SCOTRAIL: NO WAY TO RUN A LOCAL RAILWAY

ScotRail’s £10m loss amid contract woes and loss of franchise threats

Scotrail trains on the Glasgow-Helensburgh to Balloch routes.

BBC Scotland is reporting that the company that runs Scotland’s rail services has reported losses of £10m over a 15-month period.

Abellio ScotRail lost £7.9m before tax on turnover of nearly £990m between 1 January 2018 and 31 March 2019.

Earlier this month, it was stripped of the contract to run rail services by the Scottish government amid criticism of performance levels.

The rail operator said its results had been “impacted by operational performance issues”.

  • Abellio ScotRail contract to end three years early
  • ScotRail admits it ‘didn’t do well enough’ after delays
  • Thousands of ScotRail services axed due to staff shortages

ScotRail operates about 2,400 train services a day, and covers all services in Scotland except those run by other operators which cross the border.

The Scottish government contract to provide rail services, worth more than £7bn over 10 years, was due to last until 2025.

However, the government said a so-called “break clause” would be used to end the franchise three years early, in 2022.

The company also revealed that it had not paid out any dividends to shareholders over the period, in accounts lodged at Companies House.

Dominic Booth, managing director of Abellio UK, described the decision to end the contract early as “the wrong choice for Scotland’s railway and its customers”.

He said the company had invested more than £475m in new and upgraded trains and created more than 500 extra jobs in Scotland.

In its latest accounts, Abellio said it had set “ambitious objectives” at the start of its franchise in April 2015, with the “biggest investment in new trains, track and stations since the Victorian era”.

It went on to state: “During this period of unprecedented investment and change, results for the period have been impacted by operational performance issues following major infrastructure upgrades of track and stations and the late delivery of new trains to support significant timetable improvements.”

It added that since it took over the franchise, it had increased the number of seats available each weekday by 23% and increased overall rail services by 9% as a result of timetable improvements and bringing in more carriages in new and refurbished trains.

Running ScotRail doesn’t seem very easy or very profitable, if these accounts are anything to go by.

Abellio ScotRail has – yet again – been unable to make a profit or pay back the multi-million pound loan it got from its parent company. Even shareholders go empty-handed.

That could present a problem for the future.

If Abellio – an arm of the Dutch state railway – can’t run ScotRail to the standards expected by the Scottish government, who can? Since Abellio took charge, they’ve made a huge investment in electric trains, and increased the number of seats for passengers by 23%.

But that wasn’t enough.

They lost the contract – officially, at least – because the Scottish government didn’t accept their plans for the future. The fresh subsidy sought by Abellio was deemed too much.

Scottish ministers now have two years to find a company to run the railway better than Abellio managed – and more cheaply than Abellio promised.

Anyone bidding will wonder how they can do that, and still make a profit.

By 2022, the UK government may have changed the rail franchise system. Perhaps a new “concession” system will be in place, which means the operator wouldn’t own ScotRail trains or sell ScotRail tickets.

That may open the door for a public sector bid – “Calmac ScotRail”, anyone?

But the clock is ticking. A new operator has to be in place by April 2022.


7 thoughts on “SCOTRAIL: NO WAY TO RUN A LOCAL RAILWAY

  1. It costs money to run a railway. It costs money to build the infrastructure that a railway runs on. It costs money to buy the latest trains.

    Anyone doubting that need only look at the HS2 figure. Initially budgeted at £56 billion only a few years ago the price is now being revised to £86 billion. Or what about Cross Rail in London. Originally commenced on a budget of £14.8 billion the delayed project is now being re-cast at over £18 billion with possible further increases.

    Two English rail projects with costs of over £100 billion ( which expressed in numbers is £104,000,000,000 ) is a considerable sum of money. But fair play to our cousins in the south, £104 billion is a lot of high quality jobs – and the investment in infrastructure makes so much sense.

    Oh were it not the case that Scotland could rebuild its infrastructure to the same scale. That would be a real union dividend. But as we know HS2 is stopping in northern England and, unlike Cross Rail in London, the Glasgow underground will never have its route extended with new tunnels and stations.

    But let us be thankful for the creaking networks that we have here in Scotland. We should not expect better for our fingers are worn out holding the begging bowl. We know our place and in our place we shall remain. I hope not though.

    And good on our southern cousins for their government’s investment in infrastructure and jobs. They deserve it, don’t they. Happy new year.

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  2. Hello again, Willie. You appear to have become the self-appointed spokesperson for the SNP. I am delighted that the party has your services at their disposal. How about becoming legitimate and revealing your name. Anonymity is not a good strategy for any political party. Until then get off the railway or risk being run down.

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  3. And yes Editor you report that Scottish Ministers have less than two years to find a replacement to run the railway better than Abellio did – and more cheaply than Abellio promised.

    It’s interesting that you also say that if Abellio can’t run Scotrail then who can.

    Two very interesting conclusions and conclusions that go to the heart of the matter of under investment because without adequate investment one is flogging the proverbial dead horse. Think how a 1970s car performs compared to a 2020 car and you get the picture.

    Now how you channel investment into infrastructure is a big question. And it is something that folks need to consider because over the last thirty years or so, much of Scotland’s infrastructure investment has been procured through what was called the Private Finance Initiative.

    Introduced by Mrs Thatchers’s government and thereafter absolutely embraced by New Labour the model of PFI ( or Design, Build, Own, Operate and Transfer ) has since become a tad, or should we say more than a tad of a discredited way to procure public assets with expensive build costs and even more expensive mezzanine finance all wrapped up with shoddy cheap build standards.

    So what of it now, and what if any differences between good old devolved Scotland and grand old England. Well to draw a comparison, and using road infrastructure as an exemplar, Highways England have publicly acknowledged that PFI is a discredited model. Thus in consequence of this the recently completed £1.5 billion ticket priced A14 in Cambridgeshire was procured using early intervention collaborative target cost style non PFI contracts.

    By comparison the recently completed Aberdeen Western Peripheral By Pass at less than half the cost was procured by PFI.

    So why the difference. Why is Transport Scotland being forced down the route of expensive PFI whilst Highways England isn’t. Well that’s another Union Dividend I’d like answered and it is set to to get worse. Indeed, because of restrictions on SG borrowing through the devolution settlement the Scottish Government is going to be forced down an even harder PFI route using a procurement model named the New Investment Model.

    But hey, again, at least our southern cousins are not being forced down this discredited route. Good on them. Must have been something Nicola said?

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    1. It would help if you read the article, Willie. There is no way I would know how to run a railway. I wouldn’t have a clue. The remark that “if Abellio can’t run a railway, who can?” was made by the author of the article on the BBC Scotland website. You might not agree with him/her and I might not agree with him/her, but we defend that person’s right to say what he/she has said. However, we would prefer that we had the identity of everyone who participates on these pages. The SNP should be above sneaking around writing anonymous letters in places of darkness. Editor

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  4. Editor, I couldn’t agree more about your comments that you don’t have a clue how to run a railway. I think most readers would agree on that, and nor should you need to know how to run a railway.

    Listening to so many of our politicians it seems they know how to run a railway. Or at least they try to kid on that they do.

    What however goes without saying, and something that I think we can all hopefully should agree on is that infrastructure investment has been choked off in Scotland. That is certainly true of the railways and especially so when you look at the largesse being lavished on Cross Rail in London and HS2.

    I do not speak for the SNP but I do speak for what I observe. Nor do I try to make cheap shots against other political parties. That said, some of the Labour comments being reported in your editorial prices come across as ya boo political comments. But that maybe is the nature of minority opposition parties, and if the SNP were the same with one MP and a vote share heading to single figures then they might be the same.

    Constructive comment, based on observation and fairness is what we want and I think readers appreciate that. Maybe that will cause more will come, with more contributing. That would be a result because getting people thinking about what is happening round about them is a key to a fairer better society.

    So, let’s hope more folks contribute to these pages. Not just on politics but on many of the other cultural and or historical pieces that you make the effort to deliver.

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  5. Yaboo the noo, Willie. We need more readers like you to make contributions to The Democrat. What we don’t want is a culture of secrecy in Scottish society. Let’s know who you are and what you think. Pat heads or put the boot in. All human life is here no matter where your political affiliations lie. Keep going. 2020 could be really interesting.

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    1. Thanks Editor.

      I’ll keep commenting and let’s hope more contribute in discussion in a positive way to what goes on in our community.

      Now locally, Council secrecy, that’s a good question. They wouldn’t keep secrets from us or would they. The Council spend circa £500,000 on corporate communications every year. That’s a lot of lolly. But what do they tell you. Not what you need to hear, that’s for sure. So, If you know a secret, or have concerns, why not let the Editor know. It’s only through exposure and public visibility will things change – and to a large extent it’s up to us all to help facilitate that change. And I’m sure the Editor will play it straight, keeping whistleblowers confidences.

      Ya boo politicians need to be checked. Folks are not sheep and reasoned argument is to be preferred. So to use the Nike slogan, let’s do it.

      Right that’s it – enough for tonight. It’ll all be here tomorrow. Night night.

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