*****UPDATE: The Scotsman today reports the Caledonian Sleeper has lost £65 million since the contract was signed with Serco.
The latter asked the Scottish government for additional funding in light of inflation and other cost pressures.
But The Scotsman reports these were “rejected because of scary numbers”.*****
Caledonian Sleeper is backed by the UK and Scottish governments.
Operator Serco holds a ten year franchise which was due to expire in June 2030.
In recent years the service had been upgraded with new rolling stock manufactured by CAF of Spain. Although there have been teething issues since the new stock has led to an overall improvement over the ex-British Rail carriages which were 40 years old.
Today, however, Scotland’s transport minister Jenny Gilruth announced that the (Scottish) government would terminate its agreement with Serco in June 2023 to “ensure the Sleeper service represents value for money.”
Serco Caledonian Sleeper’s current agreement will come to an end on 25 June 2023.@JennyGilruth says that the decision has been taken to ensure the Sleeper service represents value for money.
Read more ➡️ https://t.co/GyYbCuRo7v pic.twitter.com/OApXLWc5Mk
— Transport Scotland (@transcotland) October 5, 2022
John Whitehurst, managing director of Serco’s Transport business, commented:
“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.
“The Government and Serco were not able to reach agreement on these revised terms, and accordingly the Franchise will now end in June 2023, at which point, unless other arrangements can be agreed, Serco will hand back the management of the Sleeper to the Scottish Government.
“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.”
At this stage it is unclear how Westminster will react.
However, this important Anglo-Scottish link, popular with corporate travellers, parliamentarians and leisure users, will remain unchanged for the time being.
Scotrail has already been nationalised by the Scottish government and the unions had been calling for the sleeper to be taken back into public hands.
Obtaining financial figures is difficult, if not impossible, right now because during the pandemic all rail revenues (open access firms excepted) were absorbed by the government under its Emergency Measures.
Nonetheless, in September 2020 The Scotsman reported that Caledonian Sleeper losses had risen by 50 per cent even before the pandemic had started.
Unfortunately this situation is the opposite of what’s happening in mainland Europe where there is a renaissance of night trains.
See our update on the above in the forthcoming November issue of Business Traveller.