WHEN passenger services resumed on a redundant North-East railway last summer, hopes were high that a remote dale would enjoy a golden age of steam.

Popular with walkers, families and visitors enjoying a touch of nostalgia, Weardale Railway, in County Durham, brought thousands of visitors to an area hit hard by job losses and foot-and-mouth disease.

Along with other developments, it is a key element in the dale's revival, as well as part of a plan to create a heritage trail in the region known across the world as the birthplace of the railways.

It is a tantalising prospect that could attract international interest, especially when it is linked with other exciting projects, such as Shildon's new Locomotion rail museum.

The group behind the line, Weardale Railways Limited, which has been the operating company, and the volunteer-run Weardale Railway Trust, are hoping their original dream is still intact.

But as passengers came in their thousands to pre-Christmas Santa Specials, a financial nightmare was unfolding that threatens the line's existence.

Contractors who worked day and night to get the railway open on time have still not been paid and 30 people lost their jobs as soon as administrators moved in on Wednesday.

Former workers have spoken of wasted resources and money being "chucked around".

One major problem was that the line did not have its own steam locomotive and had to hire ones from other lines at £350 a day, paying up to £3,000 in transport costs every time one came and went.

Even with £53,000 in the bank from the Northern Rock Foundation, the trust could not find a suitable engine to buy anywhere in the country.

And without a mains water supply to the Wolsingham depot, water had to be brought in by tanker at a cost of £300 every two days.

One redundant worker said: "We are all very bitter. We blame the funders and the management.

"Thousands of pounds have been wasted."

In the opinion of Stanhope Parish Council chairman Harry Irwin, the railway was too ambitious in the early days.

He said: "They tried to run before they could crawl. There should have been a time of consolidation.

"The parish council is sorry it has gone into administration, but it has always been a risky venture and they tried to do too much.

"Public relations have been poor. They have upset a lot of people, and there have not been other structures in place, such as parking to cope with the extra visitors.

"We want the railway to succeed, but the important thing for us is that it does not cost council taxpayers a penny. There is not enough money for basic services in Weardale as it is."

One Weardale businessman, who asked not to be named, is desperate for the railway to continue.

He said: "It is an exciting project which has brought a lot of good things to the dale. It is important that people do not lose confidence in it because they have seen people losing jobs and businesses not being paid."

Councillor Brian Walker, Durham County Council's cabinet member for business support, spoke for the line's supporters yesterday, saying: "We remain as determined as anyone to see this important and imaginative project succeed, and are looking very closely at all the options that might limit the impact of current difficulties on the railway company itself, the jobs of its employees, local suppliers and the local community as a whole."

Road freight decision triggered campaign

THE reopening of a five-mile stretch of the Weardale Railway between Stanhope and Wolsingham took a resourceful band of volunteers 11 years to achieve.

They launched their campaign in March 1993, after cement company Blue Circle controversially switched its freight transport to the dale's narrow roads, meaning the end of the rail link between Eastgate and the nearest main line link, 18 miles away at Bishop Auckland.

Then, it was a small band of enthusiasts who, backed by the council, managed to run a number of steam specials to raise awareness of the line.

The original Weardale Preservation Society merged with the Weardale Railway Trust, which has grown to 1,000 members who help fund the project and provide volunteers essential to the running of the service.

A separate company, Weardale Railway Limited, was set up to undertake the specialised tasks of negotiating with line owner Railtrack, raising money through regional, national and European grants and running the trains.

Complex legal and technical hurdles were overcome. Railtrack agreed to sell the line for £100,000, a Transport and Works Order was granted on July 16, 2002, and the company pre-qualified for crucial funding.

Before a full application could be submitted, the business plan had to be discarded overnight.

In January 2003, the Strategic Rail Authority said it was ending its Rail Passenger Partnership grant package, and new sources of funding had to be found.

By then, the railway project had assumed a significant role for Weardale and the Wear Valley, which had, following foot-and-mouth outbreaks and company closures, earned the unwelcome tag of the most deprived rural district in England.

A new task force gave the railway flagship status, seeing it as a link between other tourist attractions, especially a renewable energy centre proposed for the former cement works site and a restored prisoner of war camp at Harperley.

The announcement of grants made the prospect of opening the line a reality. Tracks were cleared, platforms built and Stanhope Station restored to its 1950s glory.

Reopening day on July 17, last year, was a triumph, symbolising a spirit of recovery with new jobs and visitors spending money in shops, pubs and hotels.

With 19,000 passengers travelling since then, there were optimistic preparations to extend the line to Eastgate and then to Bishop Auckland.

Any development was abruptly halted this week after expected grants failed to materialise, the money ran out and administrators laid off 30 of the 36 workers.

What administration means

ADMINISTRATION is a method used to protect a company experiencing financial problems from its creditors.

A court order is issued that forbids any form of legal or insolvency action without the court's permission.

Essentially, the company's directors hand the business and its assets to a specialist insolvency practitioner, usually a firm of accountants.

Such a manoeuvre prevents creditors taking enforcement action against the company and gives the administrator time to review the scale of the crisis and negotiate with creditors.

The point of administration is to achieve a better realisation for creditors than would be the case if the business went into liquidation immediately.

This is usually achieved, either by selling as a going concern, or restructuring the business and proposing a schedule of debt repayments.

At other troubled companies, the first task of administrators is to cut costs. Because the wage bill is the biggest cost, attempts are usually made to offload staff, as happened at Stanhope on Wednesday.