The UK Secretary of State for Transport Grant Shapps has directed West Midlands Trains to invest an additional £20m to improve services for passengers.
The investment comes after a poor performance last year and failure to meet targets.
It will be used to improve the rail timetable and recruit new train drivers and senior conductors to deal with the shortage of staff on board.
The rail operator will also invest in daily operations, which will ensure that services are more reliable.
Passengers will also be offered a 3% discount on renewal of season tickets and 10% discount on off-peak fares in July and August this year.
The UK Department for Transport (DfT) stated that this measure should be considered as a warning and would face a ‘firm response’ if contractual obligations are not met.
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Shapps said: “West Midlands Trains have failed to fulfil their obligations, to their franchise agreement and, most importantly, to their passengers.
“The action we’re taking means they must invest in rapidly improving services so that passengers have reliable, punctual trains they can rely on.”
West Midlands Trains MD Julian Edwards added: “We have held detailed discussions with the West Midlands Mayor and others to ensure this extra investment, over and above our original £1bn franchise commitment, benefits all our customers and restores the reliable rail service they deserve.
“We are fully focused on achieving this as quickly as possible. Every issue cannot be solved overnight and we thank our customers for their patience while we fix their service.”
DfT will monitor the rail operator’s performance to ensure that it meets contractual obligations.
Last month, Shapps announced that the government will operate the Northern rail franchise from 1 March.