Going Dutch: First Group loses out in race for ScotRail franchise

Rail union RMT reacted furiously to the "scandalous" development, saying it represented a missed opportunity to bring the franchise back into public ownership, as did Green MSP Patrick Harvie.

Abellio is part owned by the state-owned Netherlands Railways and receives funding from taxpayers in Holland. It had been shortlisted alongside FirstGroup, National Express, Arriva and Hong Kong operator MTR.

The contract will see the company run most of the country's trains for ten years and take responsibility for ScotRail's 5,000-strong workforce.

An official announcement will be made by Transport Minister Keith Brown at Waverley station in Edinburgh.

However, sources confirmed the move, with one saying that the tendering process did not examine what had been achieved or was being done currently but what was being promised by the rival bidders for the duration of the new franchise.

Union bosses described the reported move as a "disgraceful and shameful betrayal of the Scottish people" soon after the referendum vote and said the whole franchising process should have been put on hold for now.

RMT general secretary Mick Cash said: "It is scandalous that just a few weeks after the referendum, and promises from all quarters that the Scottish people would have an increased say in every aspect of their lives, that the continued privatisation of Scotland's railways has been bulldozed through with the SNP colluding with the political elite in Westminster to deny the opportunity for this franchise to be brought back into public ownership.

"There is no question that this whole franchising process could and should have been halted, pending the ratification of the post referendum devolution settlement, instead of rushing headlong into a deal that will deny the Scottish people ownership and control of their railways for many years to come.

"Scotland could have taken control of its own railways, instead they have opted to go Dutch, meaning that profits will be sucked out of the system to underpin investment and fares in Holland.

"It is a disgraceful and shameful betrayal of the Scottish people and makes a mockery of promises made both before and immediately after the referendum vote. RMT will continue the fight for public ownership with every means at our disposal. "

Patrick Harvie, Green Party MSP for Glasgow and transport spokesman for the Scottish Greens, called on ministers to give an assurance over the new ScotRail franchise.

He said: "It would be ironic to have a Dutch national railway company taking over most of Scotland's trains. While it would be great to see public transport run by a public sector firm it should be our public sector.

"There's huge public appetite for bringing rail back into public hands. We need an assurance from the Transport Minister that the optional five year break in the ScotRail franchise will allow for a Scottish public sector operator to bid, assuming power is devolved from Westminster to allow it."

Speaking when the ScotRail franchise shortlist was announced last year, the Dutch firm's UK managing director, Dominic Booth, described it as a "tremendous opportunity". He said the company would "throw everything we can into exceeding the requirements of (the franchise) and, therefore, the expectations of passengers across the country".

Abellio currently operates three rail franchises in England, including Merseyrail and Northern Rail.

Netherlands Railways runs the majority train services in Holland, and has been praised for the efficiency of its services, with 93 per cent of its services arriving on time.

The firm also offers generous terms to commuters and passengers whose journeys are delayed, with those left waiting for more than half an hour on long-distance services entitled to a refund worth half the ticket price, rising to a full refund if the delay is longer than an hour.

Scotland is currently undergoing a boom in train passenger numbers, with the number of rail travellers increasing by one third to 87 million during the last decade.

FirstGroup's loss of its ScotRail franchise came as the company revealed a boost from stronger rail passenger revenues.

The Aberdeen-based group said like-for-like passenger revenues lifted by a bigger-than-expected 6.5% in the six months to September 30, helped by growth in franchises such as First Great Western.

But shares fell 5% today after the firm was told by Transport Scotland it had missed out in the race for a new ten-year ScotRail contract, which it has operated since 2004, to Dutch rival Abellio from next April.

In recent months FirstGroup has lost its Caledonian Sleeper franchise to Serco, failed in its bid to win the Essex Thameside - retained by National Express - and seen its Capital Connect contract in London become swallowed up as part of the larger Thameslink franchise, which was awarded to Govia.

Its next large contract bid is for the East Coast service, while it is in talks with the Department of Transport to operate its existing TransPennine Express contract until 2016 and to extend its largest franchise, First Great Western.

Analysts at HSBC recently underlined the importance of winning bids because paying off its debts, which stood at £1.3 billion in May, "will be painfully slow unless the group can win rail franchises."

In a trading update today, the business said it was performing in line with expectations and it was making progress with its transformation plans.

Shore Capital analyst Greg Johnson said the statement was "very encouraging."

He added: "For the first time in 18 months of covering the stock there is no downgrades.

"The failure to win ScotRail is a bitter blow, however we now await news on the direct award of First Great Western and the award of the East Coast franchise."

At its UK bus unit like-for-like passenger revenues and volumes are forecast to rise by 2.1% in the period, as it experienced mixed local economic conditions across its regions.

The division, which has a fleet of 7,400 buses carrying around 2.3 million passengers every day, posted a fall in profits to £44.4 million in its last financial year.

FirstGroup added the slow pace of economic recovery was also impacting its core Greyhound coach business in the US but this was balanced by better performances in UK rail and its US local bus and yellow school bus services.

First Student raised average prices 4.5% during the period but because of the timing of the Easter holiday dollar sales at this unit are expected to be 1.6% lower than a year ago.

At its US bus service, First Transit, dollar sales are expected to lift 9%, largely due to new contract wins in areas such as Palm Beach County and Denver.