West Midlands Combined Authority forced to pay back £200m grant if Metro line not built in full

Bosses have voted to split the extension into two phases due to spiralling costs and a huge funding shortfall, with no completion date set for the second section from Dudley to Brierley Hill.

And a leaked report into the struggling scheme has revealed that government funding of £207m would need to be handed back should the whole project not be completed.

The report on 'Metro affordability' says failure to complete the line would have "financial and reputational implications".

It says the West Midlands Combined Authority (WMCA) secured a Department for Transport grant of £207m for the scheme from the Transforming Cities Fund.

It also received £131.7m for the Birmingham to Edgbaston extension, which opened last week.

The report says: "Grant funding terms and conditions for these projects require the WMCA to have created an asset where we have 'resulting economic benefit or service potential'.

"In the event that the extensions are not built, those conditions would not be met, and it is prudent to assume that the £338m would become repayable in full."

The report adds the WMCA could be forced to borrow money from its local authority members in order to pay off the debt.

Mr Street has insisted the whole line will be completed, telling the Express & Star it remained "mission critical" and that new funding options were being explored.

The Express & Star revealed that the shortfall for the Wednesbury to Brierley Hill line currently stands at around £240m, while its projected cost has increased from £449m in 2019 to £550m.

A number of opportunities to "mitigate the funding gap" have been put forward, including bidding for new government grants and switching funding from other projects.

The mayoral council tax precept could also be raised – a move that would break a pledge made by Mr Street when he was re-elected last year.

According to the report, the decision to split the line into two phases will see costs rise even further, with the Wednesbury to Dudley section now expected to cost £385m.

The 1,350m Birmingham to Edgbaston extension cost £149m, including phase one from Grand Central to the library.