Loss-making South Western Railway faces prospect of nationalisation

THE new boss of South Western Railway has been hit by an auditors’ warning over the future of the business as he arrived by making an apology to passengers for its poor service.

Mark Hopwood's first week in charge was greeted by a caution that SWR might have to be nationalised after accounts filed by Deloitte raised “material uncertainty” over its future.

The documents lodged with Companies House revealed the loss-making company is in talks with the government for a rescue deal.

The report said: “Whilst these discussions are constructive they remain ongoing and the outcome of them and, therefore, the impact on the company's ability to continue operating the franchise throughout the going concern period is at this stage uncertain.”

Potential outcomes are the company being asked to submit a short-term management contract to keep running the service, it concluded, or the deal being terminated within the next 12 months and the state taking over.

The network, which includes the New Forest and Christchurch, has been hit repeatedly by strikes during a more than two-year industrial dispute with the RMT union over the future role of guards.

It has faced criticism from passengers and MPs, alongside calls for it to be stripped of the seven-year franchise, which parent companies FirstGroup and Chinese firm MTR were awarded by the government in 2017.

They are currently helping to prop up SWR which in the year to March 2019 made a loss of about £137m.

An SWR spokesperson said its recent performance had been affected by issues including “infrastructure reliability, timetabling delays and industrial action”.

He added: “We continue to be in ongoing and constructive discussions with the Department for Transport regarding potential commercial and contractual remedies for the franchise and what happens next, in order to ensure we reach the right outcome for the government, our shareholders and our customers.

“As set out previously, FirstGroup and MTR have already provided for the maximum unavoidable loss.”

RMT general secretary Mick Cash called for nationalisation, saying: “Rather than allowing South Western Railway to collapse into chaos, RMT is demanding that the existing operator is stripped of the franchise with the public sector taking over as soon as possible."

New managing director Mr Hopwood comes from Great Western Railway to replace former boss Andy Mellors, who is moving to another role within SWR.

In an open letter to passengers, Mr Hopwood said: “I'm sorry that our service has not been good enough in recent times. It's my mission to change that.”

Mr Hopwood, who said he had more than 30 years’ experience managing rail businesses, conceded there had been a “very tough couple of years” and said he was “determined to find a resolution” to the strikes.

He went on: “We’ll increase the number of trains running on time, and address problems like trains running with fewer carriages than they’re supposed to and trains missing out stops to make up time.

“This will be a slow and steady improvement – I'm sorry to say there's no silver bullet to solve these issues overnight, and I expect we'll still have bad days like everyone else.”

Action includes bringing together several key departments under chief operating officer Mike Houghton, who he said had turned around performance in his last job at Melbourne Trains in Australia.