The long-awaited extension of the Midland Metro through Birmingham city centre has been officially put on hold.
Transport Secretary Philip Hammond announced he was suspending plans to build a new section of the Midland Metro tram route, running from Snow Hill to New Street station.
And he warned that nobody should assume the project would ever receive the funding it had been promised.
The Labour government announced it was extending the Metro, which currently runs from Wolverhampton to Snow Hill, in March, two months before the general election.
Ministers said the long-awaited scheme would create 1,300 new jobs and boost the region’s economy by £50 million a year. The Treasury was to provide £81 million of the £127.1 million cost.
But the high-profile announcement was made even though the project was only at the start of the approval process. It had received “programme entry” status, which is the first stage of applying for government transport funding, but an application for “conditional approval”, the second stage, was due to be made later this year.
After that, the scheme would still require “final approval” before it could go ahead.
The coalition government has now announced that it is suspending every transport scheme which has failed to reach the final approval stage.
Transport Secretary Philip Hammond said local authorities should stop all work on them - because they may be wasting their money.
He said: “Pending the outcome of the spending review, I am suspending all local transport schemes which are not yet contracted. These schemes will be reviewed once the department’s spending allocation is confirmed.
“I am taking this action to ensure that no taxpayers’ money is spent unnecessarily on transport schemes that are now under review.
“If we are to succeed in reducing the UK’s record budget deficit, it is vital that not a single penny is wasted and we get the maximum value for money for every project.”
And in a statement to Parliament, he warned councils: “They should not assume that schemes prioritised under the previous Government . . . will be funded to the previous published levels.”