ScotRail follows Northern and LNER into nationalisation

‘The current franchising system is no longer fit for purpose’ – Michael Matheson, transport secretary

Under orders: Glasgow Central station in June 2020 (Simon Calder)

The Scottish government is to nationalise rail services within the nation from March 2022.

Trains are currently run by Abellio ScotRail, a subsidiary of the Dutch national rail operator, NS.

Scotland’s transport secretary, Michael Matheson, said when the current ScotRail franchise expires in March 2022, an “Operator of Last Resort” (OLR) owned and controlled by the Scottish government will take over services.

All staff will be transferred to the new enterprise and there should be no immediate effect on services.

Mr Matheson told the Scottish parliament: “At this difficult time, I want to give rail staff and passengers as much certainty as I can about the future.

“I have repeatedly stated the current franchising system is no longer fit for purpose. Keith Williams, who led the UK Rail Review process, has also said that ‘franchising cannot continue in the way that it is today’.

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“Yet, there is continued uncertainty about the form and timing of rail reform emerging from the UK government review process, which is now a year overdue.

“It is high time that the UK government listened to our requests to place the future structure of Scottish railway in Scotland’s hands. The simplest way to do this is to devolve rail powers.

“Following a detailed assessment process and given the uncertainty caused by Covid-19, alongside the continuing delays to the UK government White Paper on rail reform, I have decided that it would not be appropriate to award a franchise agreement to any party at this time, either through a competition or a direct award.

“That is why I have confirmed that, from the expiry of the current franchise, ScotRail services will be provided in public hands through a company wholly owned and controlled by the Scottish government. This is in line with our Operator of Last Resort duty.”

The move emulates two similar nationalisations by the Department for Transport (DfT): the East Coast main line franchise previously operated by Virgin/Stagecoach in 2018 and the Northern franchise a year ago. Both train operators are largely based in England but have some Scottish services. They are run by DfT OLR Holdings.

In 2019, before the coronavirus pandemic ScotRail took about £450m in fares, but received a subsidy of almost £500m – representing around £5 per passenger journey.

The Scottish government has paid Abellio an additional £333m to cover losses due to the collapse of passenger numbers.

In addition, the Caledonian Sleeper – connecting northern Scotland, Edinburgh and Glasgow with London – is heavily subsidised by the Scottish government.