In a written statement, issued before a planned visit to Leeds today, Mr Shapps said: "Passengers in the north have had to put up with unacceptable services for too long. We understand how frustrating this has been for people and we are taking action to make sure that performance improves."
The Transport Secretary began a process looking the future of the franchise, which is operated by Arriva, back in October.
Mr Shapps said today: "It has now been confirmed to me from the most recent available financial information that the franchise will only be able to continue for a number of months."
A decision has not yet been made about whether Northern will be given another, short-term contract, or if the Department of Transport’s own Operator of Last Resort to step in and deliver passenger services, effectively nationalising the service.
Vandalised Scarborough allotments to be restored as council approves plans to help tackle hundreds stuck on waiting lists
Post-war asbestos bungalows to be demolished in Scarborough as plans for new terraced homes approved
COURT: Scarborough brothers threw man around 'like a rag doll' during vicious street attacks
Scarborough seaweed farm SeaGrown win Government contract to help increase renewable energy
Tractor fire forces police to close road through High Marishes near Malton
A decision would made on based on: protecting the interests of passengers; ensuring business and service continuity; preserving the interests of taxpayers by ensuring value for money
and the continued quality of the franchise proposition - according to the statement.
"To clarify, the current financial position of the Northern franchise will not impact on the railway’s day-to-day operations. Services will continue to run and there will be no impact on staff," Mr Shapps added.
Northern Powerhouse Partnership Director, Henri Murison said: “While there has been a great public clamour for stripping Northern of their franchise, and a belated recognition that Trans Pennine Express are just as bad, the crying shame is that whoever operates the railways in the North will struggle to run good and reliable services because of the major infrastructure issues in and out of some of our major cities.
“Ministers trumpet the Ordsall Chord as a significant achievement, but in reality – without the associated infrastructure improvements around Manchester Piccadilly, the Castlefield corridor and around Sheffield to name but a few – this should have just been the start of the major improvements we should have seen as part of the Northern Hub. Indeed, the Ordsall Chord has arguably made things worse without associated improvements.
“While the forthcoming Williams review will rightly address issues with the franchising process in the North, government should urgently act to undertake the engineering works needed to allow operators to run services more effectively, including a number that could be started immediately. Otherwise we risk a situation where the North faces years more misery on its rail network – regardless of who runs the trains.”