THE collapse of yet another East Coast Mainline rail franchise reveals yet again how farcical our approach to running railways is. The Government persists in treating the railways as a cash cow - auctioning the franchises off to the highest bidder with scant regard for whether the companies bidding to run services can afford the high costs imposed.

Three times now different companies have had to pull out of franchises for which they bid too much - first GNER, then National Express, and now Virgin/ Stagecoach. The only time there was any real stability was after National Express pulled out, when for a while the route was effectively nationalised. Many thought it should have remained that way.

There has been absolutely nothing wrong with the standard of service provided by any of the three private rail operators who have run the East Coast route. The only problem has been that the ludicrous bidding process they are required to go through forced them to pay too much.

So what, you might say? If an ambitious company bids too much for a franchise, that is its lookout.

Well, yes - except that very often it is the taxpayer left picking up the pieces. Lord Adonis has warned that the early termination of Virgin’s East Coast franchise will cost the taxpayer hundreds of millions. The franchise should have returned £3.3 billion to the state - but York Central MP Rachael Maskell says it will now pay only a fraction of this.

This is utter madness. There is a genuine debate about whether the private sector or the state should run our rail services. The present government is ideologically committed to privatised railways.

But if we expect private companies to make the investment that our outdated rail infrastructure needs, we have to make the franchises commercially viable. Virgin says it will press ahead with the promised redevelopment of York Station despite its franchise ending early. Well, let’s just wait and see...