The announcement that errors were made will land taxpayers with a huge bill and re-open calls for the re-nationalisation of our railways.
Trains can't do u-turns, but governments can.
Ever since the Department for Transport announced that the West Coast Main Line would be lost by Virgin, it has insisted that it had made the decision on solid grounds.
The charismatic Sir Richard Branson said they were "insane". Now civil servants have admitted they did make errors so serious the decision must be scrapped.
What was the error?
Since privatisation, trains are run by companies on a contract with the Government known as a franchise.
First Group bid to run services on the West Coast Main Line from Euston to Scotland. The firm included some very optimistic income and passenger figures, which Virgin always questioned.
An important term in the contract is a penalty clause which firms would pay in the event of not being able to fulfil their side of the bargain.
Many believe that the amount of money First Group was being asked to pay (£265 million) was too small.
How will this effect passengers?
The Government has a legal duty to keep services going uninterrupted. It is likely Virgin will simply continue while the entire franchise bidding system is run again. The trains, staff and timetables will not be effected.
Who will pay for this big mistake?
Every train firm that entered a bid to win the West Coast services will have paid around £15 million to participate in the process. This will now be re-paid to the firms. Ultimately taxpayers will pay tens of billions
What of the future?
There are 15 franchises to be offered by the time of the next general election. Now there will be searching questions about whether the entire franchise system is valid. In turn, this will lead to a resurgence of calls to re-nationalise rail.