The government privatised Britain’s only publicly owned main-line rail network yesterday, signing off a rip-off which will cost the taxpayer hundreds of millions of pounds.

East Coast Main Line operates between King’s Cross in London and Edinburgh, serving centres including Peterborough, Doncaster, Wakefield, Leeds, York and Newcastle.

It was privatised in 1996 but in 2009 was taken back into public ownership because privateers proved incapable of operating it efficiently.

Under public ownership the service was run by Directly Operated Railways (DOR), a company owned by the Department for Transport, and contributed about £1 billion to the Treasury.

It won passenger approval ratings which made it the most efficient and popular intercity rail service in the country.

Now it is being taken over by Inter City Railways, a joint venture 90 per cent owned by Stagecoach, 10 per cent by Sir Richard Branson. The service will operate as Virgin East Coast.

The Tory-led coalition rushed the privatisation through, ignoring regulations which govern the usual privatisation process, in order to complete the deal before May’s general election.

Labour criticised the reprivatisation but failed to say it would take East Coast or any other part of the network back into public ownership if the party wins the general election, despite widespread public support for renationalisation of the whole rail network.

Shadow transport secretary Michael Dugher said: “This decision is a betrayal of taxpayers and the travelling public. David Cameron has put privatisation ahead of the public interest. This whole rushed franchise process to reprivatise the East Coast Main Line should never have happened.

“Labour has called for a wholesale review of the franchise process.”

Rail union RMT general secretary Mick Cash said Mr Dugher’s comment was “a start from Labour but doesn’t go anywhere near far enough.

“A review is a waste of time and money. The whole franchising and privatisation racket needs to be swept away entirely — and the politicians need to wake up and realise that is what the public are demanding.”