THE Scottish Government is examining options for returning Scotland’s railways to public ownership in what would be the biggest shake-up of the service since privatisation more than 20 years ago, the Sunday Herald understands.

Ministers are “preparing the ground” for a form of public ownership in the event of the Scottish Government going ahead with its threat to strip ScotRail of its contract if it fails to improve services.

The model ministers are understood to have in mind is based on CalMac Ferries Ltd (CFL), which describes itself as a “wholly-owned subsidiary of David MacBrayne Ltd, which is wholly owned by Scottish Ministers”.

More than 19,000 people have signed a petition calling on Transport Minister Humza Yousaf to “make ScotRail bosses improve Scotland’s trains or strip them of their contract”.

Dutch firm Abellio was awarded the franchise in 2015 for 10 years, but ministers can strip the company of the contract after five if punctuality falls below 84.3 per cent.

Nicola Sturgeon told MSPs at last week’s First Minister’s questions that: “If ScotRail do not meet their performance requirements, we have the option of terminating the contract early.”

However, a senior source close to the Scottish Government said the Transport Minister has a preference for moving towards public ownership of the railways north of the Border as soon as possible, and is currently seeking to clarify how this could be done.

The source said: “The Government is preparing the groundwork for how a publicly owned and publicly accountable railways could be delivered for Scotland. CalMac is the model that’s being looked at.”

Scottish ministers have so far resisted repeated calls from campaigners to commit to renationalising Scotland’s railways, suggesting that the Government does not have sufficient powers under the existing devolution settlement.

However, Yousaf, who was appointed Transport Minister by Sturgeon after May’s election, is understood to believe that the Scottish Government would have enough powers to return rail to the public sector.

The news comes after Labour’s shadow chancellor John McDonnell said “Scotland could lead the way” for the UK by renationalising rail.

McDonnell suggested that Labour and the SNP could work together to bring rail back into public ownership in Scotland.

The Labour MP, backing renationalisation, said: “This policy has overwhelming support across the UK and Scotland could lead the way in its implementation.

“The SNP has the idea opportunity now to follow Labour’s lead and renationalise this essential public service.”

Manuel Cortes, general secretary of the Transport Salaried Staffs’ Association (TSSA), previously claimed that SNP ministers were hiding behind a “smoke screen” by saying they did not have enough powers to renationalise ScotRail – a claim he disputes.

ScotRail was fined £483,000 last month for failing to meet required standards for trains and stations.

Performance inspectors found areas that missed targets included station toilets, ticket machines, train seats, toilets and cleanliness.

The results follow criticism of the ScotRail Alliance franchise, operated by Dutch firm Abellio, for delayed, cancelled and over-crowded trains.

Meanwhile, a Scottish Government spokesperson said officials are examining what steps can be taken to ensure that a public sector body can bid in future Scottish rail franchise competitions, in line with the new powers coming to Holyrood.

The spokesperson said: “We have put in place measures to ensure we are fulfilling our Railways Act obligation of securing ongoing rail functions, as the operator of last resort, should a franchise terminate early, for any reason, and not be replaced.

“Separately, and quite distinctly, a manifesto commitment was made to facilitate a public sector bid for our railways. Ministers are committed to this and will be working with appropriate stakeholders to take this forward. This is about forward looking policy and future Scottish rail franchise competitions.”

Abellio ScotRail managing director Phil Verster has previous said it would “absolutely not” reach the point where the number of trains running late could force the Scottish Government to end Abellio’s contract.