Who would want to run ScotRail anyway? Why it’s a tough sell – Prof Iain Docherty

So the latest episode in the ongoing saga of rail franchising has played out, with ministers terminating Abellio’s ScotRail franchise at seven rather than ten years.

The story, though, is a familiar one. The current system demands the operator heavily front loads investment in new trains at the start of the franchise period, at the same time as government invests in complementary infrastructure upgrades.

The problem comes from the inevitable passenger backlash against the consequent disruption. It’s worth remembering that for all the dewy-eyed commentary on the success of Virgin Trains’ franchise as it came to an end last week, that company was vilified in its early years as the upgrade of the West Coast Main Line dragged on. Only the combination of a long franchise period and extra subsidy made recovery possible.

Sign up to our daily newsletter

The i newsletter cut through the noise

Abellio ScotRail has faced similar problems. Yes, it made mistakes, but all operating companies do. The perfect storm of significant disruption such as the Queen Street tunnel closure during the Edinburgh–Glasgow electrification works, vexatious industrial action, the opening of significant new motorway capacity and the continued underpricing of driving make the financial sustainability of ScotRail difficult to say the least.

Abellio have been stripped of the final three years of their ScotRail contract. Picture: John Devlin

The early termination of the franchise means the Scottish Government is obliged to run a full franchise competition over the next two years. This is because, although the letting and financing of the franchise itself is devolved, the structure of the industry is not.

The SG’s commitment to allowing a public sector bid might sound good on paper – and indeed be the best they can do in the current situation – but with each franchise bid costing £10 million to put together and £10m to appraise, the decision is not without cost.

The fundamental question remains: who would want to run ScotRail anyway? With operating margins around 3 per cent, reputation in large part dependent on the performance of the nationalised Network Rail, unions out to cause trouble and a toxic political culture around the railways generally, it’s a tough sell.

And with no recent experience of doing so, there’s no guarantee the public sector would make a better job of it.

Professor Iain Docherty is Dean of the Institute of Advanced Studies at the University of Stirling and a former non-executive director of ScotRail and Transport