The Hertfordshire County Council and the Department for Transport have issued a joint statement. The summary:
For a long time we’ve wanted to increase the service frequency on the Abbey Line between Watford and St Albans, and the Department for Transport (DfT) had suggested that transferring the line to county council ownership and converting it to light rail could be the best way to do this. It was believed that a light rail service would be cheaper than conventional rail to operate, and as a result, that a more frequent service could run for the same cost.
However, having studied the detail of taking the line out of Network Rail ownership and separating it from the London Midland franchise, it became clear that there were some significant obstacles.
The proposal turned out to be considerably more complicated than originally expected and it was found that it is not possible to deliver light rail within the available funding. Therefore, the DfT has decided to step back from the plan to transfer and convert the line.
The full statement can be seen of the Hertfordshire County Council website along with all the newsletters issued about this proposal,