SENIOR MPs probing the collapse of City Link blasted the “privatisation of gains and the socialisation of losses” yesterday after hearing that managers were optimistic about the firm’s future until investors pulled the plug.

The Scottish affairs and business select committees’ joint investigation had heard from secured creditor Better Capital that assurances of the company’s stability should have been taken with a pinch of salt.

In a letter to auditors in September, Better Capital said its “current intention” was to provide another year’s funding.

But chief executive Jon Moulton told MPs last month: “There’s a considerable difference between an intention and an undertaking,” he said.

This week, City Link chief executive David Smith suggested to the committee that his company had accepted assurances of funding from Better Capital at face value.

Mr Smith told the committee his fellow directors had believed in the potential viability of the company down to the wire, according to Post and Parcel magazine.

“What we believed, though, was that it would take longer than we’d originally thought,” he said. “And certainly take more money to do that,”

Inquiry chair Ian Davidson said: “It appears that the company directors thought Moulton was standing behind them until he pulled the plug.

“It’s perfectly clear that Better Capital cut their losses and put the costs on the taxpayer, who will now pay out redundancy.

The committee is set to finalise its conclusions before the general election.