“Tory government could let Virgin Trains run more rail lines despite East Coast ‘bailout’ “

“Tory ministers could let Virgin Trains take control of more rail lines despite a huge row over the firm receiving a “bailout”.

Transport Secretary Chris Grayling refused to rule out further franchises, despite confessing the firm “made a major mistake” and there will be less money than forecast for the taxpayer.

He faced calls to quit last month when he let Virgin Trains East Coast, a partnership between Stagecoach and Sir Richard Branson’s empire, walk away from its franchise three years early. The firm is expected to pay the government hundreds of millions of pounds less than the £3.3bn it originally promised to 2023.

Labour branded this a bailout, a word Mr Grayling has repreatedly rejected.

Grilled by MPs today, Mr Grayling finally admitted there “won’t be as much” profit to the taxpayer “as had been forecast”. He added he was “not at all” happy with the current situation, adding: “This is a franchise that we clearly have not got right, the company hasn’t got right, it’s hugely frustrating.” But he repeatedly refused to guarantee the firm won’t be granted future rail franchises. He said the firm had not defaulted on the East Coast contract and was running a “good service”.

He told the Commons Transport Committee: “I have to do what is lawful as well as what is desirable. “I’m also constantly under attack from various politicians saying there are too many foreign companies in our rail network. This happens to be a British company in our rail network. “It may have made a major mistake here – do we want to exclude it permanently from all participation in the rail network?”

Mr Grayling insisted he does not want “companies to abuse the system and milk it for money”, and promised: “There’s no question of handing anybody a bung… They will be held to every last inch of that contract.”

But he admitted there will be less money to the public purse than forecast. He told MPs: “The taxpayer continues to make a premium out of this, will make a premium out of this in all circumstances going forward – taking a substantial slice of the operating profit.

“The money that’s been committed through the franchise period doesn’t just disappear in a puff of smoke. “But it’s certainly the case there isn’t as much of it as had been forecast.”