TRAIN company GNER has shrugged off reports that it may have to pay £100m a year to the Government should it win the right to continue running services on the East Coast Main Line.

Last year, it paid about £25m to the Treasury in premiums and is among just a handful of profitable rail firms that do not require a public subsidy.

With a preliminary decision due as early as next month on which company will win the new east coast contract, it is understood the Government could now be looking for up to four times that figure.

This has led to fears that the winner will be forced to increase ticket prices and reduce services.

GNER spokesman John Gelson said: "It is pretty much accepted wisdom that the premium payments back to the Government next time around will be a lot higher than they are now. We are pretty relaxed about £100m."

GNER has admitted that it can give no guarantees over price rises should it win the new seven-year franchise, nor can it say exactly how many trains it will be running on a daily basis until the final details of any contract is thrashed out.

A document published by the Strategic Rail Authority (SRA) last year allowed for the withdrawal of some services.

Ian Walker, secretary of the North-East branch of campaign group Rail Future, said: "We would be concerned if financial savings were made to the detriment of services."

Four companies - GNER, First Group, DSB (part of Danish railways) and a Virgin/Stagecoach consortium - have been shortlisted by the Strategic Rail Authority to run trains on the East Coast Main Line.

An SRA spokesman said the level of premium payments would be "substantially more", but could not confirm how much.