Watchdog probes rail deal

The National Audit Office is investigating the Government's deal with train operator GNER, which collapsed last December barely a year and a half into a contract expected to last up to 10 years. The franchise, which includes services between Doncaster and the capital, was replaced with a temporary deal after the company said it could not pay an agreed 1.3bn premium.

The NAO's probe forms part of a wider study into rail franchising, including the process for selecting winners, which should be completed next year.

It follows calls from Conser-vative politicians for an independent inquiry into ministers' role in the "shambolic" East Coast mainline deal, which was agreed between GNER and the now defunct Strategic Rail Authority.

GNER at the time blamed the July 2005 London bombings, higher electricity prices and a rival being allowed on to the East Coast route for its financial difficulties.

NAO chief Sir John Bourn confirmed that the East Coast mainline would form part of its inquiry in a letter to former Tory shadow transport secretary Chris Grayling.

An NAO spokeswoman said it would look at "lessons learned" from the deal.

Ministers are set to reveal later this year which firm has won a replacement East Coast franchise.

Arriva Trains, National Express Group, First Group and a partnership of Virgin, Stagecoach and GNER are in the running.