THE Government may have grounds to terminate National Express's rail franchises in Essex, Transport Secretary Lord Adonis said today.

They are the National Express East Anglia line linking Essex with London Liverpool Street and the London, Tilbury, Southend franchise c2c.

It came as the Government announced it was taking over the running of a major London to Scotland rail route - the East Coast Main Line - after cash-strapped present operator National Express defaulted on its franchise.

Lord Adonis said he had set up a publicly-owned company which will take over the East Coast line when National Express ceases to operate the franchise - probably later this year.

The announcement of the takeover came as National Express announced its chief executive Richard Bowker, a former boss of the now-defunct Strategic Rail Authority, was leaving to take up a Middle East rail job.

Today, National Express said it was no longer willing to provide financial support for the franchise.

Lord Adonis said National Express had said that it did intend to default on its obligations in respect of its other rail franchises.

He went on: "Notwithstanding this, the Government believes it may have grounds to terminate these franchises, and we are exploring all options in the light of the (National Express) group's statement this morning. In the meantime, we expect National Express to meet its obligations on these franchises in full.

"A company which had defaulted in the way National Express now intends would not have pre-qualified for any previous franchises let by the Department (for Transport).

"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."