UK Transport Secretary Grant Shapps has taken the first step towards potentially stripping train operator Northern rail of its franchise, according to a report from the Press Association.

A nine-year franchise to operate the Northern line was awarded to Arriva Rail North, a subsidiary of German state-owned operator Deutsche Bahn, in 2016.

Shapps told MPs he has issued a “request for proposals” from Northern and the Operator of Last Resort (OLR), which could lead to services being brought into direct government control and run by the OLR.

Giving evidence to the Commons’ Transport Select Committee, he said the level of performance on the Northern network “cannot continue”.

Shapps continued: “I entirely believe we cannot carry on just thinking it’s OK for trains not to arrive or Sunday services not being in place. That simply has to change.”

The Department for Transport later issued a statement explaining 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 consideration of the forthcoming recommendations of the Rail Review, which is due to be completed this autumn.

Shapps told the committee he looked up “on time” statistics showing the percentage of scheduled stops at stations which trains are making within a minute of the timetable.

He said: “Northern’s current performance sits at 57%, literally just better than a one in two chance of a train arriving on time.

“That has actually fallen in the last six months from 61% in March, while the UK average sits at 65.1%.

“Nearly two-thirds of all trains arrive on time but if you’re on Northern it’s not much over half. That is a big gap.

“I’ve started to take action.”

Northern has previously admitted it will continue to use outdated Pacer trains next year, despite a pledge to replace them by the end of 2019.

Shapps described the trains as a “symbol of the old railway continuing”, adding: “That is very frustrating and it all plays into the overall concern I have about the set up.”

The chaotic introduction of new timetables in May 2018 saw up to 310 trains a day cancelled.

Northern’s managing director David Brown 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 station 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.

“That’s why the Government has asked us to prepare a business plan for a shorter direct award.

“We are well under way with the development of that plan, which will see the completion of our transformation programme.”

Andy Burnham and Steve Rotheram, the mayors of Greater Manchester and the Liverpool City Region, have repeatedly called for Northern to be stripped of its franchise.

Burnham said: “After months of misery it is a relief for us to hear Government finally accept what we’ve been saying.”

He added: “Grant Shapps should now accelerate plans to terminate the Northern franchise and bring in an Operator of Last Resort. I stand ready to work with him on this.”

The Department for Transport’s OLR began running East Coast Main Line services in June last year under the London North Eastern Railway brand.

This followed the failure of the Virgin Trains East Coast (VTEC) franchise.