STAFF on the East Coast rail franchise will be retained, services maintained and tickets honoured, Transport Secretary Lord Adonis confirmed this morning.

He was speaking after debt-ridden National Express said it would give up the franchise to operate rail services between London and Scotland following the resignation of the company's chief executive, Richard Bowker.

Lord Adonis said it was now also "possible" the Government could also take control of National Express's other two rail franchises.

A publically-owned company has now been set up to take over the running of the East Coast main line, which serves York, Northallerton, Darlington, Durham and Newcastle until the franchise can be again put out to tender.

"What the company has said is that it will not commit additional resources to the franchise from the holding group," said Lord Adonis.

"National Express are defaulting on the terms of their contract.

"We have to pay out whatever it takes to ensure services continue.

"All tickets will be honoured. There will be no disruption to services. The staff will be retained. We are concerned to ensure there is continuity."

Commenting on the failed attempts by National Express to renogiatiate its East Coast franchise, he added: "The Government is not prepared to renegotiate rail franchises.

"I am simply not prepared to bailout companies that are unable to fulfil their commitments.

"If you did so all the other train operating companies would want a bailout."

A spokesman at the Department for Transport said: "It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."