THE 30-year dream of a metro-style light rail scheme across Teesside is in fresh doubt after it missed out in a £1.5bn Government transport package.

Promoters must now try to rescue the project by putting together bids for two separate funding pots – both of which will come under fierce pressure in the looming spending squeeze.

The first phase of the metro system, to link Teesside with Darlington, was promised £34m of funding by the Labour government as part of a much-criticised spending splurge in the run-up to the General Election.

But only £4.9m of the package was signed off before polling day, mainly for station improvements at Eaglescliffe and Thornaby.

The remaining £29m, for new stations at Durham Tees Valley Airport and James Cook University Hospital, Middlesbrough, along with major improvements to Darlington and Redcar central stations, has not been agreed.

This week, the Department for Transport told Tees Valley Unlimited, the public-private partnership which co-ordinates development, that the scheme would receive no more funding without “further tests” of its value for money.

Tees Valley Unlimited has been told to apply to either: ● a £500m “regional growth fund” being set up to win privatesector investment and jobs, but also expected to fund some local transport schemes, or.

● a £140m local sustainable transport fund, of which only £55m will be for capital funding. Much of the cash will be allocated to expanding the Bikeability cycling proficiency scheme.

Both funds are due to get under way next April, with local authorities due to told the criteria for applications by the end of this year.

Tees Valley Unlimited had accepted it is highly unlikely to receive the full £29m it originally asked for. It is hard at work, particularly with Network Rail, attempting to reduce the overall £80m cost of the project.

John Lowther, director of strategy, said: “We are reasonable confident that we will get funding for the next stage of the metro.

“However, we will now have to go through these two other mechanisms.

It is most likely that we will go through the regional growth fund, because the project is linked to regional development.”

The Metro – if a £140m second phase ever received funding – would see trams run every 15 minutes, knocking 11 minutes off the existing journey time.

Extensions to Hartlepool and Nunthorpe have been mooted.