End the great railway scam

That sum is certainly an underestimate, since there will be further costs in terms of Virgin's legal challenge, a rerun franchise process, expensive lawyers and accountants to go through the next draft with a fine-tooth comb and possibly a foray into the courts by First Group to challenge the cancellation of its award.

But even if it adds up to double McLoughlin's estimate, it's a drop in the ocean compared with the £5 billion handed over annually for the private train operators to dish out to their shareholders.

McLoughlin absolve the privateers from blame, insisting that he fault lies with his department - not with the man in charge but with his civil servants.

However, George Muir, former head of the Association of Train Operating Companies (Atoc), declares that the current franchising system is at fault, since it is unworkable.

His criticism is that franchises of longer duration - upon which the government insisted to drive up the size of bids - cannot be guaranteed to deliver the level of later-years revenue needed to justify bids of the magnitude of that submitted by First Group.

Muir insists that there needs to be government responsibility to underwrite future revenues so that train companies don't walk away from their franchises, as National Express East Coast did in 2009, avoiding its financial commitments to the Treasury under the terms of its franchise.

The West Coast franchise won by First Group and now cancelled by McLoughlin ran every risk of ending in a similar shambles, but the burden would have been borne by the taxpayer.

This is because the franchise model provided for the lion's share of contributions to the Treasury to be handed over in the latter half of the franchise, enabling First Group to hand back the keys if it didn't prove as profitable as the company had claimed or believed when it submitted its tender.

Virgin Trains boss Richard Branson portrays himself as the knight in shining armour in this affair, but deciding between any of the private train operating companies is essentially a choice between a monkey and a black dog.

They all talk of better services, lower prices, more reliability and attention to passenger safety, but their overriding priority is shareholder value.

Ex-Atoc boss Muir blows the gaffe when he admits that no private train operating company will commit itself to investment and franchise payments to the Treasury without its revenue being underwritten by the government.

This undermines the free-market thesis that private companies merit profits on the basis of risking their investment in the marketplace.

These characters don't want risk. They want certainty.

They want profits guaranteed by the taxpayer in return for their supposed expertise in making the railways more efficient and less dependent on state finance.

Privatisation has cost the people of Britain countless billions in subsidies, escalating fares and a higher level of casualties in avoidable accidents.

Ed Miliband calls this latest privatised railway fiasco "another government screw-up, another government mistake," but the blame lies with rail privatisation itself.

Rather than score tedious political points by questioning current government competence, Miliband should have the courage of popular conviction and declare that the next Labour government will return our railways to public ownership.