Rail privateer First Great Western was accused of a £1 billion taxpayer rip-off yesterday after the government decided to extend its franchise for another five years.

No other operator has been allowed to bid for the service — running from London to Wales and the West Country — despite First Group’s chaotic operation of the network.

Just hours after news of the award broke, furious commuters were facing 60-minute delays as the company reduced services to London’s Paddington station to four an hour, blaming “damage to signalling during overnight engineering work.”

On top of nearly £1bn in subsidies, FGW will benefit from hundreds of millions of pounds in taxpayers’ cash being pumped into electrification of the network, and replacement of its inter-city fleet.

The company will not pay a single penny towards either project.

Transport union RMT said the franchise extension was a “stitch-up which shows that the chaos of rail franchising is continuing to deliver massive rewards for failure to train companies whose only role in life is to rob every penny piece that they can from Britain’s privatised rail network.”

General secretary Mick Cash said the extension showed “that rail privatisation is a one-way ticket to the bank for these companies.”

He accused the company of “holding the British people to ransom” as a monopoly provider.

“With the company planning to axe catering services, and threatening the jobs and role of the guards when the new inter-city trains are introduced, RMT will continue to fight for jobs, pay and decent working conditions from a company that is clearly awash with money and which has no excuse for making any cuts whatsoever.

“The union will also continue to campaign for the public ownership of our railways and an end to the franchising racket,” he said.