A TRAIN operator - with headquarters in York city centre - could be renationalised.

Transport Secretary Grant Shapps has taken the first step towards potentially stripping train operator Northern of its franchise.

And the boss of the rail company says it has faced “unprecedented challenges” in recent years.

Mr Shapps told MPs on Wednesday that he has issued a “request for proposals” from Northern Rail - as well as the government’s Operator of Last Resort (OLR) - which could lead to services being brought into direct government control and run by the OLR.

Northern’s headquarters is currently based in Rougier Street, York, but it is unclear how many people currently work at the site.

The Department for Transport has issued a statement saying that it is “developing contingency plans” for replacing the franchise with a new short-term management contract with Northern or the OLR.

It said it has the “right to terminate” Northern’s existing deal if it finds it is “in default of its current contract and that default was material and not capable of remedy”.

Any decision on the next steps will take into consideration the forthcoming recommendations of the Rail Review, due to be completed this autumn.

Mr Shapps added: “Northern’s current performance sits at 57 per cent, just better than a one in two chance of a train arriving on time.

“That has fallen in the last six months from 61 per cent in March, while the UK average sits at 65.1%. That is a big gap. I’ve started to take action.”

Northern previously said it will continue to use outdated Pacer trains next year, despite pledging to replace them by the end of 2019.

David Brown, managing director at Northern, said: “It’s on record that the Northern franchise has faced several material and unprecedented challenges in the past couple of years, outside the direct control of Northern. The most significant of these is the ongoing, late delivery of major infrastructure upgrades.

“The North West electrification was more than two years late, which meant we could not use electric trains on that route or cascade diesel trains from that route to run more services elsewhere on our network. More recently, new and longer platforms at Leeds stations are delayed, which means we have had to postpone our plans to run longer trains.

“These factors – alongside the damage caused by strike action and lower than expected economic growth – have had a significant effect on the revenue expected in our original franchise business plan agreed with government back in 2015.

“The Government has asked us to prepare a business plan for a shorter ‘Direct Award’. We are well underway with the development of that plan, which will see the completion of our transformation programme.”

David added: “Northern remain fully committed to delivering the transformation of the North’s railways and improving customers’ experience. These discussions have no impact on rail services for customers. Our job is to continue to provide the best service possible for our customers whilst any discussions are taking place.”

"We are delivering the biggest transformation of local rail for a generation, with 29 of our 101 new trains in service from Monday and driver training taking place on dozens more trains right now. Alongside 2,000 extra services per week, this is part of a £600 million investment in improving customers’ experience; we are continuing to invest in better stations, better offers for customers and more recruitment."