Rail regulators have been accused of “penny pinching” over plans to redevelop Gatwick Station in time for the 2012 Olympics.

The Office of Rail Regulator (ORR) outlined yesterday how much it intends to allow Network Rail to spend on major projects over the next five years.

It was initially hoped that £30 million would be earmarked for Gatwick to transform the station into an integrated transport hub worthy of ferrying thousands of extra passengers in time for the London Games.

But business leaders and councillors have criticised the ORR’s decision to hand out just £19 million out of a total of £26.7 billion for the five-year period, beginning April 2009.

Jeremy Taylor, chief executive of Cadia, the business association for the Gatwick Diamond area, said: “The regulator appears to be penny pinching to the detriment of Gatwick and business in the South East.

“The figures that are being bandied about the country are vast, so it is a pity the UK’s second gateway airport has once again been underfunded.

“We need to see what NR can do with the £19 million. They will not have plucked the £30 million cut of thin air or to install marble fountains.

“The money will have been for a station that is more than fit for purpose and with the capacity to provide a really good experience for passengers travelling through Gatwick.

“The regulators appear to be looking at the minimum of what could be spent rather than what should be spent.”

The £19 million is an improvement on the £9 million the ORR offered in July but is still not enough for West Sussex County Council leader Henry Smith. He said: “We welcome the recognition that more money needs to be spent on tracks, signalling and the station area.

“However, £19 million is still well short of the £30m estimated that it would cost for the work to be done properly. We need to continue to lobby the Government about the need for the right level of investment. Last week I met the deputy mayor of London about this issue and he agreed to join us in writing to the ORR.

“Two weeks ago the Chancellor made an announcement saying that the Government is going to spend its way out of recession through capital projects. The Gatwick Station redevelopment is a golden opportunity for this and would be great for the local economy.”

A spokesman for Network Rail said they would be looking at the ORR report to see whether £19 million was enough and would respond before the deadline in February.