THE Government has deferred a decision on replacing intercity express trains on the rail network.

The Intercity Express Programme (IEP) - to replace Intercity 125 high-speed trains - was halted by the Labour government earlier this year and an independent review was set up which reported to the new Government in June.

An Hitachi-led Agility Trains consortium has indicated it would build a plant at Newton Aycliffe, County Durham, if it won the £7.5bn IEP contract.

The factory could deliver a £660m boost to the North-East economy over the next 20 years.

The Government said it is now looking at two options - a revised bid from the Agility consortium; and an alternative for a fleet of all-electric trains.

The Government said it would continue to assess these two alternatives, "alongside a consideration of the extent of electrification on the Great Western route" and would make a further statement in the new year.

The Government did say, however, that there would be 2,100 new rail carriages on the network by May 2019 to help overcrowding on the busiest services.

Transport Secretary Philip Hammond told BBC Radio 4's Today programme: "I made the decision that we must carry on investing in the railway, we can't stand still. If we want growth to continue, we have to invest in our transport infrastructure."