Caledonian Sleeper

UK: Serco’s contract to operate Caledonian Sleeper night train services between London and Scotland is to end in June 2023, after its proposal for a financial rebase of the agreement was rejected by the Scottish government as ’not representing value for money to the public’.

In an answer to the Scottish Parliament on October 5, Scottish Transport Minister Jenny Gilruth said the franchise agreement would be terminated on June 25 2023. Work is underway to determine arrangements for the continued provision of the services.

‘It is worth noting that Serco Caledonian Sleepers Ltd has, broadly, delivered well and significantly improved Caledonian Sleeper services over the last seven years’, she commented.

15-year contract

Caledonian Sleeper

In 2014 Transport Scotland awarded Serco the contract to operate the Caledonian Sleeper services for 15 years from April 1 2015, when the Anglo-Scottish routes to and from London Euston were was split off from the ScotRail franchise.

A £100m fleet renewal backed by a £60m grant from the Scottish government has since been completed, with 75 CAF MkV coaches entering service from 2019.

The coronavirus pandemic saw the Scottish government introduce a six-month Emergency Measures Agreement in April 2020, with subsequent extensions to February 2022 when a temporary agreement running to March 31 2023 followed. This sees Serco receive payments to cover the difference between revenue and operating costs, plus a performance-based incentive.

The 2014 contract included a ‘rebase clause’ whereby after seven years Serco could propose alternative financial arrangements for the remaining years of the franchise.

Managing Director of Serco’s Transport business John Whitehurst said it had not been able to reach agreement on revised terms, and accordingly the franchise would end in June 2023, when, unless other arrangements can be agreed, Serco will hand back the management to the Scottish government.

A similar situation saw the ScotRail franchise transfer from Abellio to a company owned by the Scottish government in April 2022.

Caledonian Sleeper

Whitehurst said Serco had ‘completely transformed’ the Caledonian Sleeper to provide ’hotel-standard service and accommodation that is renowned and admired around the world and loved by the people who travel on it’.

He said ‘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.’