MPs yesterday called for the East Coast Main Line to remain in public hands after hearing of “improved performance”

since it was taken out of private hands.

Margaret Hodge, the chairwoman of the Commons Public Accounts Committee (PAC), asked the Department for Transport (DFT): “If it ain’t broke, why fix it?”

However, DFT permanent secretary Lyn Homer said ministers would stick with their timetable to re-tender the franchise at the end of next year – more than three years after it became staterun.

She said: “Competition for the railways is one of the ways that we can bear down on the costs to the taxpayer.”

Elaine Holt, chairwoman of the state-owned East Coast Main Line Company, said her company had considered bidding for the franchise.

However, Ms Holt said such a bid would have been a distraction, and said: “We would have needed a partner. Rather than making a bid, we are focusing on doing our day job and getting that right.”

The comments came as the PAC investigated the decision to terminate National Express’ £1.4bn franchise when the company ran into financial problems in 2009.

It was the second time in three years that a company had bid more than £1bn for the route and then quit after admitting it could not afford it. GNER gave up its £1.3bn contract in 2006.

An earlier report by the National Audit Office found that the DFT was correct in taking a “tough line” and refusing to renegotiate.

However, yesterday, Conservative MPs on the PAC, led by Stockton South’s James Wharton, suggested taxpayers would have gained an extra £30m if National Express had been allowed to pull out. He said: “I think you got a bad deal. Other operators will say ‘if you terminate, then we can get away without any long-term penalty’.”

The committee heard that the East Coast company was now paying premiums to the DFT at two-thirds of the level planned by National Express – up from half last year – and had made a £26m profit.

Ms Holt said punctuality had deteriorated, but said track operator Network Rail was responsible for nearly two-thirds of delays and an ageing fleet for many of the rest.

The DTF’s leading civil servant said: “We have seen an improved performance from East Coast, particularly in recent months. It shows this is an area where a good service can be delivered.”

East Coast staff will share bonuses of about £600,000 this year, although Mrs Holt’s has been capped at £12,500.