Meeting of the Parliament

Meeting date: Thursday, January 12, 2023

Official Report 1262KB pdf

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Caledonian Sleeper Service

The next item of business is a members’ business debate on motion S6M-07156, in the name of Richard Leonard, on the Caledonian sleeper service. The debate will be concluded without any question being put.

Motion debated,

That the Parliament welcomes that ScotRail Services transferred into public ownership on 1 April 2022 and that Scotland’s rail passenger services are operated by Scottish Rail Holdings Ltd, a company owned and controlled by the Scottish Government; notes that the sleeper service between Scotland and England is approaching its 150th anniversary; recognises what it sees as the significant social, economic and environmental values of the Caledonian Sleeper service, including for the Central Scotland region; notes that the current franchise is due to end in June 2023, following the Scottish Government’s decision not to rebase the franchise; further notes that the Scottish Government has not yet confirmed how sleeper services will be operated from June 2023 onwards; notes the view that this is the ideal opportunity to bring the Caledonian Sleeper Service into public ownership via established structures and reintegrate the sleeper service with ScotRail and that, in so doing, the public purse would not be expected to fund profits for a private operator of the service, and further notes the calls on the Scottish Government to confirm that it will not give Serco a further contract for the Caledonian Sleeper service and that it will instead use a Scottish Government-owned company to run the service from June 2023.

12:54  

I begin by referring members to my voluntary entry in the register of members’ interests. I thank members who signed the motion enabling the debate. In so doing, they have honoured a commitment not just to all those who care about our railways, but to all those who care about parliamentary democracy and open government.

Next month marks 150 years of an overnight rail sleeper service running from Scotland to London, but this is a service that cannot merely be consigned to its glorious past; it demands active support in the present to secure a bright future as an integral part of a wider and longer-term plan for our public transport system—a plan that means that, instead of closing down booking offices and cutting jobs, we invest in our railway and cut fares. If we are really serious about climate change, we should be getting people out of their cars and on to public transport and, when it comes to cross-border travel, we should be getting people out of their airline seats and into railway carriages.

I thank Richard Leonard for the points that he has made. Does he accept that, if passengers are not returning to the railways in the numbers that used them previously, and if there is therefore a shortfall of money, we cannot just keep increasing the subsidy?

It is not a subsidy; it is an investment. If we are serious about climate change, we need to get people out of their cars and on to public transport.

Will Richard Leonard take an intervention?

No, I need to press on.

That is why not only this Parliament but the workforce, the trade unions, the travelling public and the people deserve some straight answers from the minister this afternoon.

The position is this: on 5 October last year—the eve of the Scottish National Party conference in Aberdeen—instead of making a ministerial statement or speech in the Parliament, the Minister for Transport issued a press release based on a carefully crafted reply to a Government-initiated question, announcing that Serco was being stripped of the sleeper contract and issued with a notice of termination. Then, exactly two months later, after the SNP conference was all done and dusted, in reply to a series of written questions that I lodged, the minister was forced to reveal, with a smoking gun in her hand, that an

“appropriate assessment of a direct award to Serco Caledonian Sleepers Ltd is being made”.—[Written Answers, 5 December 2022; S6W-12362.]

Does Richard Leonard understand that I am somewhat constrained by United Kingdom legislation that, as a Scottish minister, I have no power over? It requires me to look at a direct award and, if that is ruled out, the operator of last resort arrangements that we have in place in Scotland. Does he understand the process that I have to go through as a Scottish minister?

Yes, I understand the process and I will come on to that.

Jenny Gilruth is guided by not only the Railways Act 1993 but the Scotland Act 2016, which devolved rail services to Scotland. The truth of the matter is that the company that runs the Caledonian sleeper called for more public money to run the service. That request was assessed and rejected, then, 60 days later, the minister was forced to admit that the Government was lining up a direct award to the self-same company.

Let me be clear: this is not just another run-of-the-mill ministerial U-turn; it is a governmental betrayal of the highest order. It goes well beyond the simple question of a train contract to the very values that define the Government. Let me remind Parliament and the minister that this is the same Serco that presided over a culture of bullying and harassment of its own staff on the Caledonian sleeper service. It is the same Serco that boosted its profits by 64 per cent in 2021 and hiked up the pay and bonus of its chief executive officer by shamelessly exploiting the deadly Covid-19 pandemic as a money-making opportunity. It is the same Serco that, for more than a year, conducted a reign of terror, night after night, among asylum seekers in Glasgow with its hostile lock-change programme and forced eviction policy. That is who we are dealing with.

I say to the minister that it is not too late to do the right thing and bring this service into democratic public ownership. It is not too late to make a direct award to Scottish Rail Holdings, because there is a clear legal basis for bringing in a public sector operator under section 25 of the Railways Act 1993.

The burning question is this: has Scottish Rail Holdings been asked to be prepared to operate the Caledonian sleeper service? If not, why not? If not, will the minister instruct it to do so today?

Finally, there are some who will accuse me of making this demand out of some kind of rigid, dogmatic, socialist ideology.

No.

Well, I have to confess that I do stand here this afternoon guilty of the charge of standing up for an ideal. I stand guilty of the charge of holding the firm conviction that this natural private monopoly run for profit should be a natural public service run for passengers. I plead guilty to the charge of believing that public ownership of the railway is economically rational, socially responsible, environmentally sustainable and democratically unanswerable.

I do plead guilty, but I also make a plea. This decision rests in the hands of the Scottish Parliament and the Scottish Government alone. It is both legally competent and morally correct. So, this afternoon, I hope that the minister is not only listening but hearing, and that she is prepared to act, and to act decisively, to take this public transport service back where it belongs—into public ownership.

13:01  

I thank Richard Leonard for bringing the subject of the sleeper service to the chamber for debate.

I am enthusiastic about rail and use the train as often as I can. However, I have to say that the sleeper service is extremely expensive, which is why I have not used it since the new rolling stock was introduced. The most basic return fare, including a bed, is meant to be about £280, but when I looked at dates in the near future, I found that the cost of a classic ticket was more like £400 for a return. By contrast, the last time I travelled to London, which was in July, I travelled by West Coast daytime train and the cost was £77 for a return.

All rail travel is heavily subsidised—or invested in, for those who like that term—and rightly so, normally by around 50 per cent. It has been reported that the average subsidy on the sleeper is £164 per single ticket. Broadly speaking, I am in favour of public ownership in many sectors, especially when it is a public service and is virtually a monopoly. All the trains run on the same track and use the same stations, just as all our electricity runs through the same wires and all our water runs through the same pipes, so the idea of competition in the rail sector or the electricity sector will always be a bit artificial.

Of course, it must be said at this point that the Scottish Government is bound by relevant Westminster legislation, which I think is principally the Railways Act 1993. Therefore, we do not have complete freedom to act in the way that we might want to if all rail powers were fully devolved.

Richard Leonard’s motion mentions

“profits for a private operator”.

It may be the case that a private operator makes profits but, equally, a private operator can make losses. I think that that has happened to Abellio with the ScotRail contract and to Serco with the sleeper. Therefore, public ownership is not without risks and, if there is a loss, it is the public purse that has to foot the bill.

There has sometimes been the illusion that, with nationalisation, all the financial pressures would somehow magically disappear. People talked as though bringing ScotRail into public ownership would automatically mean lower fares, higher pay for the staff and more frequent and improved services, but the reality is that income and expenditure still have to match, whoever owns and operates our railways. We can do all the things that I mentioned—have low fares, pay staff well and all the rest of it—but that still comes at a cost, whether the owner is in the public sector or the private sector.

We could increase the subsidy, but would that be the right thing to do at a time when the national health service and other public services are so under pressure? Let us be realistic: only a tiny number of people use the sleeper service. Unless they are using the seated coaches, they generally need to be fairly well off or have their employer pay for it.

Serco has fingers in a lot of pies. Although some of its work for the public sector might be of high quality and provide value for money, as Richard Leonard said, those of us in Glasgow will not quickly forget how Serco was involved with the Home Office in threatening asylum seekers with eviction just a few years ago.

My final point is on a sensitive subject. There is a balance to be struck between the needs of passengers—or “customers”, as they seem to be called these days—and the needs of the staff who work on the railways. We must all be clear that the passengers must come first, but that has not always been the case. Those of us who are older remember—years ago, in the days of nationalised British Rail—the awful sandwiches, which were a standing joke throughout Scotland, England and Wales. Certainly, at that time, it seemed that the railways were often run for the staff, and the passengers were a bit of an afterthought. Therefore, by all means let us take the sleeper into public ownership, but if we are to do so, let us also make the commitment that the passengers must come first and remember that we, as politicians, together with the railway staff, are here to serve the paying public.

13:05  

I, too, thank Richard Leonard for securing the debate, not least because it is always good fun to hear him speak and wind the clock back several decades. That aside, this is an important topic to debate—because it is a debate and we are not all going to agree. It is also an opportunity to hear from the minister, as we have yet to discover what she intends to do about the sleeper service.

We need to know that, because it is an important and iconic service. Six mornings a week, a little piece of Scotland rolls into London, full of people who are ready to start their day. The background to the debate was the announcement last year by the Scottish Government that the sleeper contract with Serco would be terminated halfway through this June. That was after the company wanted to discuss finances in the wake of the pandemic, so it seemed a very sudden decision.

When ScotRail became NatRail on April fools’ day last year, with the obligatory plaque unveiling by the First Minister, it followed years of negative publicity for Abellio. However, that is not the background here. Since Serco started running the sleeper service, it has invested in new fleet—there have been 75 new carriages in less than four years. Revenue was falling when the contract was awarded but, since then, Serco has grown revenue by 48 per cent, with 2022, incredibly, being its best-ever year. This coming year looks set to be even better.

Customers must like what Serco does—it has scored its highest-ever customer satisfaction scores, with full trains. Employee satisfaction is also up, despite what the National Union of Rail, Maritime and Transport Workers might say. Against that background, it seems strange for even Richard Leonard to be arguing for change, although for him, as he confirmed, it is ideological.

Serco is clearly doing something right. I have not yet travelled on the sleeper, but I hope to do so soon on a trip to London, because on a one-way trip, it offers great value for money when compared with other options.

There are a range of ways to travel on the sleeper: passengers can just take a seat, or there is a choice of cabin options, too. There is lots of Scottish produce on board—even the mattresses are from Aberdeen.

The minister has to make up her mind, and she has three options: the sleeper service could rejoin ScotRail; she could bring in an operator of last resort; or she could offer a direct contract award, which might be the best option in terms of value for money. I have spoken to Serco and I hope that the minister will do so, too. It is keen to discuss a direct contract award, which would mean ministers having complete control of the contract. That must surely appeal to the Government. Last month, Jenny Gilruth said that she was assessing that option. Has she now done so?

A cloud of uncertainty hangs over the sleeper service, which is unfair to staff. I have outlined some of the options for the minister. She needs to say what she intends to do and why, and she should set out the business case for that decision. How would taking the service off Serco help passengers and the taxpayer? With the current contract ending in June, we are running out of track.

The Government never said why taking ownership of ScotRail would be better and it never had a plan for making it so. I hope that the minister does not repeat that mistake with the iconic Caledonian sleeper.

13:09  

I thank Richard Leonard for securing this important and timely debate.

The Caledonian sleeper is 150 years old this year. From the Victorian era up to the present day, it has been a vital and valued link between Scotland and London for travellers of all kinds. Now more than ever, the sleeper has a potentially vital role to play as a means of low-carbon travel.

The two most-used domestic flight routes are between London and Glasgow and between London and Edinburgh. There is clearly significant potential for modal shift from domestic flights to rail, and a reliable, affordable and comfortable sleeper service can play a key part in that shift. It can and should play an important role in getting people back on to our railways and in meeting Scotland’s and the UK’s climate commitments. It is also vital for our tourism sector.

For the sleeper to play that role, however, we need to have a world-class service and value for money for passengers and taxpayers. Under the Serco franchise since 2015, we have had neither. Not only has Serco failed on its franchise commitments, but its running of the sleeper service has not been a particularly happy experience for either passengers or staff. A 2021 survey of Caledonian sleeper staff by the RMT found that nearly 60 per cent of those surveyed had felt harassed by management at work, and nearly half had felt bullied.

Meanwhile, price hikes mean that the cost of a standard bed on the service is now up to £190 one way. That is out of reach for many people in Scotland. I believe that many people would far rather take the train to London but, at prices like that, it is no wonder that many people have to opt to take a cheaper flight.

Given that the current subsidy is, as I understand it, £164 per ticket, how on earth—I refer back to John Mason’s speech—could the ticket price be made any cheaper without huge funds being ploughed in from the public purse?

Clearly, there is a need for investment and subsidy in the railways. There always has been and there always will be. However, we want a publicly owned railway that reinvests the profits from those private companies into services. If we have that, we can make rail travel more affordable.

As Richard Leonard said, despite significant cost and revenue risk being transferred to the Scottish Government for a number of years, Serco has received fees for running the service. Indeed, this week—I say this to Mr Kerr—Serco reported an operating profit of £11.2 million. However, the public pay the price. As Richard Leonard’s motion says, money from the public purse is being used to fund the profits of a private operator.

There is a better way. I believe that there is a clear case for the Caledonian sleeper being taken into public ownership in June 2023. Such a step would mark an important move away from the inefficient and costly fragmentation of our railways and it would stop public money going to fund private profits. Instead, it would see those profits channelled back into the network to the benefit of passengers and the public.

What is more, we have a pre-established structure and model for doing that. Following ScotRail being brought into public ownership after the failure of Abellio, the structures are there to run the sleeper in the public sector alongside ScotRail.

My question to the minister, though, is this: what is the Government’s policy intention? As Richard Leonard said, before the minister’s party conference, she appeared to be talking about public ownership. Recently, however, there seems to be talk of a direct award to Serco. I hope that, today, she will deliver some good news to rail users, staff and taxpayers by confirming that her policy intention is that the Caledonian sleeper will be brought into public ownership and run for the benefit of passengers, not for private profits.

13:13  

I, too, welcome the opportunity to debate the future of the Caledonian sleeper service. I thank Richard Leonard for securing the slot.

Fundamentally, I do not think that we can deliver a people’s ScotRail without a sleeper service that is fully integrated, operated in the national interest and run by a public company. Like many members, I am uncomfortable that a company that is better known for running detention centres and evicting people who are seeking asylum is currently the operator of a national rail service. I am pretty sure that that on its own is not a valid reason to pull Serco out of the running of the franchise, but I would certainly get a better night’s sleep on the train knowing that it was being run by an operator that reinvested its profits back into the national interest.

A nationalised sleeper service should not just be at the heart of the Government’s vision for rail; it should also be at the heart of its vision for aviation, because there is no credible way to meet our climate targets without a reduction in unnecessary air miles. The number of short-haul flights within the UK and to continental Europe can and should be reduced, and the sleeper service should play its full part in that.

We have already seen rail overtake flying as the most popular mode of transport between Edinburgh and London. Rail’s share of that market rose from 35 per cent before Covid to 57 per cent last year. Rail operators have been smart; they have understood the market well on the east coast and have geared their marketing and pricing to what people now need and can afford following Covid.

There is the opportunity to replicate that success with the sleeper service, but better integration is needed, and that must start with better ticketing and fair fares. With single ticket prices in the hundreds, the sleeper is simply not an affordable service at the moment, so we need to do all that we can to ensure that the sleeper—nationalised or not—is a low-cost option that is competitive with aviation.

Since the Eurostar terminal shifted to St Pancras, there has been the opportunity for seamless connections with Europe for rail passengers coming to and from Scotland. For example, a passenger getting on a sleeper at Inverness has only one platform change to get to Paris, Brussels or now Amsterdam by the morning of the next day, but the lack of an integrated and affordable ticket remains the biggest stumbling block. Therefore, we need to think big. The Irish Taoiseach and the French President have already announced that, starting this year, there will be a combined ferry and train ticket to link the two countries. A big discount for young people should also be a feature.

Does Mark Ruskell not accept that the sleeper service is, in fact, incredibly popular and that the trains often run full?

I do not think that that is the case on every journey. Operators on the east coast have been very smart in how they structure their fare prices and in the offerings that they create. I think that more could be done with the sleeper service, particularly on integrated ticketing, which I want to return to.

It is not just France and Ireland that are planning to ditch air travel. A new European sleeper train from Belgium to Berlin will be launched in May, with plans to expand the route to Prague. New direct rail services between Paris, Madrid and Italy are also getting ready to be launched next year, and our German Green Party colleagues have already been promoting a plan at the European Parliament for a fully integrated European sleeper service, which would include our Caley sleeper as a vital part of Europe’s rail network.

Scotland should not be left out of the rail renaissance that is happening across Europe. Brexit has left us isolated and, at times, locked up in a 10-mile tailback outside Dover. We need to be better connected. Of course, most European rail services are run by nationalised rail companies that have the vision and backing of their Governments at their heart. We need a Caley sleeper that is run in the public interest and integrated with the rest of Europe’s national rail services. I welcome that vision and look forward to that day coming soon.

13:17  

I want to make a short contribution to the debate as someone who used to use the sleeper. I used to commute to and from London on the sleeper, and I still take it reasonably often. I readily recognise Richard Leonard’s claim of

“the significant social, economic and environmental”

contribution that the sleeper makes, having experienced at first hand the excellent upgrades to the rolling stock and the use of local produce in the buffet car, and having seen the economic and net zero benefits to the north-east, in particular, of bringing people in and taking them to London.

However, it is that experience that causes me great disquiet in relation to the calls for nationalisation of the service. Richard Leonard first suggests that he is persuaded of that model by making an analogy with ScotRail, yet for anyone who uses ScotRail—as I do but often cannot, with Aberdeen having been cut off for much of last week, for example—that claim is extraordinary.

That leads me to the fundamental question that has not been answered: would nationalisation, in itself, improve the service? After all, as Graham Simpson said, it has not helped ScotRail. Indeed, last February, Richard Leonard said in a debate that we must encourage people back on to the railway in volumes that signal a modal shift. That is absolutely right. He went on to say that that cannot be done in the context of ticket office cuts and closures, service reductions and increases in fares.

There is a difference between supporting public ownership and the SNP’s management of the railways. We would take different decisions from those that the SNP Government has taken in the past years.

I readily acknowledge the appalling decisions that have been taken by the SNP Government—Neil Bibby makes a good point. However, the fact is that we have all seen cuts since nationalisation. My point is that public ownership of the sleeper service will not, in itself, improve passenger or staff experience or any other aspect of the service. It cannot.

The motion demands that

“the public purse would not be expected to fund profits for a private operator of the service”,

but Richard Leonard clearly did not bother to take even a cursory glance at the publicly available figures, which show that Serco has lost more than £60 million running the sleeper since it took up the franchise.

I remind Mr Leonard that the transport minister told me last year that ScotRail’s rail passenger services, which cost £266 million in 2016, were expected to cost £407 million by the end of 2022. I will be putting in a parliamentary question after this debate to see what that figure actually was.

If Richard Leonard had done his homework, he would know that the rise in working from home has cut fare income on the railways from £11 billion to £9 billion, which means that the only way to drive improvement in our nationalised railway—

Will the member accept an intervention?

I do not think that I have time.

I can allow a wee bit of latitude with time, should the member wish to take the intervention.

I would be grateful if the member could be very quick.

If all of this is caused by people working from home, why are the motorways and roads into our major city centres as congested as they are? We need to get people out of their cars and on to the railway.

We absolutely do. That is why, when Richard Leonard talks about the need to deliver investment in the railway and cut fares, he must appreciate that there are only three ways to drive people away from their cars and make the modal shift that he and other members have rightly mentioned. One is to increase taxes on the people of Scotland—even those who never use the railway and are already subsidising every sleeper journey to the tune of £164—and hypothecate any increased tax take to the railway. Another is to generate more money to invest in the sleeper by cannibalising other portfolios such as health or education, which, quite rightly, no Government will ever do. That leaves cannibalising the railway budget from within as the only option, which the Scottish Government has done with ScotRail. Railway funds could be reprofiled by cutting ticket office hours, staff or services, or by ramping up fares to squeeze more money from a smaller passenger base.

There is absolutely no analysis that suggests that nationalisation could deliver a better service for passengers, staff or Scotland’s taxpayers. I return to Richard Leonard’s comments about the need for a modal shift. I absolutely support him on that, not least as it is a way of achieving our net zero ambitions. However, in the context of the Climate Change Committee telling the Government that it is guilty of magical thinking with its net zero plans, I fear that there is more of that thinking in Mr Leonard’s motion. He must be careful about what he dreams of, because, if we were ever to nationalise the sleeper, he would find that rapidly turning into his worst nightmare.

13:23  

I thank my comrade Richard Leonard for bringing the debate to the Parliament. As we have heard from members across the chamber, this is an important issue.

The Caledonian sleeper service is one of the jewels of Scotland’s rail infrastructure and represents a transport offering to the public that few other parts of the UK can enjoy. The sleeper has been in operation since 1873, making it 150 years old this year. It holds great memories for many—even Opposition members have mentioned that. It connects Scotland to the rest of the UK and remains in demand to this day, despite what has been said about its present affordability.

Graham Simpson said that bringing this subject to the chamber takes us back in time, but the debate has been about the way in which we sustain transport and bring people back on to our railways as part of properly looking at our carbon footprint.

I associate myself with the comments that Richard Leonard made about the fact that public ownership brings huge benefits to staff and customers, to bring in John Mason’s point. It is important that staff and customers are both seen as being part of the equation.

We should not hand the service back to Serco in June under any circumstances. Now is the right time to bring the sleeper back under public control through a Government-owned company. We have heard in the debate that we can do that. What better way is there to reward the staff of the sleeper service than to bring the service back into a long-term future in public hands? That would be popular.

Let us say that that happened. How would we generate the money to pay for all the benefits that were being brought in by nationalisation?

Conservative members have to understand that it is necessary for us to nationalise the sleeper. Neil Bibby mentioned that we have always subsidised our railways, and rightly so. As Mark Ruskell said, we want to integrate ourselves into Europe and be part of that service. There is an opportunity for us to do that and we can do it. The privatisation of the railways has been a disaster in the UK and throughout Europe. Other European countries have done much better, having retained public ownership.

The current operator, Serco, is paid by us to run the service while, at the end of the day, we take the risk that is associated with that anyway. It is an incredible situation in which private enterprise can extract fees to run public assets and, if anything goes wrong, just send them back to the public sector anyway.

When the railways across Britain were privatised, we were told that it would increase competition and drive down costs for the consumer. However, there is zero competition and zero risk to the companies while customers are paying increasingly high prices and shouldering the long-term financial burden. That cannot go on.

The sleeper is a fantastic service that should be in public hands. If the Government is serious, it will soon take it back into public hands in the way that has been described.

13:27  

I refer members to my entry in the register of members’ interests and congratulate Richard Leonard on securing this important debate, which is part of a wider discussion about public transport, the climate challenge and how we get people to move from cars and planes to rail, in particular, as the greenest form of transport.

We need to compare where we are in Scotland and the rest of the UK with other European countries. In Germany, it is possible to travel by train throughout the country for €9. In Spain, most train travel will now be free for another year. France has recently obtained permission from the European Commission to ban domestic flights on routes where the train is available. I listened to Liam Kerr’s speech and it is clear that we need big decisions to be made by the UK Government as well as the Scottish Government.

Serco has operated the Caledonian sleeper franchise since March 2015. Prior to that, it was integrated into the ScotRail franchise and, due to the Covid-19 pandemic, in March 2020, the sleeper was transferred on what is called an emergency measures agreement—now a temporary measures agreement—so that all cost and revenue risk was transferred to the Scottish Government and Serco received a fee for running the service.

Therefore, the risk is already with the Scottish Government, and Serco is eligible to receive fees, which it has been doing. This debate is to encourage the Scottish Government to take the Caledonian sleeper back into public ownership.

Can the member tell me—I have not yet heard this from anyone—what Serco has done wrong with the Caledonian sleeper service? One member said that it has been running a very good service.

I suspect that the member has not spoken to as many Caledonian sleeper employees as I have. We could have a debate in its own right on some of the practices that have been operated in the Caledonian sleeper service. We have already heard from Richard Leonard about some of the alleged bullying that has been taking place, but some of us have a dossier on some of the problems with the way that the service is operated.

The Green Party member who spoke has already talked about some of Serco’s behaviour in relation to people seeking asylum and bespoke accommodation. We also know about its track record on the test and trace system. Therefore, there are some issues of principle with regard to the kinds of organisations to which the Government awards contracts, but there are some very specific issues with regard to how Serco has operated sleeper services. It is discredited and it is not fit to receive public money from the Scottish Government, but that is a wider debate that we could focus on in detail.

The issue before us today is whether that is the best way for a public service to be operated. I do not think that we have the specific figures, but we believe that nearly £2 million in fees has been given to Serco as part of the current contract. I ask the Scottish Government to confirm how much money Serco is receiving. I hope that, over the coming months, as the minister makes decisions, she will take into account the very strong support that she has from the Scottish Labour Party in particular to bring the sleeper service back into public ownership.

I call minister Jenny Gilruth to respond to the debate.

13:32  

I congratulate Mr Leonard on securing this important debate on the Caledonian sleeper. I am not sure how many MSPs in the chamber have travelled on the sleeper, but I certainly encourage colleagues to take the opportunity to do it. Travelling on the sleeper is a fantastic experience. I undertook it for the very first time in November, and it was really enjoyable.

As, I think, both Mr Leonard and Mr Bibby noted, sleeper rail services have existed in Scotland for almost 150 years, and they give us connectivity from Scotland to other parts of the UK. The Caledonian sleeper is an essential part of the vital mix of rail services that we have in Scotland.

I have listened to the debate with interest, and I want to return to members’ points in turn. It is fair to say that there are some different views in the chamber, which are perhaps split along ideological lines, but, for context, I remind members that it was this Government that brought ScotRail into public ownership. That context is an important point to start from.

On the issue of ScotRail, delivering better rail services obviously requires real leadership. Chris Gibb is leaving his key post as chief executive of Scottish Rail Holdings after less than a year. The Scotsman has reported that political interference was one of the factors in his decision and linked it to the postponement of engineering works in Fife. Will the minister confirm or deny whether that was the case?

I do not recognise Mr Bibby’s outline of that individual. That individual’s post came to an end this year, so the issues that the member has highlighted in the chamber are not my understanding of why Mr Gibb is leaving. If the member would like to speak with Mr Gibb, as I have done, actually, he would be more than welcome to do that, and I am sure that Mr Gibb can give him his own views on that matter. Mr Gibb has made a substantial contribution to the first year of public ownership of ScotRail.

I want to respond to some of the history around the sleeper service. Going back to the beginning of the sleeper service in 1873, train journeys could last in excess of 11 hours. Obviously, things have moved on since that time. In the UK today, there are two sleeper services: the night riviera from London to Cornwall and the Caley sleeper.

The sleeper is really the prominent example of connecting communities in Scotland directly to London. As important as the fact that the Caledonian sleeper opens up travel for people who live in Scotland is the fact that it opens up travel for visitors. We heard about that from members today.

The minister will remember that I wrote to her about some of the employment practices of Serco, especially with regard to staff based in Inverness. Serco was making staff redundant, with no hope of any redeployment and without consultation with the unions. Will she give that some consideration when she makes her decision?

I thank the member for that intervention; she made an important point, and I will absolutely consider that. I spent an hour and a half with the rail unions yesterday, and we talked about that issue at length, as the member will understand, so I am more than happy to look at that—particularly in the round of the decision that I will need to make on the future viability of the sleeper service and how it will be delivered.

As I mentioned, there has been a shift in our railway traffic to the tourist end of passenger outputs. Liam Kerr spoke to some of the societal benefits that the sleeper service brings—the economic and social benefits—but, as we have started to recover from the pandemic, tourist services are driving growth in the Caledonian sleeper business. The situation is perhaps different from when Mr Kerr and others might have used the service, when it was more of a commuter service.

As Graham Simpson noted, we have quite high satisfaction levels from customers, and it is important to reflect on that.

The minister is right in saying that it is important to reflect on that. Carol Mochan described the sleeper, which is being run by Serco, as a “fantastic service”. Does the minister agree with that? If it ain’t broke, why fix it?

I recognise the member’s point. Serco is running a broadly good service, and I will come on to talk about that in more detail. However, it is important to say that the rationale behind the decision reached on the provision of services was based on value for money. We have spoken at length about the importance of recognising the challenges that the Government faces in relation to the sustainability of public funding and providing that subsidy, and it is important to recognise that.

Graham Simpson noted some of the Scottish products that are available on board. Those are important in helping the service to support local communities, and they give VisitScotland an opportunity to promote Scotland to visitors travelling from London.

The success of the Caley sleeper has surpassed the success of any other train company in the UK, and that is an important point. We have seen, based on passenger satisfaction levels, as I mentioned, that Serco has been running a broadly good service. Its revenues from the past year outstripped pre-pandemic performance and its bookings are stronger than ever. As the franchising authority, it has lifted the Caley sleeper to new levels of success.

Some years ago, Scottish ministers took the decision that the Caledonian sleeper would be operated separately from ScotRail services. That allowed a level of dedicated management for the service, which has been hugely important for how it has progressed. The service has evolved, and with that it has been able to make progress. I recognise that there have been challenges historically, but it is important to put that on record.

The policy decision was made ahead of the resurgence of sleeper services across Europe, which we heard about from Mark Ruskell, and the Caledonian sleeper has established a model that has attracted attention from international sleeper operators. It is important to say that.

The Caledonian sleeper service is now thriving, and that is unique in the current context of rail. It is a testament to not only the quality and attractiveness of the service, but the work of the staff, who continue to help make the service as successful as it currently is. The service is increasingly recognised internationally, and it attracts passengers from all over the world.

Of course, there are challenges, and I recognise that the franchise has had its problems—we heard about some of them from members. The issues around the introduction of new trains are well documented; bringing in a complicated fleet with en suite facilities was ambitious and challenging at the time. However, we can also recognise the success that we have now, with the strong recovery as we move forward from the pandemic.

As we have noted in the debate, I have decided not to accept the rebasing proposal that was received from Serco at the end of last year, so the current franchise agreement will end of 25 June. I need to repeat that the decision not to rebase was in no way a reflection on the quality of the product that has been developed, nor on the commitment of the staff, who deliver the service very well, every day. Instead, it was a question of the terms of the rebase offer and because those terms did not represent value for money anymore.

The decision about the arrangements that will replace the current franchise when it comes to an end in June need to be taken in accordance with existing UK railway legislation. As a Scottish minister, I cannot unpick that legislation—as much as I might like to—and the Scottish Parliament does not have the power to change that legislation, at least not currently. Working within the constraints of that legislation, we are in the process of determining the arrangements to secure the continued provision of the Caledonian sleeper services beyond June.

The minister has referred a few times to section 25 of the Railways Act 1993, but does she accept that section 57 of the Scotland Act 2016 provides her with an opportunity to put the contract out to a tender process, which would allow a public sector bid?

I hear what Mr Leonard says, but I do not think that the legislation that he cites recuses me from adhering to the current UK legislation. That is the advice that I took from my civil servants in Transport Scotland. If Mr Leonard has legislative advice that contradicts the advice that I am receiving, I am more than happy to consider it.

Working within the constraints of the current UK legislation, I will move forward. As I noted in my letter to the Net Zero, Energy and Transport Committee back in October, it has been determined that it would not be appropriate to pursue a competition for the re-letting of the franchise at this time, because we do not consider that the prevailing conditions in the current UK rail market would sustain that option. The post-pandemic recovery on rail has created, it is fair to say, substantial uncertainty and risk about future market conditions.

On current railways legislation, the remaining options for successor arrangements are the direct award of a new franchise agreement or the mobilisation of operator-of-last-resort arrangements, as was undertaken for ScotRail. As I mentioned, work is well under way—I note that June is fast approaching—to consider those options in accordance with the current legislation and the Scottish ministers’ franchising policy statement, with the intent to deliver the best service for Caledonian sleeper passengers and the best value for the people of Scotland.

I again congratulate Mr Leonard on securing this debate on the future of the Caledonian sleeper. I have listened with interest to members’ contributions on how those services should be delivered from June, and I commit to updating Parliament in the coming weeks on the new proposed delivery model, which will deliver for passengers and staff alike.

13:41 Meeting suspended.  

13:59 On resuming—