THE transport minister has said she is constrained by UK law to consider the continued use of outsourcing firm Serco which has the £800m franchise to operate overnight rail passenger services between Scotland and London.

In mid-December, Jenny Gilruth said that it is making an assessment over a direct award of the Caledonian Sleeper service to Serco - two months after saying that it would be stripped of the contract seven years early while the SNP said it presented an opportunity for nationalisation.

The current 15-year franchise was awarded to the outsourcing company Serco in May 2014, with the 15-year contract coming into effect on March, 2015.

Richard Leonard, the Central Scotland MSP, who is also convenor of the National Union of Rail, Maritime and Transport Workers' Scottish parliamentary group called for the service to be brought into public ownership.

He said that considering a direct award back to Serco was a "governmental betrayal of the highest order".

The franchise was due to end on June 25, next year rather than run its entire term to 2030 after Serco tried to renegotiate the terms of the contract through a process known as rebasing.

READ MORE: Ministers 'u-turn' over state-control of Caledonian Sleeper franchise

The contract that was signed in 2014 included a ‘rebase clause’ that meant that, after seven years of the 15-year franchise, Serco could present to the Scottish Government alternative financial arrangements for the remaining years of the franchise.

Serco had hoped to revise the terms of the contract to put the service on a "more sustainable footing" saying that it had been "loss-making over the life of the contract".

But Ms Gilruth said in answer to a parliamentary question in October that a new contract with Serco does not represent “value for money to the public”.

The SNP then said the ending of the franchise in 2023 "presents an opportunity for the Scottish Government to consider bringing the Caledonian Sleeper into public hands, just like it did with Scotrail in April this year".

It came after the Scottish Government last year took over the running of most train services in the country following the end of Abellio’s tenure in charge of ScotRail.

The Herald:

Now Ms Gilruth has said that she is limited to what she can do by UK law over the future of the iconic service but confirmed one option remains to bring it under state control.

She said that under UK legislation ministers now had the option to put the contract out to tender, or make a ‘direct award’ back to Serco or to a company owned and controlled by the Scottish Government – the latter effectively being public ownership.

She said: "Working within the constraints of that legislation, we're in the process of determining the arrangements to secure the continued provision of the Caledonian sleeper services.

"The decision not to rebase was in no way a reflection on the quality of the product that has been developed, nor on the commitment of the staff to deliver the service very well every day. It was instead a question of the terms of the the rebase offer, and that those terms did not represent value for money anymore. The decision about the arrangements that will replace the current franchise when it comes to an end in June need to be taken in accordance with the existing UK railway legislation. I cannot as a Scottish minister, unpick that legislation much as I would like to."

Mr Leonard in a parliamentary debate questioned whether Ms Gilruth was constrained by UK 1993 Railways Act and suggested that the 2016 Scotland Act which devolves rail services to Scotland allows her to take the service over.

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He said: "This month marks 150 years of an overnight sleeper service running from Scotland to London. But this is a service which cannot merely be consigned to its glorious past. It demands active support in the present in order to secure a bright future, a bright future as an integral part of a wider and longer term plan for our public transport system. A plan that means instead of closing down booking offices and cutting jobs, we should be investing in our railway and cutting fares because if we are really serious about climate change, we should be getting people out of their cars and onto public transport.

"When it comes to cross border travel, we should be getting people out of their airline seats and onto railway carriages.

"The position is this on the fifth of October last year's on the eve of the SNP party conference in Aberdeen, instead of making a ministerial statement or a ministerial speech in Parliament, the minister for transport issued a press release based on a carefully crafted reply to a government initiated question announcing that Serco was being stripped of the Sleeper contract and issued with a notice of termination.

"But then, exactly two months later, after the SNP party conference was all done and dusted in reply to a series of written questions I tabled, the minister of transport was forced to reveal with a smoking gun in her hand that an appropriate assessment of a direct award to Serco was now being made.

"The truth of the matter is the company that runs the Caledonian Sleeper calls for more public money to run the service. That request is assessed and rejected. Then 60 days later, the minister is forced to admit that it is now lining up a direct award to that self same company. Let me be clear, this is not just another run of the mill ministerial u-turn. This is a governmental betrayal of the highest order. "