THE franchise that operates train services between Hampshire and London could be nationalised by the Department for Transport.

A statement issued by transport secretary Grant Shapps to parliament said the operation currently run by South Western Railway (SWR) could be transferred to the Operator of Last Resort (OPR), a public sector operator wholly owned by the government department.

The only other option on the table for SWR is to sign up to a new short-term contract, with tightly defined performance requirements.

The announcement from Mr Shapps comes after SWR's recent financial statements indicated the franchise was "not sustainable in the long term".

He also hit out at the ongoing dispute between the railway franchise and members of the National Union of Rail, Maritime and Transport Workers over guards on trains, which saw a month-long strike take place in December.

Mr Shapps said: "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 have not yet failed to meet their financial commitments and my department will ensure that SWR are held to their financial obligations under the current franchise.

"However, as a precautionary measure, my department must prepare suitable contingency measures, under the Railways Act 1993."

The Department of Transport has issued a request for proposal to the SWR franchise owners (FirstGroup plc and MTR) and to the OLR, and will evaluate the responses before reaching a decision.

"This will not impact on the railway’s day-to-day operations," added Mr Shapps. "The business will continue to operate as usual with no material impact on SWR services or staff.

"Parliament will be kept informed of developments."

An independent review of the railways is currently being led by Keith Williams, who has said the current form of franchising cannot continue.

"Modernisation of the railways must come with reciprocal modernisation of the way the railway is operated," said Mr Shapps. "Passengers on SWR have already suffered significant disruption from industrial action by the National Union of Rail, Maritime and Transport Workers (RMT), and this week the RMT are balloting for further strikes.

"These strikes are not about safety, accessibility or helping passengers. Driver controlled trains are perfectly safe, and have been operated elsewhere on the network for many years. These trains allow the guards to devote much more time to looking after passengers, which is of great benefit to those who need help with travel, like the disabled and the aged. This modernisation is essential if the future needs of this railway are to be met.

"Whoever operates SWR services, I will remain committed to modernising services and improving support for passengers.

"The railway is a public service. People rely upon it to support their way of life, livelihoods, education and healthcare, and it is why this government has committed to introducing minimum service levels during times of strike action."