THE Government will lose a third of a billion pounds in revenue following the collapse of York-based National Express East Coast, The Press can reveal today.

Figures show the new publicly-owned company, East Coast, is set to hand over £433 million in premium payments to the Exchequer between now and 2011/12.

The figure is in stark contrast to the £766 million which NXEC was set to pay over the same period, had it retained the franchise.

The statistics were released by the managing director of York-based East Coast, Karen Boswell, in an in-depth interview with The Press.

East Coast had said previously that it would be paying less than NXEC, but the huge scale of the difference had not been known until now.

In the remaining five months of the current financial year, East Coast will pay £47 million, compared with the £96 million which NXEC would have paid.

In 2010/11, East Coast will hand over £169 million, compared with £303 million which NXEC would have paid.

In 2011/12, East Coast is due to pay £216 million, compared with £366 million which NXEC would have paid.

Ms Boswell said the old franchise agreement payments had been a matter for the Department for Transport, which had entered into an agreement with NXEC.

Selby’s Labour MP John Grogan said today he was not surprised by the third of a billion pound reduction in payments, even though it would be quite a severe blow to the Exchequer.

“It probably reflects the unrealistic nature of the bids that were made for the franchise under the two previous operators,” he said.

“I think they both probably over-bid and they both got into difficulties.”

He said he would now like a period of stability on the line, and favoured East Coast being allowed to run it for ten years.

York MP Hugh Bayley said the premium payments had been reduced to make the business viable over the next two years, after fare revenue had fallen because of the economic downturn.

Vale of York MP Anne McIntosh said the two previous franchisees had paid the Government too much.