Tory ministers faced an angry backlash yesterday after it was revealed they have given rail privateer First Great Western (FGW) nearly a quarter of a billion pounds discount on its rail franchise.

FGW will pay just £32.5 million in premiums for the 23 months of the new extension, which lasts until 2015.

The premiums of the last two years of the previous contract amounted to £279m, revealing an astonishing £247m loss of payments to the taxpayer over a similar period under the current deal.