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Ministers rejected revised financial proposals from Caledonian Sleeper operator Serco to keep the service running because of the “quite scary numbers” involved, The Scotsman has learned.

It is understood the company wanted a significant increase in funding in the face of high inflation and projected further fuel price increases.

Serco has already lost £65 million in the first seven years of the contract when it had expected to make a profit.

In a surprise announcement on Wednesday, transport minister Jenny Gilruth said the 15-year franchise would be scrapped in June, seven years early, because Serco’s “rebasing” proposals as part of the deal were “not value for money”.

Serco incurred extra costs from the delayed introduction of a faulty new fleet. Picture: Jeff Holmes/Shutterstock

However, it has also emerged the Scottish Government had left the door open to Serco continuing to operate the Scotland-London overnight train service through a possible new “direct contract award”.

Serco’s bid for extra cash to keep running Caledonian Sleeper ‘rejected because of scary numbers’