RAIL union RMT condemned government plans to terminate the East Coast rail franchise three years early in what Labour has branded a “bailout” that could cost taxpayers hundreds of millions of pounds.

The train operator, made up of Stagecoach and Sir Richard Branson’s Virgin Group, had pledged to pay £3.3 billion to run the service until 2023 when it was re-privatised in 2015, after six years of public ownership.

But Virgin Trains East Coast will avoid paying huge sums back to the public purse, since the bulk of payments were due in the final years of the franchise. The line will then be run by a new partnership model.