York train company Northern Spirit was rocked today by news that bosses have been considering shedding another 400 jobs.

Happy times: Northern Spirit managing director Paul Davison welcomes a train with new livery to York Station last year

And a key figure, finance director Malcolm Lawn, has abruptly left the company.

The firm, which employs more than 300 people at its headquarters in the city, has already got rid of about 400 staff from an original staff of about 2,900 since it was privatised in 1997.

A spokesman confirmed today that it was planning further efficiency savings as it prepared to cope with another cut in its public subsidy.

But he said that an original proposal to shed an additional 400 jobs was being re-drafted, although he was unable to say what figure was now being considered.

He also insisted that the company was still seeking to recruit and retain front line staff such as drivers and conductors. "We have more conductors and drivers now than we had last year and are continuing to recruit."

He said Northern Spirit's subsidy was being reduced from £197 million this year to £176 million in the next financial year.

But at the same time, passenger numbers were up by about ten per cent on key routes such as TransPennine Express, which takes Yorkshire passengers across the Pennines to Manchester and its airport.

He said the total size of the train fleet was falling, but the quality and reliability of trains was improving, and they were being utilised more efficiently to provide additional services.

Northern Spirit today confirmed that Mr Lawn had left the company. It is understood that Mr Lawn, one of the board of directors that steered Northern Spirit through the privatisation process, was recently given one day to clear his desk after 30 years in the railway industry.

It is believed he disagreed with parent company MTL's policies on the way the train company was being run, although the company spokesman declined to comment today on the circumstances of his departure.

Mr Lawn today declined to comment.

Meanwhile, John Greenway, Tory MP for Ryedale, today called on the Government to speed up extending the franchise for the other York-based train company, Great North Eastern Railways, which runs East Coast services between York and London.

He said: "GNER are prepared to invest millions in new trains and new rolling stock. But they are not prepared to do it without knowing they can have the franchise for longer.

"Why are ministers playing fast and loose with this? The Government is holding up improvements."

Deputy Prime Minister John Prescott has said franchises would be extended if companies could deliver packages of improvements.

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