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Virgin trains will continue to run on the West Coat Main Line until the government sorts out the £40 million mess it has made of the franchise bidding process.

This morning we heard that the controversial decision to award the contract to run the West Coast Main Line to FirstGroup has gone south – by which I mean the franchise award was scrapped by the government after it found “significant technical flaws”.

Three civil servants have been suspended – typical of David Cameron’s government to sack the help.

Bids were made by four companies – Virgin, FirstGroup, Dutch train operator Nederlandse Spoorwegen, and a joint bid from French companies Keolis and SNCF. The flaws were found in the way the level of risk in the bids was evaluated.

This appears to be a problem across the Coalition government’s departments. Does anyone remember Andrew Lansley’s refusal to release to risk assessment on his changes to the NHS, which predicted severe problems with the delivery of healthcare?

The August announcement that FirstGroup would take over services on the West Coast Main Line, starting in December, sparked a legal challenge from current operator Virgin, which has run the franchise since 1997. The Department of Transport said it will no longer be contesting the judicial review launched by Virgin in the High Court, and Virgin will continue to operate the line while the issue is resolved.

I’m not fantastically enthusiastic about this because it seems like a squabble between rich boys over their toys. Let’s bear in mind that Virgin is having great fun peeling bloody strips from England’s NHS and claiming them for itself.

Most damning of all is the fact that the four companies must be reimbursed for the cost of their bids, taking £40 million from the public purse at a time of fiscal austerity. The government has wasted our money. Will the welfare budget take yet another hit to help George Osborne balance the books?

There is a bright side. The flawed franchise was awarded when Justine Greening was Transport Secretary. She was replaced last month by Patrick McLaughlin. I made fun of him at the time because he has a fear of flying, but at least he has the decency to admit when a mistake has been made.

What a shame his leaders can’t admit the same about their entire administration.