Rail contract accused of giving millions in reward for failure

Labour says the contract is no incentive to attract passengers. Picture: John DevlinLabour says the contract is no incentive to attract passengers. Picture: John Devlin
Labour says the contract is no incentive to attract passengers. Picture: John Devlin
ScotRail and Caledonian Sleeper are to be bailed out with millions of pounds of extra public money after failing to hit growth targets under a “bizarre clause” in their contracts, Scottish Labour has claimed.

The party said it meant the train operators would be recompensed for not increasing passenger numbers and revenue as much as forecast.

Labour pointed to a near 25 per cent increase in annual subsidies to be paid to the firms in the Scottish budget – a rise of £103m to £520m.

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Transport secretary Michael Matheson has refused to say how much is for revenue support because it is “commercially sensitive”.

But he confirmed: “If revenue growth does not increase to the expected levels that were set out in the franchise agreements, we are required to provide further funding to the franchise provider.”

ScotRail, run by Dutch firm Abellio, is the Scottish Government’s biggest single contract. Outsourcing giant Serco runs the Sleeper.

Scottish Labour transport spokesman Colin Smyth said: “It beggars belief the firms running the franchises, which are so badly failing passengers, are being effectively rewarded for doing so.

“Instead of rewarding big rail firms for their failure to deliver expected levels of revenue growth, the SNP government should be tackling the reasons why passengers numbers are flat-lining.

An Abellio spokesman said: “Reliability and punctuality on ScotRail has improved significantly in recent months, aside from the effects of extreme winter weather.

“The number of passenger journeys is rising, with passenger satisfaction rising to 89 per cent.”

Caledonian Sleeper managing director Ryan Flaherty said: “The forecast increase in payments is in line with what was agreed at the outset of the franchise.

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“Since Serco took over the franchise, we have introduced a new fleet of trains while passenger numbers rose 14 per cent last year compared with 2018. We expect to see further success in the months and years ahead.”

The Scottish Government said it shared the risk equally with Abellio for below-target revenue. But its spokesperson said Labour’s claims were “an over-simplified view of the increase in franchise payments”.

It said they “failed to take account of many factors, not least that we are funding 9 per cent more ScotRail services compared with the start of the franchise, and that the payments include changes to track access charges.

“We have stated many times the current franchise system needs to be reformed.”