Thousands of rail passengers who endured late, cancelled and overcrowded trains on a doomed Sussex service were the biggest victims of a disastrous

franchise, MPs have said.

The House of Commons Public Accounts Committee said the decision to award the South Eastern franchise to French-owned Connex in 1996 was marked by "wishful thinking".

Connex, which ran the Hastings to Tonbridge line, suffered the humiliation of having its contract withdrawn early in 2003 after it swallowed millions of pounds of public subsidies. In 2000 one in five of its services turned up late. Edward Leigh, chairman of the Public Accounts Committee, said:

"Connex became a byword for incompetence among cold and angry passengers waiting for trains that limped in late or simply didnt arrive."

The committee's report calls for better scrutiny of franchise bids and the development of an "early warning system" to prevent a repeat of failures in financial management which cost taxpayers nearly £60 million in "stop-gap" funding in addition to the £535 million Connex was awarded when it took on the 15-year contract.

Mr Leigh said: "Wishful thinking marked the acceptance of Connex South Eastern's franchise bid. The policy of the then Office of Passenger Rail Franchising (OPRAF) to go for the cheapest bid clearly led to myopia over what Connex could realistically deliver. And neither OPRAF nor its successor, the Strategic Rail Authority, managed the resulting risks.

"The parties couldn't communicate properly and felt no trust in each other.

"The SRA was slow to realise that Connex was running into money problems and Connex didn't rush to make this clear to the SRA. When further subsidies of £183 million were to be poured into Connex, there were no strings attached whatsoever."

In 2003 the Strategic Rail Authority withdrew the South Eastern franchise from Connex and passed it to its subsidiary, South Eastern Trains.

Terminating Connex's franchise early cost taxpayers £6.4 million, of which £2.8 million was later recovered.

Jane Cobell of consumer group Passenger Focus said: "It will be interesting how the Department for Transport and the Government respond as it is a warning of what can happen when you choose a franchise based on the lowest cost."

Since April 1 this year the service, renamed Southeastern, has been run by GoVia, which also operates the Southern franchise. In its first month 95 per cent of trains turned up on time.