South Western Railway will be formally asked this week to explain to Grant Shapps, the transport secretary, why he should not sack it from the commuter network based at London Waterloo.
Just days after Mr Shapps renationalised Northern rail, stripping Arriva of its franchise, the owners of South Western Railway (SWR) have been told to submit a bid to the Department for Transport to stay in the job.
If the plans of SWR’s operators — First Group and MTR of Hong Kong — fall short, Mr Shapps will nationalise the business and hand the keys over to the operator of last resort, a sub-division of the transport department which is taking over at Northern next month.
If SWR keeps the contract it will be under substantially revised terms with the department likely to put the operator on a highly specified, low-profit-margin management contract.
This would anger passenger groups fed up with two years of disruption. MPs are also angry at having been misled over the government’s intentions. Last month in an answer to a parliamentary question the transport minister Chris Heaton-Harris said SWR remained “fully compliant” with its financial commitments. Days later Mr Shapps declared SWR was “not sustainable” as it emerged that the business was losing £137 million a year.
SWR has been in disarray since it took over the franchise two and a half years ago from Stagecoach’s South West Trains operation. Within a year SWR, in the grip of a chronic industrial dispute with its guards and unable with Network Rail to make its timetable work, had returned to the transport department asking to have its contract rewritten. It is supposed to run to 2024.
The crisis at SWR has been mirrored by disarray at its main owner, First Group, which has lost £532 million in two and half years, been under attack by hedge funds, suffered boardroom coups and has been forced by investors to break itself up. It is understood SWR will argue that it should be given the chance to reset its relationships with Network Rail and passengers under its new management. Mark Hopwood, credited with turning round First’s GWR operation, was installed as managing director at the turn of the year.
First Group, SWR and the transport department declined to comment.
