DfT criticised over National Express handling
A £150m offer from Birmingham-based National Express to terminate its East Coast rail franchise contract by mutual consent was turned down by the Department for Transport (DfT), it has been revealed.
Instead, the contract was terminated in late 2009 for a £120m payoff from National Express, costing the taxpayer £30m.
A new report by MPs said the DfT hoped that by waiving the fee, other train operators with loss-making franchises would be dissuaded from seeking similar deals.
The report said: "Since the East Coast termination, other franchises have been in financial difficulty and their holding companies have not sought to hand them back."
The committee added it was "concerned" that the department created "a moral hazard" by allowing National Express to pay a lesser financial penalty.
MPs also raised concerns over the DfT's statement that it would not hold the termination of the contract against National Express if the company chose to bid for future franchise offers.
