United Kingdom government will take back control of the running of the rail route between London and Edinburgh from private operator Stagecoach (temporarily) after the company failed to make the contract work financially.
The London to Edinburgh line has been run by a joint venture between Stagecoach and Virgin, for the last three years.
Mr Grayling said the decision had been "very finely balanced" between an operator of last resort and a new, non-profit contract for Vtec.
Stagecoach reported losses on the line, and in November a year ago Grayling announced that the franchise would be terminated in 2020 to enable it to become a public-private railway.More news: Juventus in seventh heaven
The proposal comes as part of Transport Secretary Chris Grayling's announcement in the Commons today that the East Coast line, which serves Stevenage, would be taken over by an "operator of last resort".
Despite the firms now avoiding up to £2bn in premium payments after the failure of the franchise, Grayling said "it would not be reasonable to place conditions" on Stagecoach or Virgin bidding for further rail services.
He expected the majority of the enhanced services planned by Virgin and Stagecoach for delivery by 2023 to be implemented by LNER, although this would largely depend on the ability of infrastructure manager Network Rail to deliver them. Adonis has said he was forced to resign as the government was "trying to silence" him over his criticism of its handling of a multimillion pound rail franchise.
In 2015, the Conservative government privatised Directly Operated Railways, meaning that a franchise collapse, like the one revealed today, would see the service run by a consortium of three companies - Arup Group, Ernst & Young and SNC-Lavalin rail & Transit.More news: When is Ramadan 2018? Muslims Set To Begin Holy Month Of Fasting
The service's most successful period had come under public ownership, Mr McDonald said, until it was "cynically reprivatised".
He insisted taxpayers had not lost out, adding: "Only Vtec and its parent companies have made losses at this time". Quite the contrary. The disciplines of private sector operation returned more investment and better returns to taxpayers than public sector operation did.
But the private operators have since complained of losing money on the line between London and Edinburgh.
Mr Grayling may protest that this is only a temporary measure - but it is still the third time in just over a decade that a private company has had to be stripped of the East Coast Main Line contract.More news: Formula One: Dominant Lewis Hamilton reigns in Spain, Sebastian Vettel fourth
LNER will take over the running of the line from June 24. They have advised that there is also no suggestion of either malpractice or malicious intent in what has happened. He said: "They have paid a high financial and reputational price".
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