The South Western Railway (SWR) network could go back into public hands after government officials concluded its position is not sustainable in the long-term.
The Government is preparing contingency plans and the Department for Transport (DfT) looks likely to step in as an operator of last resort.
Transport secretary Grant Shapps told MPs that ‘poor operational performance, combined with slower revenue growth, has led to the financial performance of SWR to be significantly below expectation since the franchise commenced in August 2017’.
SWR has not yet failed to meet their financial commitments and the DfT will ensure that SWR is 'held to their financial obligations under the current franchise’, Mr Shapps said.
However, as a precautionary measure, the department must prepare suitable contingency measures, under the Railways Act 1993.
‘Such options include a new short-term contract with SWR, with tightly defined performance requirements; or transferring the operation to the Operator of Last Resort (OLR), a public sector operator wholly owned by the department.’
He told MPs that the DfT has issued a request for proposals to franchise owners FirstGroup plc and MTR and to the OLR, ‘and will evaluate the responses to determine how best to secure the continuation of passenger services on this part of the network’.
As Transport Network has reported, FirstGroup/MTR has been in discussions with the DfT over financial support, in the light of the long-running dispute with the RMT union over the role of guards.
Earlier this month the firm warned that it could be stripped of its franchise after forecasting losses of up to £146m during the remainder of its contract.
A spokesperson said: ‘As we indicated in the statutory accounts for SWR released earlier this month, we continue to be in ongoing and constructive discussions with the DfT regarding potential commercial and contractual remedies for the franchise and what happens next, as we seek to ensure the right outcome for our customers, our shareholders and the Government.
‘We will be responding to the Government’s request for proposal in the coming weeks.’
The RMT criticised Mr Shapps for not immediately bringing the franchise back into public ownership, which it called a ‘total cop-out and continuing failure to face reality’.
However, perhaps conscious that the eventual demise of SWR might be seen as a victory for the union, Mr Shapps re-iterated the Government’s plan to further restrict the right of railway workers to strike through the introduction of minimum service levels.
He said: ‘Whoever operates SWR services, I will remain committed to modernising services and improving support for passengers.’