The Scottish government has announced that ScotRail train services will be run by a public-owned company from next year.
SNP transport secretary Michael Matheson told MSPs on Wednesday that Abellio, the private firm currently running the services, will not have its contract extended.
The Dutch firm’s agreement runs out in March 2022 and will be replaced by a government-backed organisation because “the current franchising system is no longer fit for purpose”.
Mr Matheson said train services would only be run by the government as an “operator of last resort”.
Instead, Mr Matheson said ScotRail services will be provided by an “arm’s length company”.
ScotRail staff will transfer to the new Scottish government-owned entity, with their terms and conditions protected, Mr Matheson said.
The company that takes over from Abellio will be paid for “internally within the existing rail budget,” he added.