FirstGroup, which has a majority share in South Western Railway, has issued a farewell message as the countdown to Sunday¹s renationalisation goes on.

First Rail managing director Steve Montgomery said it had been ‘a privilege’ for FirstGroup to have operated SWR since 2017. Over the last eight years FirstGroup have delivered investment in SWR’s rolling stock including a £70m refurbishment of the existing Desiro fleet; a new depot at Feltham; and launching the new Arterio fleet. While the Arterio programme had been slower than expected due to a number of factors largely beyond FirstGroup’s control, the number of new trains on the network is set to double by the early summer, replacing older rolling stock and giving good momentum to the business in future.

He continued: ‘Passengers have been at the forefront of  service improvement throughout our eight year stewardship of these important routes. We are proud of how SWR brings people together across the south east of England.

‘Improving the infrastructure, customer experience and rolling stock across the service has enabled us to deliver for our passengers, who make 165 million journeys each year. Right up until the final weeks we have continued to innovate, with a new fast Wi-Fi service being rolled out.

‘I would like to thank our SWR passengers for their custom during this time. Above all, I would like to say thanks to our SWR colleagues for their hard work and dedication to our customers and recognise the important role all those across the business have played in delivering these improvements to the service. We are supporting DfTO to ensure a smooth transition and we wish passengers, partners and colleagues every success for the future.’

FirstGroup and its franchise partner MTR won the former South West Trains franchise in 2017, ousting Stagecoach after 21 years (writes Sim Harris). Stagecoach itself would retire from the privatised rail industry two years later as the result of a dispute with the Department for Transport over liability for railway staff pensions.

All DfT franchises ceased to exist in September 2020 as part of the fall-out from Covid, which had forced the government to introduce ‘emergency measures’ in March to protect the operators from insolvency while everyone was being urged not to travel in the interests of public health.

Most franchises were replaced over time by National Rail Contracts, a form of management contract in which the government collected all revenue, paying each operator’s costs and a management fee.

However, four English contracts have been already renationalised. The first was LNER in 2018, which was created to take over from the failed Virgin Trains East Coast – 90 per cent of which was actually owned by Stagecoach.

The three others which followed Intercity East Coast into state hands, in the shape of the DfT’s Operator of Last Resort, were Northern in 2020, Southeastern in 2021 and TransPennine Express in 2023. Northern and TPE were terminated on the grounds of poor performance, while it was discovered that Southeastern had failed to repay £25 million which it had owed to the Department for Transport under the terms of its contract.

Avanti West Coast has come close to following these three out of the private sector as anger flared, particularly in the north west of England, about the high level of cancellations, which was attributed to a shortage of drivers. However AWC, which is owned jointly by majority shareholder FirstGroup and Trenitalia, is not expected to be renationalised for now. The government has said it expects to take over AWC on an unspecified date after October 2026, as part of its wider renationalisation policy.

This policy was set out in Labour’s manifesto for last year’s general election, and involves a gradual takeover of all the remaining DfT passenger operating contracts, in preparation for the creation of the new ‘directing mind’, Great British Railways.

An Act of Parliament passed in November changed the status of the long-standing Operator of Last Resort, which had existed since 1993, into an effective ‘Operator of First Resort’. Officially known now as DfT Operator Ltd, this new law makes nationalisation the preferred option, rather than the last one.

The DfT has to step carefully in making renationalisation a reality, because re-absorbing a private sector operator involves complicated detail. To avoid overload, the takeovers are being spread out.

After South Western Railway passes to the state at 02.00 on Sunday, it is to be followed by c2c on 20 July and Greater Anglia on 12 October. The other seven are expected to have followed by 2027.

The private sector, meanwhile, has tried to stay on the rails by creating more ‘open access’ operators. These have a licence from the Office of Rail and Road but no contract with the DfT, which will not rescue them if their business plans fail.

There has been a flurry of applications for such licences, particularly after Labour won power last July, but few successes. FirstGroup has gained the rights to run from London to Stirling and from London to Carmarthen, but other applications from the Group still on the ORR’s table are three new services between London and Rochdale, Sheffield and Paignton, and an extension of its existing Lumo route from Edinburgh to Glasgow.

Virgin Trains has put forward a complex series of routes from London Euston to north west England and Scotland, broadly mirroring its former West Coast franchise, which together would involve something like 35 departures from London each day, while Alstom is bidding to restore services between London and Wrexham, recalling the former Wrexham & Shropshire operation which ended in 2011.

Before the election, Labour had said ‘wherever there is a case that open access adds value and capacity to the network, they will be able to continue to compete’, but ministers have since expressed doubts about such operators, suggesting in particular that they make use of publicly-funded infrastructure at bargain rates.

The DfT recently wrote a bleak assessment of the outstanding open access applications, giving qualified support to only one – Alstom’s bid for Wrexham. Network Rail is also said to be dubious about applicants who want paths on the congested West Coast Main Line. Virgin, in particular, would occupy between 70 and 80 a day.

A further straw in the wind might have been seen this week. Grand Central launched its second route, between London and Bradford Interchange, in 2010. A new platform 0 has just opened at Bradford Forster Square, and state-owned LNER has increased the number of trains it runs to London from two to seven a day.

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