Serco will lose its contract to run the Caledonian Sleeper next year, the Scottish government has confirmed, with the troubled train service tipped for renationalisation. The decision was welcomed by the governing Scottish National party and Greens as a possible opportunity to take the overnight operation linking Scotland and London into public hands. Serco started running the service in 2015, with a substantial state investment to revamp the fleet. However, the initial relaunch in 2019 proved to be a disaster, as new trains malfunctioned and the service ran with huge delays. It has suffered sporadic disruption ever since, with exhausted crew voting to strike before the Covid pandemic hit its business. In a parliamentary answer, Scotland’s transport minister, Jenny Gilruth, told MSPs that Serco’s attempt to “rebase” the 15-year franchise agreement had been “rejected on the grounds of not representing value for money to the public”, and that Scottish government ministers had served notice to terminate the contract with the outsource firm on 25 June next year. Gilruth said work was under way to determine who would run the operation after that, adding that Serco had “broadly, delivered well and significantly improved Caledonian Sleeper services over the last seven years”. Existing UK rail legislation means the government cannot simply renationalise the franchise, although a state operator of last resort could step in if a bidding competition does not find a new franchisee. The SNP said it was an opportunity to bring the Caledonian Sleeper into public hands, as it did with Scotrail in April. Commenting, the SNP MSP Fiona Hyslop said: “It is unfortunate that a deal has not been reached to continue the contract with Serco, but these contracts need to deliver value for money for the Scottish public. “The Scottish government has already successfully brought Scotrail under public ownership and doing the same with the Caledonian Sleeper presents an opportunity to continue to improve the service provided to those travelling overnight between Edinburgh and London. “There will be a formal process that will need to take place, but this presents another opportunity to bring Scotland’s railways into Scotland’s hands.” The Scottish Greens’ transport spokesperson, Mark Ruskell, said it was “a logical opportunity”. He added: “In particular at such a time of acute financial hardship for people up and down the country, and when our climate actions have never been more important, this seems a sensible and progressive idea to be looked at. “With an experienced, dedicated workforce and a strong customer base it is time that our railways service the needs of passengers, not the bank balances of shareholders.”