It is a big disappointment this work is being removed from the current plan, but realistic in the short/medium term. However, I'd be very surprised if some of this electrification doesn't reappear again at some point. Bi-modes are great, and Oxenholme - Windemere is a great application for them. I don't think it will be a great tragedy if Windemere doesn't ever get electrified, however on the Great Western, Every IET unit will now have to come with diesels fitted which will be used at high power for a fair part of every single journey made. Completion of electrification to Bristol Temple Meads (both routes) and Swansea could have allowed a large proportion of the fleet to have had their engine packs removed in the future, but I assume DfT have now signed on a price based on those diesels remaining in place for the full lease (27 years?). Removing the diesels could be a major saving in down time and man hours for the fleet maintainer over the long term. Put simply, Agility might be able to make more profit over the asset life by themselves arranging funding of the additional wiring in the future. Perhaps by shutting down the existing NR programme and starting up something new in a few years time, a more cost-effective approach can be made on this. There is also the possibility the Welsh Government, in perhaps already having to fund wires as far as Bridgend might be able to offer funds As for MML, there's no major fleet renewal needed in the near future with the current Meridians, though they might be supplemented by a few Hitachis or something similar in a few years to replace HSTs. They will simply have to be bi-mode there but they will be relatively few in number, and could have diesel packs removed in future if electrification rematerialises.
When resignalling and remodelling around Sheffield commences, providing suitable platforms and electrification for HS2 conventional network compatible trains, that is probably the time to reconsider MML electrification, and a programme could be devised to follow on proceeding south from Clay Cross. The Meridians will be well past their half life by then so replacement by a reliable and cheaper to maintain all electric fleet (perhaps also including some bi-modes for non electrified branches) could be acquired.
For very heavily trafficked lines with long trains and high speeds, electrification and electric-only trains has still got to be the most efficient traction option for the majority of the fleet: Weight, Complexity and Reliability are the key factors. No other rail administration in the world has ever challenged that orthodoxy. Grayling is very brave to suggest this level of finality, assuming that's his real intention. Running everything on diesel at least part of the way carries risks in both cost and reliability. A largely electric only fleet can be joined by a proportion of bi-modes of course, for the relatively infrequent trains that project beyond a core electric network, and bi-modes should at least please traction nazis who cannot bear to contemplate any diesel working under the wires!