TRANSPORT group Stagecoach has failed to reach agreement with the Government over renewing one of its rail franchises.

Stagecoach said the Department for Transport (DfT) had ended talks over its South West Trains (SWT) subsidiary — which runs the line from London Waterloo to Salisbury including the station in the city.

The DfT plans to invite train operating companies to bid for the franchise, which SWT has run since British Rail was privatised in 1996. Stagecoach are expected to bid against other operators to retain the service.

In a a statement the company said: "Despite extensive negotiations, a significant difference has remained between both parties regarding the financial evaluation of the proposals. As a result, South West Trains has been unable to reach an agreement on a direct award.

"Nevertheless, as the incumbent operator with nearly 20 years' experience in growing and improving one of the most complex and busiest rail franchises in the country, we believe we are in a strong position to submit a powerful and attractive bid for a new South West Trains franchise.

"In the meantime, we will continue to deliver on our commitments to government and customers, including the £50 million package of investment agreed with the DfT earlier this year as part of a Deed of Amendment to the existing franchise."

Stagecoach is one of the country's biggest rail franchises, operating more than 1,600 trains a day, serving more than 200 stations and carrying over 200 million passengers a year.

Mick Cash, general secretary of the Rail, Maritime and Transport union, said: "For some time now we have been told that DfT would be agreeing a direct award with SWT but now this has been abandoned and the chaos and confusion over rail franchising that was a permanent feature of the last government is continuing only months after the election.

"It is also a shocking indictment of government policy and the privatised railway that a company that has been running the franchise for 20 years is not being entrusted with the service going forward.

"That speaks volumes and this area was also supposed to be the test bed for the 'deep alliance' between train companies and Network Rail. That is now in tatters, wasting huge amounts of time and money that could have been invested in services."