A railway between London and Oxford will be the first new rail link between the capital and a major city for 100 years, if completed as planned by 2013.
The project, part of a £250 million upgrade of rail services to Oxfordshire and the West Midlands, would be the biggest rail infrastructure scheme to be funded without taxpayer involvement in postwar Britain.
The line has been designed to take cars off the congested A34 and A40 roads and will involve the construction of a station north of Oxford to attract commuters from across Oxfordshire and Gloucestershire.
Chiltern Railways, which will run trains on the line, said that annual mortgage payments of £25 million to finance construction were economically viable because of its 20-year operating licence — the first for a main line company in Britain — and a deal to spread payments over 30 years.
The Department for Transport is expected to publish a review of rail franchises next week, under which longer operating leases will become the norm in return for investment in stations and services.
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Lord Adonis, the Transport Secretary, said: “This is the kind of innovation and service improvement that I want to see across Britain, expanding dramatically the quality of services and expanding passenger numbers dramatically, and getting people out of their cars and on to trains.”
The new route will see 50 miles of the old Oxford-Cambridge railway rejuvinated and a short section of new railway built to link it with the existing Chiltern Railways main line.
The main line between Birmingham Moor Street and London Marylebone will also be improved and journey times cut by 20 minutes to 1 hour 38 minutes by next May. New platforms will be built in Birmingham and Oxford to accommodate the expected rise in passenger traffic.
BAM Nuttall, the UK subsidiary of the Amsterdam-listed Royal BAM Group, has won the £190 million construction contract. The project will mark the revival of a railway once destined for closure.
Detailed plans to run 100mph trains on the revived Oxford link, which takes seven trains a day to Bicester, were submitted for approval last week. Public consultation lasts for 42 days and a public inquiry is expected by the summer.
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Lord Adonis said he had based his decision to award a seven and a half year extension to Chiltern Railways’s franchise after seeing the merits of the scheme. He said: “The result for Chiltern has been extension to its franchise on the basis of exemplary performance and a credible plan for expanding passenger numbers and services.”
The company is confident that it would also be supported by any Conservative government. The constituency of the Conservative Party leader lies within the catchment area of the new link.
Network Rail, which manages Britain’s fixed rail infrastructure, will raise the money for construction and will ultimately own the line. Deutsche Bahn, Chiltern’s German owner, was keen to keep the deal off its balance sheet, to avoid accusations from German unions that Berlin was sinking capital into the British railway.