South Western Railway “not sustainable in the long run” – transport secretary

The South Western Railway franchise may be nationalised due to losses, according to a warning from transport secretary Grant Shapps.

Run by the SWR joint venture between FirstGroup and Hong Kong’s MTR, the franchise – which operates services across Dorset – is “not sustainable in the long term”, according to a ministerial statement released on Wednesday.

Concerns over punctuality and reliability plus slower revenue growth has led to the operator’s financial performance being “significantly below expectation” since it began in August 2017, according to Mr Shapps.

The franchise is owned by FirstGroup and MTR and made a pre-tax loss of £139 million in the year to March 2019.

A spokesperson for FirstGroup/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.”

Options for the franchise include nationalisation or moving to a new short-term contract.

In the meantime, the franchise is set to continue to operate as usual with no material impact on SWR services or staff.

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 £895 million 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.”