What next for ScotRail after Abellio is stripped of trains contract?

It was on April 1, 2015 that Abellio took the franchise over from FirstGroup after the Aberdeen-based company had run most Scottish rail services for some 10 years. The ten-year deal was worth up to £6 billion in what was then the biggest single contract ever awarded by the Scottish Government.

But in recent years ScotRail has faced attack after attack for its performance in ensuring trains run on time, fare rises, overcrowding and in the way, it has looked after the rolling stock and stations.

READ MORE: Moves for greater state control as Abellio is stripped of control of Scotland's railways

The winter timetable disruption came In December, last year, with a new timetable that ushered in the introduction of high-speed trains and new class 385 electric trains which would provide faster and greener rail journeys.

ScotRail was forced to submit a plan by February 19 to address falling performance levels which if unsuccessful would have resulted in a breach of contract and led to Abellio losing the ScotRail franchise early. A remedial plan to improve performance has been in place since February.

READ MORE: The 12 days of Christmas chaos at ScotRail

Transport Secretary Michael Matheson has indicated there could be a franchise bidding war, but with a process that could include a public sector bidder such as CalMac.He indicated the preference would be for Holyrood to have full power over the rail network so that it could abolish franchising and decide the extent to which the public sector runs Scotland's railways.

The direction of travel will depend to a great extent on Keith Williams, the former British Airways boss, who had been conducting a “root and branch” review of the railways for the past 15 months and is to deliver some conclusions next year.

He has pointed to a "new industry structure, reducing fragmentation, better aligning track and train, creating clear accountability and a greater distance between government and running the day to day railway". The crucial question is how.

Rail franchising – where train services are contracted out to transport companies – “cannot continue the way it is today”, he has said.

And he has made it clear that he is not considering handing over "guiding mind" powers to Network Rail.

What that could mean in practice is said by some experts to mean a shift from a franchise model to one involving longer-term concessions.

The concession model sees private companies being contracted to run the train lines, but with government, either local or central, setting fares and timetables.

Concession agreements are similar to franchises, but the legal framework is different and the public sector authority, would hold the financial risk.

Concession holders are paid a management fee to run the service, which would be tightly specified by the public sector authority. While they do not have the commercial risk, there are still usually penalties and rewards specified in the contract for large variations in performance. Bidders generally do not have to produce timetables or fare levels.

Image from union video calling for nationalisation questions contract to Abellio

Experts say the advantage for the passenger in this is the franchisees are driven by income, through new services, rather than costs.

The argument for more state control has been widely advocated, although there are differences of opinion on how far the country should go.

READ MORE: Video - 'Ditch the Dutch' calls for full nationalisation of Scotland's railways is 'off track'

With the support of a 'Ditch the Dutch' video and a petition supported by tens of thousands, Manuel Cortes, the general secretary of the transport staff union TSSA has constantly called for full nationalisation of ScotRail without recourse to any bidding war.

He believed a publicly owned company could lose in a bidding war with private companies and that the minister should take action to institute full public ownership.

A Common Weal think-tank analysis for the TSSA transport workers union said that nationalised Scottish railways would lead to average fare cuts of 6.5 per cent across the service. It also said that there was the “potential” to provide the same source of “collective pride” about the railway that is felt about the NHS.

Last year, the Herald revealed that Network Rail Scotland, which runs the infrastructure such as the tracks and signals, was being probed by the transport regulator as it was responsible for two in three of the delays which was ScotRail forced to settle 65,000 successful claims from passengers over nine months.

And think tank Reform Scotland has previously said Scotland should go further in taking control of the railway network after it said more than half of all train delays are caused by problems such as faulty tracks or signalling.

More ScotRail services would be on time if the operator of Scotland’s railway infrastructure – which is currently run by public body Network Rail – was answerable to Holyrood ministers and not to the UK Government, the think-tank said.

Scottish Labour predictably welcomed the Scottish Government decision which follows their campaign to end the franchise early and continued calls for greater state control.

READ MORE: Analysis - It is not who runs the trains that is the problem but who fixes the track

Colin Smyth, the party's transport spokesman, said "nothing less" than a publicly-owned rail system would deliver an efficient and reliable public transport system.

"For years Scottish Labour have campaigned to end Abellio's shambolic spell in charge of Scotland's railway," he said.

"What we now must know is if the Scottish government intend to make a serious public sector bid for control of ScotRail or whether our railways will be flogged off once more to a foreign-based private company, focused only on profit."

But the decision was also welcomed by the environmental protection lobby - as moves are made to ban older cars from Glasgow city centre in three years time in a low emission zone (LEZ) while Nicola Sturgeon has agreed 2045 will be Scotland’s new net-zero target for CO2 emissions.

Responding to the decision to strip Abellio of the ScotRail franchise, John Bynorth, policy and communications officer at Environmental Protection Scotland (EPS) said: “Abellio has fallen short of its targets with regular cancellations, delays and a lack of carries on its trains forcing many people to turn their back on Scotland’s rail network and use their private cars.

“The public’s faith needs to be restored in the railway network and the next operator must guarantee more reliable services, more carriages and a service fit for the 2020s.”