Grant Shapps says it is not OK for trains to fail to arrive or for Sunday services to be lost

The Northern rail network could be renationalised after years of late and cancelled trains, according to the transport secretary, who said the current franchise cannot continue as it is.

Grant Shapps told the Commons transport select committee that first steps had been taken towards taking the Northern rail network back into public hands. He said he had asked the Northern franchisee, the German-owned Arriva, and the government’s operator of last resort to draw up proposals to improve the service.

Highlighting that barely one in two Northern trains ran on time, Shapps said: “I consider that it cannot continue delivering in the current delivery method.”

He added: “I entirely believe we cannot carry on thinking it is OK for trains not to arrive, or Sunday services not to be in place – that simply has to change.”

His remarks were welcomed by politicians who have criticised the service, whose vast network runs from Newcastle to Leeds, Liverpool, Hull, Manchester and Stoke. Greater Manchester’s mayor, Andy Burnham, said: “After months of misery it is a relief for us to hear government finally accept what we’ve been saying repeatedly, that things can’t carry on as they are.

“Northern passengers will agree with the transport secretary that the current situation of unreliable, overcrowded trains cannot continue.

“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.”

Northern has been beset by problems, including a breakdown in industrial relations, and suffered more than most networks after the botched introduction of a new timetable in May 2018. While Network Rail, the owner and operator of Britain’s rail infrastructure, accepted much of the immediate blame for engineering delays and the rescheduling process, Northern has failed to restore punctuality this year.

Shapps added he was “hugely impatient [to see] the extinction of Pacer trains”, referring to the old rolling stock which had become totemic in the struggle to modernise Northern’s service. The pacer carriages are now likely to run until 2020. However, Shapps said the dilemma for now remained retaining the Pacer or leaving “a gap in the timetable”.

Ministers have admitted that the current franchising system no longer works. Northern would be the second service to be returned into public ownership under the Conservative government, following the collapse of Virgin Trains East Coast, now run as LNER under the Department for Transport’s operator of last resort.

Labour said all rail franchises should come under the state’s wing, joining Network Rail. Andy McDonald, the shadow transport secretary, said: “Northern Rail’s incompetent operator should have been stripped of its contract years ago over its abysmal performance record. The government’s refusal to do so has meant massive inconvenience for rail passengers and damage to the region’s economy.

“A railway is an interconnected system that will work best when it is integrated under public ownership, as Labour will do.”

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Northern blamed factors outside its control for the problems. David Brown, the managing director, said on Wednesday it had faced “several material and unprecedented challenges” of which the most significant was delayed upgrades to infrastructure and an electrification programme.

“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,” he said.

He added that Arriva and Northern were investing £600m and “remain fully committed to delivering the transformation of the north’s railways”.