.4m of that and funders are looking over our paid invoices before more can be released.

"We have to stop all spending, including staff wages, until that happens."

He said that discussions were ongoing and it was hoped a way forward would be agreed by the end of January in a bid to reinstate some staff within days.

Principal funders include development agency One NorthEast, the Heritage Lottery Fund, Government Office North-East, Durham County Council and the Northern Rock Foundation.

They have vowed to work with the company to find a solution as quickly as possible to safeguard jobs and the dale's economy.

John Holmes, director of regeneration and tourism at One NorthEast, said: "All the partners involved in this scheme want it to succeed, and that is why we are working quickly and closely to address any problems."

The company will continue to operate its winter service between Stanhope and Wolsingham up to and including next Monday.

The first stretch of restored track between Stanhope and Wolsingham was opened in July, but plans to restore and open the full length of the line, between Bishop Auckland and Eastgate, by 2007, have been put on hold.