An investigation into the West Coast Main Line rail fiasco must be transferred to a fully-independent individual or lose all public credibility, Labour has said.
Transport Secretary Patrick McLoughlin is expected to appear before MPs when the Commons returns on Monday to explain the costly and embarrassing U-turn over the award of a new franchise.
He has already announced a review of the "unacceptable mistakes" by officials that led to the award being halted after Virgin Trains took legal action against the decision not to renew its contract.
But shadow transport secretary Maria Eagle said it was unacceptable the probe would be headed by non-executive directors of the Department for Transport and accused ministers of pre-judging the outcome. And in a letter to Mr McLoughlin, she warned the taxpayer could be exposed to still further legal costs if, as reported, the Government gives an extension to Virgin to continue running trains while the issue is reviewed.
The risks of further action by First Group - which had been awarded the new franchise - could be avoided by the Government's own not-for-private profit operator taking over in the interim, as called for by trade unions. Three civil servants were suspended earlier this month after the errors were found in the way the DfT managed bids from FirstGroup, Virgin and two other companies.
In her letter, Ms Eagle said: "Considering the need to look thoroughly at the role of everyone involved in this process, including ministers and senior officials, it is difficult to see how anyone will have confidence in the conclusions reached by fellow members of the Departmental Board. This is not in any way to criticise or pass judgment on those appointed by you to carry out this work, but to ensure the conclusions can be accepted without criticism of the 'inside' nature of the inquiry."
She hit out at attempts to "scapegoat" officials, pointing to claims by transport minister Simon Burns that there was "no evidence to suggest that past ministers were involved. She wrote: "If the department has formed such a clear view already, it is difficult to see how an inquiry by members of the Department's Board can approach this with a genuinely open mind."
The RMT - Britain's biggest rail workers' union - has warned that an 18-month "pay as you go" contract for Virgin to carry on running services risked compounding the public expense of the "shambles". It wants the route handed over to state-owned Directly Operated Railways (DOR) from December 9. "If this is not the course of action that you intend to take then I will look forward to hearing how you believe this can be prevented," said Ms Eagle.
A Department for Transport spokesman said: "The independent review into the Intercity West Coast franchise competition will be led by one of the country's most prominent business figures. Sam Laidlaw is the chief executive of Centrica and the lead non-executive on procurement across Government and is the person best placed to establish what went wrong rigorously and promptly. Mr Laidlaw is using independent external advisers and has been asked to provide an initial report by the end of this month.
"The second independent review - on how to take forward the wider rail franchising programme - will be undertaken by another leading business figure, the chair of Eurostar Richard Brown CBE. The government will naturally cooperate fully with both reviews and is resolving urgently the future arrangements for operation of the West Coast main line to deliver uninterrupted train services. The Secretary of State will provide an update on the situation to Parliament this week."