PLANS to electrify the rail link between Liverpool and Manchester may be shelved after the Government revealed “problems” with spending.

The new coalition appeared to indicate Labour’s £1bn plans for electrification of the UK’s railway system, including lines in the North West, may not go ahead.

Louise Ellman, Riverside MP, and chairman of the Select Committee on Transport, last night said she was appalled by the position the new government had taken, after the news emerged during question time in the Lords.

Earl Attlee, for ministers, said there were “problems” about spending money on electrifying lines, given the state of the public finances.

He added: “We are committed to High Speed 2, but you will understand the problems about expenditure on electrification in the current economic climate.”

The coalition did, however, express “support” for “further electrification of the rail network”.

Lord Attlee said the Government was seeking to implement transport savings of £682m in 2010/11.

He said these would include “£112m from direct departmental spend, £100m from Network Rail, £309m from local government grants, a proposed reduction of £108m from the Transport for London grant, and the deferral of £54m from lower priority schemes”.

Lord Adonis, who was transport secretary until the coalition took power, had set out £1bn plans last year for electrifying lines between Liverpool and Manchester and London and Swansea.

Survey work has already started on the Liverpool-Manchester scheme, and electrification of the line would mean a travelling time of 30 minutes between Liverpool and Manchester, with more regular services and fewer breakdowns.

The £530m “Northern Hub” project to remove bottlenecks around Merseyside and Manchester is also under threat.

The idea is to boost train numbers by 40% and the scheme would also provide Liverpool with its first direct link with Bradford and Halifax, and slash journeys to Sheffield, Leeds and Newcastle by 40 minutes.