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A multi-million pound project to bring a long-awaited overhaul to the transport network of South East Wales has finally been given the green light by the Welsh Government.

The Finance Minister Jane Hutt yesterday published her draft budget proposals which confirmed that the first phase would begin on a South Wales Metro system this year – promising “potentially transformational” improvements to bus and rail links for the region.

It means a total of £62m will be ploughed into the scheme over the next three years – including £28.7m in 2014-2015 and £29.8m in 2015-2016, as well as £3.5m this year.

The Echo understands the initial tranche of funding for the long-mooted scheme is not yet appropriated to specific programmes, but First Minister Carwyn Jones has previously said he wanted to increase the rail network’s coverage of the east of Cardiff and links with Newport alongside greater link-ups with the Valleys.

An independent task force, commissioned by the Welsh Government, produced a report in June which detailed new railway stations and routes, as well as priority bus lanes and light rail, which would better connect the region.

The group – whose membership included representation from one of the region’s biggest employers in insurance giant Admiral – had recommended a package of “phase one” projects worth £90m.

This included £15m for bus priority corridors – which include an “express bus” between the city centre and Cardiff Airport – and £13m for station improvements, such as park and ride.

Longer-term plans included proposals for rapid transit in and around Cardiff, priority bus corridors both north-south and cross-Valleys, new routes between central Cardiff and the city’s north west, a new light rail system linking Cardiff Queen St, Callaghan Square, Cardiff Bay, the enterprise zone and Cardiff Central and a Caerphilly-Newport new rail line on disused rail corridor.

Confirmation of the go-ahead of the scheme and investment was published alongside the Welsh Government’s draft budget proposals, which saw cuts applied to local government totalling around £150m for next year, but an extra £570m for the health budget over the next three years.

However, local government will take a huge hit to its budget, with nearly £150m shaved off its revenue next year, with a further £106m the following year.

Business leaders welcomed the start date for the metro project and other infrastructure projects.

Director of CBI Wales, Emma Watkins, said: “By pledging firmly to fund phase one of a new scheme to create a South East Wales metro system, the Welsh Government has clearly indicated its commitment to improve the transport infrastructure across South East Wales – home to some of Wales’ largest and most dynamic businesses.

“This scheme is crucial in linking up the major cities in the south with the Valleys areas, in bringing people and goods to work, and getting Wales connected.”

Federation of Small Businesses Welsh Policy Unit chair Janet Jones said the budget appeared to be “well-grounded” and said it welcomed the additional funding for transport projects such as a South Wales Metro – something she said FSB Wales has pressed for.

Eluned Parrott, Welsh Liberal Democrat transport spokeswoman and South Wales Central AM, said: “In the past, the South Wales East Metro system has been mooted by the Welsh Government but we’ve never seen confirmation that this is going ahead. If this is indeed confirmation of the beginning of the South Wales East Metro, albeit with the small funding attached to it, this is to be welcomed.

“For a truly transformational metro programme, a significant amount of investment will be required in the years ahead. The electrification of the south Wales line by the coalition government, along with the associated infrastructure boost if the regional metro is developed, will help improve the economy of south Wales by growing connectivity.”

Byron Davies, the Shadow Transport Minister, said: “It is clear that the transport system needs urgent improvement across Wales and this investment must be given a cautious welcome.”

He added: “More must now be done and I hope similar schemes follow elsewhere in Wales.”