The South Western Railway franchise could be nationalised in the coming months after transport secretary Grant Shapps today declared it financially “not sustainable”.
South Western, which is run by First Group and Hong Kong firm MTR, has been plagued by delays, poor performance and a series of damaging strikes in recent months. The franchise lost £137m in the financial year to March 2019, it revealed earlier this month.
Since then, it has suffered the longest rail strike in British history, which lasted for the whole of December, inflicting misery on hundreds of thousands of passengers.
Shapps said that South Western had “not yet failed to meet their financial commitments”.
“However, as a precautionary measure, my department must prepare suitable contingency measures.”
Therefore, the Department for Transport has outlined two options for the franchise owners. One of these is bringing the franchise back into the hands of the government, via arms-length body the Operator of Last Resort (OLR).
The other is a new short-term contract with South Western Railway, with “tightly defined performance requirements”.
South Western’s current contract was signed in 2017, and was set to run until August 2024.
The network serves London Waterloo, the busiest railway station in the country, and it carries on average 600,000 passenger journeys every day. Trains run to regions such as Surrey and Hampshire, but even go as far as Exeter.
It comes as the rail franchising system draws near to a total overhaul via a government commissioned review into the industry by former British Airways boss Keith Williams.
Earlier this month, Shapps kicked off the process of nationalising the Northern Rail franchise, just over 18 months after it was also forced to take over the East Coast Mainline.
The announcement “will not impact on the railway’s day-to-day operations,” Shapps said.
“The business will continue to operate as usual with no material impact on SWR services or staff.”
Operator to respond ‘in coming weeks’
A spokesperson for First Group and MTR 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.”
A spokesperson for South Western Railway said: “Together with Network Rail, we are working hard to improve our performance and have set up a joint performance improvement centre to address specific issues head on.
“Our new £895m Class 701 trains will begin running on suburban routes from the middle of this year and we are confident they will make a real difference for customers, helping to improve punctuality and providing extra capacity.”
Image credit: Network Rail