The transfer of ScotRail to the public sector tomorrow marks not only the end of Abellio’s often controversial seven-year tenure as operator, but also a quarter of a century of private sector management of Scotland’s domestic rail network.

ScotRail was the last of the 25 passenger train operating companies to be created from British Rail when it was transferred to National Express on 31 March, 1997. Despite Tony Blair’s (in)famous statement that he was committed to a “publicly-owned, publicly-accountable railway”, the Labour government elected just one month later did not, in fact, seek to reverse privatisation. The franchise system, which also saw First Group operate ScotRail between 2004 and 2015, endured until the unprecedented collapse in passenger numbers of up to 97 per cent during the first coronavirus lockdown, necessitating a multi-billion pound bailout of the industry.

The rationale for privatisation was that, starved of capital in the public sector, the railways had suffered from decades of managed decline, and that only an injection of private money and entrepreneurial spirit could save them.

Whilst the more than doubling in passenger numbers between privatisation and the onset of the pandemic is often touted as a notable success, public spending on the railways also ballooned, rising from £3 billion to more than £7bn. This came about because the experience of privatisation was deeply problematic in many respects, most notably when the transfer of rail infrastructure to the private sector ended abruptly in 2002 with the demise of Railtrack following the fatal accidents at Ladbroke Grove and Hatfield.

A creation of the outgoing Conservative government, the regulatory structures underpinning privatisation were also established without any consideration of what might happen under devolution. The last minute “McLeish Settlement” added a limited advisory role on rail to the responsibilities of the new Scottish Parliament. Since then, the railways have been one of the sectors in which devolution has been more of a process than an event, with transfer over control of the ScotRail franchise and then rail infrastructure funding following by 2005. Shortly after Abellio was announced as the next ScotRail franchisee in 2014, the Smith Commission recommended the removal of the prohibition of public sector operation of the franchise, which had been in place since the 1993 Railways Act that ushered in the privatised era.

The future for Scotland’s railways in 2022 is therefore in some senses as uncertain as ever. The sector remains uneasily situated across devolved and reserved powers, with the as yet ill-defined Great British Railways organisation slated to take overall control of infrastructure and strategic planning perhaps representing a threat to the current level of devolved decision making. But the most important challenge facing the new public sector operating company is to get the costs of the system under control.

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Spending on rail in Scotland has almost doubled in five years in large part due to the impact of the pandemic. Since 2004 when the then Scottish Executive assumed responsibility for the franchise contract, ministers’ approach has been essentially expansionary, procuring more and more services despite the additional annual subsidy requirement. So long as passenger numbers were growing roughly in line with public financial support, politicians were content to sign off investment and larger timetables.

The Scottish Government’s decision to bring ScotRail back into the public sector was in large part due to the doggedness of the opposition and trades union campaign to do so. But looking ahead, there may well be a sobering dose of being careful what you wish for.

The post-pandemic annual price-tag for rail in Scotland of £1.4bn is significant enough in itself, but given rail is now unambiguously on the same budget footing as other public services, it is likely that some very challenging questions will be asked given the financial realities of a post-Covid, high inflation context for public spending. The bus industry has long been envious of the size of the rail budget since it carried four times as many passengers than trains before the pandemic for one third of the subsidy.

Then there is the impact of the pandemic on future travel demand. We have spent billions on creating a –genuinely world class – railway system across central Scotland to support the pre-pandemic economy in which growth depended significantly on maximising peak commuting capacity into our largest cities. The Scottish Government’s recent Strategic Transport Projects Review recognises this, and represents a genuinely radical shift in the role of the railway towards helping achieve decarbonisation and reduce our wider reliance on the car.

But a future in which people work more flexibly and perhaps spend only one or two days per week in the office suggests substantially different priorities. The next investment cycle will bring electrification to most of the rest of the network and more new rolling stock, including innovative battery hybrid and possibly hydrogen-powered trains. These investments are welcome – and crucial for our plans to achieve net zero – but they will not happen overnight. Such is the toxicity now of the sector’s industrial relations culture, how will we achieve other changes we need to make, such as transforming many of the ScotRail’s busiest lines into a high capacity metro system for Glasgow that provides genuine mass transit but in which practices such as maintaining ticket offices and train guards would be evident anachronisms?

Bringing ScotRail back into public control is popularly seen as a move towards greater stability in service provision. But the headwinds facing the railways mean that it could turn out to be as tumultuous a change as privatisation itself. There is more than a grain of truth in the observation that many of the industrial relations issues in the sector in recent years were a form of constitutional politics by proxy. We should expect more of this.

What, then, should we expect ScotRail to look like in 10-20 years’ time? Given the scale of the investment in the existing network required to decarbonise and make the infrastructure more resilient to the impacts of climate change, it is unlikely we will see the kinds of route reopenings that the devolved era has been known for to date. With less office commuting, there will be more focus on leisure travel and ensuring rail is the first choice for longer distance journeys.

There is no credible pathway to achieving net zero in Scotland without much more use of the railway, perhaps as much as double pre-pandemic levels. Given there were twice as many seats provided each day as passengers travelling pre-Covid, rail is in a unique position to accommodate transfer away from the car without further increases in cost to the taxpayer. What is required is a cross-sector effort to manage costs effectively and decarbonise the network on time and budget so that the railways play their full part in achieving Scotland’s economic, social and environmental objectives.

Professor Iain Docherty is the Dean for the Institute for Advanced Studies at the University of Stirling.