The Caledonian Sleeper rail service will be nationalised after Scottish ministers moved to terminate the operating company’s franchise agreement seven years early.
It will be operated by an arm’s length company owned by the Scottish government from 25 June, transport minister Jenny Gilruth told MSPs in Holyrood on Thursday.
The service, which connects Highland stations with London, has been operated by Serco since March 2015 and was due to run for 15 years until 2030.
But Gilruth insisted the decision to terminate the contract seven years early and take the service under the Scottish government’s control should not be seen as a reflection on the firm’s operation of the service.
She said: “The decision will provide a stable platform for the provision of Sleeper services and it will also provide certainty for staff and, of course, the travelling public.
“I would like to make it very clear that the Caledonian Sleeper staff will transfer to the Scottish government-owned entity, with their terms and conditions protected.”
The decision was taken when Serco attempted to renegotiate the agreement through a “rebase clause”, to ensure the loss-making service was on “a more sustainable financial footing”.
The Scottish government announced last year an offer to rebase the Serco contract did not represent “value for money”.
However, Gilruth added that the decision to bring the service into public hands would not be a permanent one, saying she and officials would continue to monitor “market conditions”.
John Whitehurst, managing director of Serco’s transport business, told BBC News that the company was disappointed that the Scottish government “did not ensure value for money by examining the possibility of a direct contract award to Serco”.
He said that the award would have “allowed Scotland to benefit from the expertise of our Serco transport senior management team who understand this complex and unique hospitality-focused train operation like no one else, while also enabling Scottish ministers to be in complete control of the contract”.
He added: “Most importantly, this would have allowed the Scottish government to compare the price of such an award with that of their arm’s length operator of last resort company.”
RMT’s general secretary, Mick Lynch, said the Scottish government had “done the right thing”, while Aslef’s Scottish organiser, Kevin Lindsay, said Serco’s control of the service had been “an abject failure”.
However, Lindsay said he was disappointed that the Caledonian Sleeper and ScotRail franchises are not being combined, something Gilruth told MSPs she is in favour of.
Scottish Conservative transport spokesperson Graham Simpson criticised the decision and said: “The minister agreed that the sleeper has surpassed any other train company in the UK in its recovery from the pandemic and was thriving and a world class service.
“Given all that, there can be no conclusion other than that this is an ideological decision. Jenny Gilruth said nothing about how this world class service can be improved under the Scottish government.”
It will be the second rail operation to be taken into state hands in Scotland, after ScotRail returned to public ownership last April.
