Serco warns ministers wanting to nationalise Caledonian Sleeper: It's been 'loss-making' from the start

First Minister Nicola Sturgeon and Rupert Soames, Serco Group chief executive launched the new Serco-run Caledonian Sleeper service in Inverness on Monday March 23, 2015.
First Minister Nicola Sturgeon and Rupert Soames, Serco Group chief executive launched the new Serco-run Caledonian Sleeper service in Inverness on Monday March 23, 2015.

OUTSOURCING firm Serco has warned ministers that the £800m Caledonian Sleeper service franchise has always been loss-making after it was stripped of the contract seven years early.

The current 15-year franchise was awarded to the outsourcing company Serco in May 2014, with the 15-year contract coming into effect on March, 2015.

The SNP has said the ending of the franchise in 2023 "presents an opportunity for the Scottish Government to consider bringing the Caledonian Sleeper into public hands, just like it did with Scotrail in April this year".

Transport minister Jenny Gilruth said in an answer to a parliamentary question that a new contract with Serco – the firm that has run the service for the past seven years – does not represent “value for money to the public”.

The franchise will end on June 25, next year rather than run its entire term to 2030.

John Whitehurst, managing director of Serco’s transport business, said they had hoped to revised the terms of the contract to put the service on a "more sustainable footing" and that it had been "loss-making over the life of the contract".

He said: “When Serco took over the Caledonian Sleeper service in April 2015, we inherited an unreliable and outdated fleet of carriages dating back to the 1970s.

“We are extremely proud that under our leadership and management we have introduced new rolling stock and other significant innovations that have completely transformed the service.

"The service that Serco provides today is widely recognised as being outstanding, providing hotel standard service and accommodation that is renowned and admired around the world and loved by the people who travel on it. "

Nicola Sturgeon toured the Caledonian Sleeper Guest Service Centre in Inverness after the franchise went to Serco.

He said the contract that was signed in 2014 included a ‘rebase clause’ that meant that, after seven years of the 15-year franchise, Serco could present to the Scottish Government alternative financial arrangements for the remaining years of the franchise.

He said the Scottish Government and Serco were not able to reach agreement on these revised terms, and the the management of the Sleeper will be handed back to the Scottish Government.

Mr Whitehurst added: “We note that the Government’s decision not to accept our proposals has not been made due to any performance issues; from Serco’s point of view the service has been loss-making over the life of the contract and the proposals that we made to Transport Scotland were to put it on a more sustainable financial footing. "We will continue to work with Transport Scotland around options for the future management of the service and in the meantime will continue to deliver a world-class service for our guests.”

Existing services and timetables will continue until the end of the contract.

The Scottish Government this year took over the running of most train services in the country following the end of Abellio’s tenure in charge of ScotRail.