Scottish Government takes control of ScotRail franchise
After 25 years of private sector operations, rail services in Scotland are due to come under the control of a public company owned by the Scottish Government on April 1.
RAIL services in Scotland are due to come under the control of the Scottish Government on April 1. This has come about because the option to extend the current Abellio franchise for a further three years after the initial seven-year period from 2015 has not been taken up.
To maintain services during the Covid pandemic, an Emergency Measures Agreement (EMA) was instituted in April 2020, in which Abellio was paid a management fee to operate services specified by Transport Scotland.
The EMA arrangement has not been continued and the Scottish Government has used powers to establish a publicly owned Operator of Last Resort (OLR) – as has been the case in England for LNER, Northern, and South Eastern, although the circumstances have been different in each case. Transport for Wales has also followed this approach.
OLR companies are intended as an interim arrangement until a new franchise/concession competition is held or a direct award is made to an operator. It is known that under the revised Great British Railways (GBR) structure, private sector operations will be continued and that OLR companies will not continue indefinitely.
In both Scotland and Wales, there is currently no intention to return operations to the private sector, which will force decisions to be made as to whether complete devolution of railway operations – including infrastructure ownership – will take place as part of the overall GBR changes.
ScotRail brand
There has been a distinctive railway in Scotland since the ScotRail brand was established in 1983 as a part of the newlyformed Regional Railways sector within British Rail. An extensive exercise to create visual branding took place, and newlybuilt diesel multiple units were introduced to replace the locomotivehauled services and Mk.1 rolling stock. Although this created capacity problems at times of high demand, the journey experience was improved.
Prior to that, the Scottish Region had been responsible for operations – although, in 1972, the Greater Glasgow Passenger Transport Executive (GGPTE) was set up to take over Glasgow Corporation’s public transport functions and to co-ordinate rail and road services in the Clyde Valley.
This was a significant initiative that reflected objectives in the 1968 Transport Act to provide a basis for funding the retention and improvement of rail services that was to lead to a continuing programme of line reopenings and electrification. Later, the Strathclyde Passenger Transport Executive was established to extend the scope of operations to council areas beyond Greater Glasgow.
The next significant change was the introduction of franchising, which led to some debate as to whether the urban network sponsored by the Strathclyde PTE should be made a separate contract, similar to the way that Merseyrail was.
In the event, ScotRail was retained as a single operation, and included the Anglo-Scottish Caledonian sleeper services that had been transferred from the InterCity sector in 1988.
Enter National Express
The first private sector operator was National Express, which took over the franchise on April 1, 1997. The subsidy required for the initial year of operation was £280 million, which covered 53.4 million passenger journeys, but over the seven-year contract period this was to be reduced to £202 million. The initial Strathclyde PTE cost element was £156 million, offset by revenue of £41.3 million.
A fleet modernisation programme was to take place, with the replacement of firstgeneration Class 303 and 305 electric units and the demise of Class 101 and Class 117 diesel units. Within a year, 40 Class 334 electric and nine Class 170 diesel units were ordered for delivery by 2000. A further 15 Class 170 sets followed to cater for growth. Timetable enhancements would see an additional 80,000 train miles per annum, with more off-peak services.
The financial bid proved to be unsustainable, although this was in part due to the impact of an outbreak of foot and mouth disease, which caused reduced travel. After a loss of £40 million had been recorded in 2001, a further £70 million of financial support was provided. Passenger numbers reached 60.7 million in 2002, and funding was provided to acquire an additional 22 three-car Class 170 sets to strengthen interurban services to six cars.
FirstGroup takes over
There was a change of franchised operator when FirstGroup commenced operations on October 17, 2004 and continued through to March 2015.
This was a more ambitious contract and reflected proposals to reopen lines. Reconstruction of Larkhill to Milngavie had been approved in 2003, and there were other proposals such as the Stirling to Alloa section, which reopened in 2008 to improve access to Longannet Power Station.
Capacity was created for more passenger services between Edinburgh and Fife, while local services were improved in the Inverness area. Proposals were also made to restore part of the former Waverley Route to reach Galashiels and Tweedbank, which was completed in 2015, and reopen the line between Airdrie and Bathgate.
With the start of the new franchise, funding was transferred from the Department for Transport to the Scottish Executive as devolution gathered pace. There was then greater financial support, which peaked at £293 million in 2010/11.
To meet increasing demand, an additional seven Class 170/4 units were acquired which, together with four Class 170/3 sets transferred from Hull Trains, was a useful addition for longer distance services as they had a buffet counter.
There was a significant increase in passenger numbers by 2008 with journeys
“2011 saw Transport Scotland, as the National Transport Agency, become responsible for specifying and funding Network Rail spending in Scotland”
increasing to 77.3 million, and greater rolling stock capacity was needed which led to an order for 38 new Class 380 electric units for Ayrshire services. This allowed a cascade of Class 318 and Class 334 units for future use on the reopened Airdrie to Bathgate line, which became part of a new through route between Edinburgh and Glasgow in late 2010.
In 2009, the Edinburgh to Glasgow Improvement Programme (EGIP) was approved, which involved electrification of services across the Central Belt as passenger numbers increased again to reach 81.1 million in 2011. But a setback was the cancellation of the proposed Glasgow Airport Rail Link, although infrastructure enhancement at Glasgow Central did go ahead providing two additional platforms.
Results of devolution
The election of the Scottish Nationalist Party as the Government for Scotland in 2011 brought stronger demands for greater devolution. Rail investment continued and Transport Scotland, as the National Transport Agency, became responsible for specifying and funding Network Rail spending in Scotland, as well as providing the finance for franchise revenue support. The money continued to be provided by the Westminster Government in the form of a block grant under the Barnett formula to cover the cost of public services. There is some controversy about this process, as the allowance per head of population is much greater than that allocated in England, and this to some extent accounts for the ability to reopen lines and electrify in Scotland.
As the time approached for the franchise to be retendered, the Scottish Government decided to separate the Caledonian Sleeper services from the main ScotRail operation after replacement Mk.5 rolling stock had been jointly funded with the Department for Transport in London.
Abellio takes over
During 2014, a franchise competition managed by Transport Scotland attracted five bidders and included a 35% quality rating in addition to bids based only on the subsidy level required. For the seven-year contract, Abellio required a subsidy of £776 million and were awarded a quality score of 70.7. In second place, National Express asked for less subsidy at £747 million, but received a lower quality rating of 62.8.Under the deciding formula, Abellio was considered the preferred bidder and duly took over ScotRail operations from April 1, 2015. The incumbent FirstGroup was some way behind, requiring subsidy of £812 million, while offering quality measures that produced a score of 64.2. There was an immediate furore about the decision, as National Express believed its proposal to provide new rolling stock for the seven InterCity routes was superior in quality to the Abellio proposal to use refurbished High Speed Trains. But proposals for greater transport integration and more emphasis on cycling brought higher quality scoring for Abellio. FirstGroup also had good reason to be disappointed as performance measured by
PPM (the public performance measure) had risen from 83% to more than 90% during its tenure, with passenger numbers rising from 68.7 million to 83.3 million. But, clearly, the cost base had become too high with 4664 staff paid an average of £32,817 per annum.
Overall, Abellio planned to increase the number of vehicles by 23%. This included providing rolling stock for the EGIP, for which 70 Class 385 electric units made up in three and four-car formations, were ordered entry into service in 2017, and from 2018 26 HST sets made up of four and five Mk.3 carriages were to commence operations. In both cases, there were delays and alternative rolling stock had to be drafted in.
There was also an innovative move to convert single car Class 153 vehicles to provide space for bicycles and ski equipment, and operate coupled to Class 156 sets on scenic routes.
Unhappy relationship
When the Covid-19 pandemic struck in early 2020, previous assumptions about financial performance disappeared and an Emergency Measures Agreement was put in place. Higher passenger numbers had again been recorded, with the figure reaching 96.4 million in the year to March 2020.
But it has not been a happy relationship between Transport Scotland and Abellio, as two remedial notices concerning performance had been issued, and a formal request for the level of subsidy to be increased was refused.
So at the start of 2020, the Scottish Government took the decision to end the franchise in March 2022 rather than offer an extension, and take direct control of the ScotRail business.