ScotRail to become state owned from March 2022

Mr Matheson said the move will come through "operator of last resort arrangements" after he decided it was not the right time to seek a franchise procurement competition to run Scotland's railways after Dutch state owned railway company Abellio ends its control.

An operator of last resort runs the railways in the event that a train operating company is no longer able to do so.

The transport secretary admitted it had considered keeping Abellio on board after March, 2022, but decided it was not in the country's best interests.

Mr Matheson said he could not say how long the 'operator of last resort" arrangements would be in place for, adding that it was something that will be considered further as the "shape and pace" of rail reform becomes clearer. 

He said: "I can confirm that the operator of last resort will run ScotRail services, after the end of the current  franchise contract. This means that from the expiry of the current franchise ScotRail services will be provided within the public sector, by an arm's length company owned and controlled by the Scottish Government.

"This will provide stability and certainty for passengers and staff,  and puts the operation of Scotland's services in public hands from the end of the current contract."

He said ScotRail staff will transfer to the new Scottish government owned company with their terms and conditions, protected.

"This period of stability will provide a platform whereby we can assess the scale and pace of recovery from Covid-19 and progress options for reform, in particular, my preferred model of an integrated public sector controlled railway."

Union leaders had called on the even of the announcement to to  "stop the excuses" and commit to taking ScotRail into public ownership.

At the end of 2019, ministers announced it had stripped Abellio of the franchise three years early in the wake of continuing outcry over service failings and rising costs to the taxpayer.

It came after a 2018 winter timetable with the introduction of high-speed trains and new class 385 electric trains ushered in months of cancellations and disruption to services with much of it put down to staff shortages partly due to training to deal with the new trains and timetable.

ScotRail was forced to submit a plan by February, 2019, to address falling performance levels which, if unsuccessful, could result in a breach of contract and lead to Abellio losing the franchise early.

Mr Matheson made it clear that it was his "strongly held view" was that a public sector controlled integrated passenger railway was the future for Scotland enabling what he called a "more cohesive, fleet of foot strategic decision making structure between rail infrastructure and services with full accountability to the Scottish Government".

But he said the vision cannot be delivered under the existing legislative framework, which is reserved to the UK Government and that that is why he has repeatedly sought full devolution of rail powers to Scotland. His calls have so far been rejected.

The long-awaited publication of the UK Government-commissioned Williams Review of the rail industry franchising will form the basis of a Government White Paper and reform package that Rail Minister Chris Heaton-Harris has pledged to publish “as soon as possible”.

And Mr Matheson said delays in its publication had hampered the Scottish Government's decision-making. 

On December, 9, the UK Government had said  a white paper was expected within six weeks, "but still we wait", he said.

He explained: "The impact of the pandemic, and the continued uncertainty about pending reform makes any franchise competition especially unwise. At this time, the cost and risk involved would be significant. And I will not divert scarce time and resources to pursue a competition which risks failing. 

"I can therefore confirm that we will not hold a franchise procurement competition to secure successor arrangements for the ScotRail rail franchise. 

"In December, 2019 Scottish ministers decided not to... continue the current ScotRail franchise, beyond the scheduled break point expected in March, 2022. 

"I know Abellio was disappointed by that outcome. But its response has been professional, particularly in dealing with the impact of the pandemic. 

"I've carefully considered the possibility of directly awarding a contract to Abellio to continue to run services beyond March, 2022, in particular, how that option would align with the recently published revised franchising policy statement.

"Based on those considerations, I've concluded that a direct award to Abellio would not be conducive to fulfilment of our policy objectives. 

"My officials have been working closely with rail industry partners over time to explore the potential for greater integration of rail services and the benefits that this may bring with energy, and the commitment to progress this with pace, but the continued UK Government delay in concluding the rail review has hampered, our progress. 

"Following detailed consideration of all options against the background of the current legislation, the  revised franchising policy statement, and the continued uncertainty arising from the Covid-19 pandemic, and the delay in the UK white paper. I consider that the award of a franchise agreement to any party at this time, would be detrimental to the fulfilment of a rail policy objectives. "

He concluded by saying the rail industry was going through a period of "necessary and overdue reform" adding: " It's my duty to secure continued operations of stable and efficient rail services within the existing legislative framework.

"In taking the approach I've announced today, we will secure, stable delivery of rail services within public hands, and under Scottish Government control, providing certainty for passengers and rail staff.

" I firmly believe this approach will best serve the interests of passengers and taxpayers in the future."

He later acknowledged there was an " ongoing problem within the rail network across the whole of the UK" because of its "fractured nature" with nationalised body Network Rail, being responsible for managing the rail infrastructure, such as the tracks and signals.

"That fundamentally has to be addressed if we are to resolve these issues," he said. "The vast majority of delays and problems on the rail network are not not caused by the rail operating company, but by infrastructure failures, and we need to address that effectively.

"That's why an integrated rail body that can deliver rail services is  absolutely critical. And that's what we have to have the powers to do here in Scotland as part of any rail reform package brought forward by the UK government."