The Scottish Government has decided to appoint a public body to manage and operate the Caledonian Sleeper service, to be known as Scottish Rail Holdings (SRH).
This follows the announcement on 5 October of the government’s decision to terminate Serco’s franchise agreement on 25 June 2023.
Over the coming months, Serco will work with the government to ensure a smooth transition of the ongoing operations and management of Caledonian Sleeper to the new public body operator.
Services should continue to operate as normal, with not impact for those looking to book before or after the end of June - and no plans to change ticket prices.
Transport Minister Jenny Gilruth said an arm's length company would would "provide stability and certainty" for passengers and staff.
The current franchise was awarded to Serco in a deal worth £800m and due to run from 2015 to 2030.
The decision to end Serco's contract came after the company tried to renegotiate the deal through a "rebase clause" to put the loss-making service on "a more sustainable financial footing".
Gilruth said the decision not to rebase was "in no way a reflection on the quality of the product that has been developed, nor on the commitment of the staff who deliver this service every day", but rather, "the decision that I had to take on rebasing was a question of the terms of the rebase offer and that, in the government's view, these terms did not represent the best value for money".
John Whitehurst, managing director of Serco's transport business, said 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 argued 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-focussed train operation like no-one else, while also enabling Scottish ministers to be in complete control of the contract".
The service, which has been operating in various forms since 1873, runs overnight trains between Scotland and London - consisting of a Lowlander route between London and Glasgow and Edinburgh, and a Highlander route to Aberdeen, Inverness and Fort William.
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