A planned public-private rail partnership on the East Coast Main Line has been scrapped.
The Department for Transport (DfT) was due to launch a new body taking responsibility for both track and train operation this year, but has decided that train services should remain under full public control for at least another three years.
It has given a new deal to London North Eastern Railway (LNER) to run trains until 2023, with the option to extend for a further two years.
LNER is owned and overseen by the DfT's Operator of Last Resort.
When it began operating in June 2018, following the failure of Virgin Trains East Coast, it was given a two-year deal, due to expire on June 28.
A DfT spokeswoman said:
This direct award will enable LNER to continue delivering improvements to the service, including the Intercity Express Programme, completing the roll-out of Azuma trains, realising the benefits of enhancements to the East Coast Main Line, and a major timetable uplift to increase the number of services and speed up journeys."
In March the DfT agreed to suspend rail franchise agreements until September to avoid train companies collapsing due to the coronavirus pandemic, at a cost of up to £3.5 billion.
The decision saw the Government take on the revenue and cost risk of train operation.
Transport Secretary Grant Shapps told MPs on Wednesday that the crisis accelerated a permanent switch to "different types of contracts".
He told the Transport Select Committee:
We already know that the railway had to change. Because of what's happened, we've ended up running all of the operations or being the ultimate guarantor of them, as it were.
The current system sees the majority of Britain's rail services operated by fixed-term franchises, which involve the DfT setting out specifications covering areas such as performance levels and upgrades. Train companies then submit bids to run the franchises, and the DfT selects the winners.
The Government-commissioned Rail Review recommended that the railway should have a "central guiding mind", which Mr Shapps compared with Transport for London, which issues contracts to firms to run London Overground services as a concession.
The DfT was due to respond to the review by setting out reforms in a white paper in autumn 2019, but this has been delayed by December's general election and the coronavirus pandemic.
Labour's shadow rail minister Tan Dhesi said:
Labour has long argued that public ownership of the rail network will provide better value for the taxpayer and for passengers. We welcome the Government conversion to this.