DUTCH rail operator Abellio's forthcoming £2.5bn franchise to run Scotland's railways would be cancelled if Labour came to power after the 2016 Holyrood elections.

The party's Scottish leader has outlined plans to exercise a break clause in the contract with the firm to takeover ScotRail.

It would be replaced with a non-profit public sector organisation, promising cheaper services, if Labour won power.

Scotland's railways would be returned to the public sector in a new non-profit ScotRail franchise under Labour, leader Jim Murphy has pledged.

The pledge came after Abellio won the contract last autumn.

Labour last year pushed to suspend the contract until after the Smith Agreement devolves powers to the Scottish Parliament to allow a non-profit, public sector organisation to bid to run Scotland's railways.

However, the SNP warned that it would have cost the Scottish Government millions of pounds and could have brought trains to a standstill.

Mr Murphy said: "I want to see better, cheaper public transport. The Smith Agreement means we can have a ScotRail that is serving commuters, not shareholders.

"The current ScotRail franchise sees money going straight from the public purse to shareholders' pockets.

"The incoming one will see Scottish public money support transport infrastructure in Holland.

"Neither deal is the best deal for Scotland when commuters are waiting on late-running services, paying over-inflated fares whilst being squeezed against train doors on overcrowded journeys.

"The best deal for Scotland is a People's ScotRail, a railway company whose commitment is not to a group of shareholders or a foreign government, but to the people of Scotland."