The Scottish Government has moved to nationalise the Caledonian Sleeper service after ending the contract with operator Serco seven years before its scheduled date.

From 25 June 2023, the service will be run by Scottish Rail Holdings (SRH), an arm’s length company owned by the Scottish government.

Serco received the current franchise in an £800m agreement, under which it was responsible for operating the service from 2015 to 2030.

The decision to terminate this agreement was announced by the government in October last year.

It was taken after Serco tried to renegotiate this agreement using a “rebase clause”, which allowed the firm to put forth alternative financial arrangements before the government for the franchise’s remaining years.

However, the government did not agree to the new terms, which according to Serco were aimed at putting the service on “a more sustainable financial footing”.

In a statement to Parliament, Scotland Transport Minister Jenny Gilruth said: “Having stated in October that the existing Caledonian Sleeper franchise would come to an end in June 2023, I want to give rail staff and passengers as much certainty as I can about the future.

“With the Sleeper franchise ending on 25 June 2023, we have carefully assessed the options for successor arrangements by the current legislative framework and our Franchising Policy Statement.”

To facilitate a smooth transfer of power, Serco will coordinate with the Scottish Government in the coming months.