Ministers today gave the green light to a £250m trolleybus network for Leeds.
Commuters in the north and south of Leeds will be able to travel into the city centre on a network of modern, electrically-powered buses – the first of its kind in the UK.
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City leaders said the scheme will speed up the city's recovery from recession and enhance its ability to "compete on the international stage".
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Ministers also approved 13.7m to build a new entrance to Leeds City Station. This scheme will allow passengers to enter and exit the station from both sides of the River Aire around Granary Wharf.
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The trolleybus announcement follows years of disappointment at the rejection of the city's proposed Supertram system.
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At an event today in Leeds City Square, transport minister Sadiq Khan announced Department for Transport (DfT) "programme entry approval" for the New Generation Transport (NGT) project and will contribute 235m towards its 254m cost.
Leeds council and Metro, the West Yorkshire public transport coordinator, will pick up the remaining 19m.
DfT officials approved a northern route to Hyde Park Corner, then to Headingley, West Park, a park-and-ride at Bodington and then along a 2.5 mile extension to Holt Park. A southern route goes to a new park-and-ride site at Stourton, via Clarence Dock and Hunslet.
Officials rejected plans for an eastern route connecting the city centre to St James's Hospital via Beckett Street and Burmantofts Street and for a city centre loop.
Metro and the council today said they were "determined" that these should both still go ahead and will investigate ways to find the 15m needed.
Today's announcement allows the project to move to the legal, planning and highway powers stage.
A public inquiry could be held early next year and if the project gets full approval, work would start late 2013 or early 2014 with the first trolleybuses running by 2016.
Mr Khan said: "This is fantastic news for Leeds. Today's announcement seeks to tackle congestion in the city at peak times, while presenting sustainable and practical alternatives to the car."
Like trams, trolleybuses are powered by overhead electric cables. But while trams run on tracks, the trolleybuses would use the road either alongside other vehicles or on segregated routes and have priority at junctions.
Metro chairman Coun Ryk Downes said: "NGT will mean quicker journeys into and around Leeds, which will in turn result in new jobs and business opportunities for people across West Yorkshire and beyond."
Coun Andrew Carter, leader of Leeds City Council, said: "NGT has the potential to tackle congestion and reduce the city's carbon footprint. It will speed the Leeds city region's recovery from recession, boost its economy and enhance its ability to compete on the national and international stage."