Hammond's announcement follows the publication of a report into the value for money of IEP by Sir Andrew Foster, former controller of the audit commission, which recommends a period of reflection while the value of alternative plans are assessed. Foster was asked by the previous Labour government in February to conduct the review following growing concerns at the decline of the debt market and slower than expected passenger growth figures.
"IEP is a complex programme which has interdependencies with several other major rail projects," Hammond says, "and as expenditure on rail projects will be re-assessed in the context of the spending review, it would be irresponsible to make a decision on IEP in isolation at this time."
The Intercity Express programme was initiated in 2005 to replace Britain's ageing fleet of Inter-city 125 diesel trains as well as to invest in capacity and passenger journey improvements on the East Coast and Great Western main lines.
In 2009 a contract, potentially worth £7.5 billion, was agreed with Agility Trains, a consortium of Hitachi, John Laing and Barclays Bank, to supply up to 1400 vehicles during a 20-year period. The 200km/h Super Express Trains proposed by Agility would be produced in electric, bi-mode and diesel versions and designed to increase capacity compared with the existing fleet.
However, concerns have been raised about the viability of the programme, specifically the development of unique bi-mode trains, along with its cost-benefits and the rail industry's growing scepticism towards it, all points echoed in Foster's report.
In response to Hammond's announcement, Agility Trains reaffirmed its commitment to continue working with the Department for Transport (DfT) on the project to provide the extra capacity the network needs without substantial investments in infrastructure.
Mr Michael Roberts, chief executive of the Association of Train Operating Companies (ATOC), however, expressed frustration at how the programme is proceeding, specifically given Foster's recommendation that potentially cheaper options should now be considered.
"This kind of government-led procurement is not a good way to deliver value to money to the taxpayer," Roberts says. "It's deeply frustrating that this project has so far cost the DfT over £20 million in consultancy fees over four and a half years and has so far failed to produce a single train."
Roberts argues that train companies should have a greater say in the procurement of their rolling stock which he believes would reduce costs in the long-term as well as guaranteeing the correct types of trains are purchased. He is, though, encouraged by Hammond's announcement that the government will in the future consult the rail industry during the decision making process relating to franchising policy, rolling stock investment and how best to implement the changes that result from the spending review.