Letter to Convener from Graeme Dey, Minister for Transport, Scottish Government, 8 December 2021
I am writing to update the Committee on progress with the mobilisation of arrangements for the delivery of ScotRail services from 1 April 2022 after the end of the current Abellio ScotRail franchise contract.
In a Statement to Parliament on 17 March 2021 Ministers confirmed that ScotRail services would be provided by an arm’s length company owned and controlled by the Scottish Ministers when the current Abellio ScotRail contract terminates, in furtherance of their duties under section 30 of the Railways Act 1993 (known as “Operator of Last Resort” (OLR)). Detailed analysis and an options appraisal, including consideration of best practice from the public and private sectors and experience of OLR deployments in England and Wales, has been undertaken to determine the governance arrangements that best suit Scottish needs and interests.
For many years, the Scottish Ministers have maintained three shelf companies – a holding company and two train operating companies – for use as potential vehicles to facilitate the deployment of OLR arrangements should these be required for either of the Scottish franchises. The Scottish Ministers are now activating two of these shelf companies, namely ScotRail Trains Ltd, which will be responsible for operating the day to day Scotrail services, and Scottish Rail Holdings Ltd, which will provide oversight and management of ScotRail Trains Ltd. Scottish Rail Holdings Ltd is a wholly owned company of the Scottish Ministers and ScotRail Trains Ltd is a wholly owned subsidiary of Scottish Rail Holdings Ltd.
This will provide for a robust and sustainable governance model compatible with current UK rail legislation, which we have no powers to change. The arrangements strike the appropriate balance between operation and oversight, enabling delivery of Scotland’s railway to be undertaken by a company employing the right mix of skills, knowledge and experience on the one hand, while ensuring there is proper overall accountability to the Scottish Ministers on the other. Both companies will be expected to form and maintain strong partnerships with Network Rail, other rail operators in other parts of the UK and of course, other parts of the Scottish rail industry; it is planned currently for the ScotRail Alliance agreement to continue between ScotRail Trains Ltd and Network Rail.
The responsibilities of Scottish Rail Holdings Ltd will increase gradually during the mobilisation of these arrangements, as part of a planned smooth transition for passengers and staff from Abellio ScotRail Ltd to ScotRail Trains Ltd on 1st April 2022. Arrangements are underway to appoint Directors for this new company and it is planned for this to include employee and passenger representation.
To assist in making this transition work, I can announce the appointment of Chris Gibb on a fixed term basis as the Chief Executive Officer of Scottish Rail Holdings Ltd. It is expected that the appointment of a Finance Director for Scottish Rail Holdings Ltd (also on a fixed term basis) may also be made shortly. Chris Gibb brings enormous railway experience both from Train Operating Companies and Network Rail, and I am delighted to have him on board.
One of the key considerations of that transition is to arrange for the formal transfer of ScotRail staff to ScotRail Trains Ltd. This process will be carried out over the coming months, and will include appropriate consultation with staff representatives and internal communication throughout with staff more generally. We want all of our staff to join us in this new venture – they are critical to its success in the short and long term, so we will be encouraging everyone to make that transfer. Full details and support will be provided to all staff in the coming months with opportunities for them to engage with the process through internal communications channels.
Clearly in the short term, our focus and priority is on making a smooth transition to the new arrangements but I see that as the start, not the finish of our journey. We want a publicly owned Scotrail to embody all the values of this government, not least in relation to fair work. The composition and approach of the business will grow over time so that it is contributing and is seen to contribute to the Scottish Government’s broader economic, social and environmental ambitions.
I will of course keep Parliament updated as we progress these arrangements and we reach significant milestones.