Boris Johnson is on a collision course with the rail industry over plans to cap profits in the most radical ­shake-up of the country’s train network since privatisation.

An eagerly-anticipated “root and branch” review of the railways is due to recommend scrapping the rail franchises in the coming weeks.

It is set to be replaced with a system of outsourcing contracts over the ­coming years as ministers gradually ­regain control of mainline and local franchises.

All that remains is for Grant Shapps, Transport Secretary, to agree funding for the overhaul with newly appointed Chancellor Rishi Sunak, according to Whitehall sources.

The changes are at the heart of sweeping reforms drawn up by former British Airways boss Keith Williams, who was commissioned to review the rail industry more than a year ago. Mr Williams’ report, which is understood to be ready for publication, will provide a basis for a Government White Paper and a new legal framework.

The plans signal Government determination to address public anger over the state of Britain’s rail services. However, they risk claims of nationalisation via the back door.

Train operators would receive a fixed fee from the Government, which would effectively own all routes and collect fares. In contrast, franchisee train operators currently collect fares and pay a cut to the Exchequer, encouraging them to maximise income.