National gives up rail franchise

National Express has given up the loss-making franchise

One of the UK's biggest rail franchises will come under public control next week, the Department for Transport has announced.

The London-to-Edinburgh East Coast Main Line will transfer to a Government-controlled company at one minute before midnight on November 13.

Private sector operator National Express has given up the loss-making franchise after paying too much to run services on the line in 2007.

Transport minister Lord Adonis said: "I can assure the travelling public that services will continue without disruption and all tickets will be honoured."

Lord Adonis issued a formal termination notice to the company on Wednesday night. The franchise will transfer to a new operator, Directly Operated Railways, trading as East Coast.

Staff currently employed by National Express East Coast will transfer to the new operator, with services likely to remain in public hands until 2011.

National Express was committed to pay £1.3 billion in payments under the original franchise, but passenger revenues were hit by the recession and talks with the DfT about easing the terms of the deal foundered earlier this year.

The company also runs the East Anglian and c2c commuter franchises. These will not fall under public control despite initial threats to strip the company of its other rail deals under cross-default provisions.

"During the last five months, the group has worked with the DfT and the proposed operator DOR to ensure an orderly handover," the firm said.

The turmoil surrounding National Express's East Coast deal - which lost £20 million in the first half of this year - has put the company in the takeover spotlight.