A GOVERNMENT spending watchdog is to probe the troubled Virgin Trains East Coast franchise.

The National Audit Office (NAO) has launched an investigation following the news that the York-based company’s deal will finish earlier than planned.

Transport Secretary Chris Grayling told the Commons transport committee recently that the Virgin/Stagecoach franchise had failed because the Government had accepted an “overambitious” bid, and it was unlikely to survive even until 2020 as it struggled to honour its payments.

The franchises for the London to Edinburgh route, which runs through York, have been hit by similar problems twice before, first when it was operated by GNER and then by National Express.

The NAO said in a statement yesterday that the latest East Coast franchise started in 2015 and had been due to run until 2023 but the Department for Transport announced in November that it would be replaced by a new ‘East Coast Partnership’ from 2020, bringing trains and infrastructure under the same management.

The NAO said: "We expect to examine the department’s management of the franchise to date and the implications of its plans for the new ‘partnership’.”

It asked anyone wanting to provide evidence for its study to email enquiries@nao.gsi.gov.uk, putting the study title in the subject line.

The DfT said yesterday that the Government had been very clear that ‘no one was getting a bailout’ and Virgin Stagecoach would continue to meet its financial commitments made to the taxpayer on the East Coast rail franchise, as it had done since 2015.

“Premium payments continue to flow to the taxpayer, as they currently do, and any suggestion that the taxpayer will be out of pocket is completely wrong,” said a spokesman.

“Stagecoach has also – on average - paid 20 per cent more back to the taxpayer than when the line was operated by Directly Operated Railways and we continue to receive hundreds of millions of pounds.

“The decision to bring in a partnership to run the service from 2020 is to ensure the train companies work more closely with those responsible for the infrastructure like the track and signalling to help improve the service for passengers.”

A spokesperson for Virgin Trains on the east coast route said: “We are continuing to meet or exceed all of our contractual commitments to customers and the taxpayer on the east coast route, as well as progressing our £140 million investment programme, and we are happy to assist the work of the NAO.”