Serco awarded contract to run the famous Caledonian Sleeper railway line

Caledonian Sleeper from London Euston Station approaching the Horseshoe Curve on the West Highland Line (Getty)

One of the world’s great railway journeys, the overnight Caledonian Sleeper between London Euston and the Scottish Highlands is to be operated by controversial outsourcing giant Serco.

Unions reacted with dismay at news of the award of the 15-year contract to the company which is currently at the centre of a criminal investigation by the Serious Fraud Office over allegations of overcharging.

Serco, which runs the controversial Yarl's Wood immigration detention centre where it is also facing an inquiry by MPs into claims of sexual harassment by staff, was accused of having a “truly shocking record” in delivering public services, by the acting leader of the Rail, Maritime and Transport (RMT) union.

Passenger groups welcomed the prospect of the company’s promise to invest £100 million in new rolling stock but said they would be monitoring performance to make sure it delivered on the upgrade to include en-suite berths and a new brasserie-style club car.

Serco, which runs outsourced services in more than 30 countries including air traffic control, prisons, and back-office support, was banned from competing for Government contracts in the wake of the overcharging scandal although this was lifted earlier this year.

It already operates Northern Rail, Merseyrail and the Docklands Light Railway.

The Scottish Government, which awarded the contract, said it had “no choice” but to give it the franchise from First Group from next April. Serco said it estimated revenue to be around £800 million over the course of the deal but said it had no plans to activate a break clause in the contract which it was claimed could allow it to walk away in the event of Scottish independence.

Bruce Williamson of Railfuture, which represents 20,000 train users, said passengers would welcome the new operator provided it could deliver the service upgrade for the route which has seen a sharp increase in popularity.

“Serco has of course had some difficulties in other areas where it provides public services, but the promise of new trains with improved facilities is very welcome. I trust that the standard of accommodation will be less spartan than in some of its prisons,” he said.

The RMT union's acting general secretary Mick Cash said the company should never have been considered to run the service.

“Serco is a company that has a reputation for promising the earth and delivering quite the opposite as they seek to maximise profits and sweat their assets for every single penny piece,” he said.

Serco Group chief executive Rupert Soames said: "Serco has a strong track record of providing high quality and efficient rail services around the world, as well as experience in managing large-scale tourism-focused transport services.

"I am delighted that we can use this unique blend of expertise to transform the iconic Caledonian Sleeper into a modern, high quality hospitality service to make Scotland proud."

Robert Samson, passenger manager for the independent watchdog Passenger Focus said the franchise would herald a "new era" for travellers. "The investment in the carriages and berths, improved website, more flexible fares as well as superior hospitality should result in a much improved service from 2018," he said.

What is Serco?

Formed in 1929 as the UK cinemas arm of the Radio Corporation of America, Serco operates a vast number of public service contracts across the world, covering everything from prisons to pathology laboratories, and nuclear facilities to Boris bikes.

Last year the Serious Fraud Office launched a criminal investigation into the company and fellow outsourcing giant G4S over claims that the taxpayer had been overcharged tens of millions of pounds for administering an electronic tagging scheme for UK offenders.

It is also facing an investigation by MPs over reports that it failed to investigate allegations of sexual assault against an inmate by a member of staff at its Yarl’s Wood immigration centre.

Serco, which reported a 62 per cent fall in annual profits last year, is also in the frame to run privatised children’s services on behalf of councils. The suggestion has alarmed critics who say it would result in it being given the power to remove children from families.

The company is already a leading contractor for welfare to work, as well as running hospitals, leisure centres, school inspection services, refuse collection and CCTV cameras. With more than 100,000 employees operating in 30 countries, Serco began its extraordinary diversification after taking over maintenance the Ballistic Missile Early Warning System at Fylingdales, North Yorkshire.

It also manages the UK Atomic Weapons Establishment. Serco is the largest non-Government supplier of air traffic control services in the world and runs Australian military bases as well the Dubai Metro and the Docklands Light Railway.