Dutch company Abellio is to be stripped of the ScotRail franchise in 2022 using a “break clause” in its contract, the transport secretary has said.

Transport secretary Michael Matheson told MSPs that Abellio’s operation of Scotland’s rail services will end in March 2022, with the government already looking at other options including the public sector.

Abellio was contracted as franchisee until 2025, but Scottish ministers have acted on a clause which allows the contract to be terminated early.

The franchise has been under Abellio’s control since 2015, but the firm has faced continued criticism over cancellations and disruptions to services.

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In a statement, the transport secretary said Abellio had been informed of the decision.

On the decision not to “rebase” the Dutch firm’s contract until 2025, he said he was “not satisfied that the significant increase in public subsidy that would be required would generate commensurate benefits for passengers, communities and the economy”.

Matheson said there had been “successes and challenges” over the first five years of the ScotRail franchise with Abellio, highlighting increased capacity as a result of investments.

But he added: “I believe that the decision I have advised the parliament of today, in respect of the ScotRail franchise, is the right one for passengers, communities, the economy and taxpayers.

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“It is of course necessary to plan for the future provision of ScotRail services and I can confirm that work is already under way to examine the options open to the Scottish ministers after the current contract comes to an end.”

Dominic Booth, managing director of Abellio UK, said the decision would create “unnecessary uncertainty” for its passengers and staff.

He said: “We are hugely disappointed by this decision and believe it’s the wrong choice for Scotland’s railway and its customers.

“Abellio has invested more than £475m in new and upgraded trains, added 23% more seats for customers and created more than 500 extra jobs in Scotland since the start of the franchise in 2015 – the biggest investment in trains and stations in over 150 years.

“Our offer to Transport Scotland would have delivered an improved service for our customers at a reduced cost to the taxpayer.

“We will remain fully committed to running a safe and reliable service until the end of the contract in 2022.”

Mr Booth added: “While this decision creates unnecessary uncertainty for more than 5200 staff and our customers, we will maintain our focus on delivering vital projects for Scotland’s railway and seeing through the delivery of significant customer benefits until 2022.”

‘The Scottish Government must now ensure that a robust public sector bid is in place so that our railways can be run in the public interest in future, rather than for private profit as now.’ Scottish Greens transport spokesman John Finnie

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The Scottish Conservatives accused the Scottish Government of “pulling the rug from under the feet” of Abellio with “no clue who will be running our railway post-2022”.

Shadow transport minister Jamie Greene said: “The SNP has been in charge of Scotland’s railways for more than 12 years.

“The fact it is having to terminate a contract that it awarded is an admission of absolute failure.

“These have been wasted years for Scotland’s train services, and now we have the risk of the quality of services nosediving even further.

“Commuters have had to ensure delays, cancellations and uncomfortable journeys – often for an eye-watering price.

“The SNP have pulled the rug from under the feet of the franchise holder, have no clue who will be running our railway post-2022 and have many questions to answer over the uncertain future of Scotland’s rail.”

Analysis by Scottish Labour, which backs nationalising the service, found almost 75,000 ScotRail trains have been cancelled since Abellio took over the franchise – 47 a day.

The party said the SNP had caved to pressure and “finally swallowed their pride”.

Colin Smyth, Scottish Labour’s transport spokesman, said: “For years, Scottish Labour have campaigned to end Abellio’s shambolic spell in charge of Scotland’s railway.

“Twice, Scottish Labour have forced votes on Abellio’s control of Scotrail and time and time again we have been voted down by the SNP, ably supported by the Tories.

“We are glad that the SNP have finally swallowed their pride and listened to what Scottish Labour has been calling for.

“What we now must know is if the Scottish Government intend to make a serious public sector bid for control of ScotRail or whether our railways will be flogged off once more to a foreign-based private company, focused only on profit.

“Nothing less than a publicly owned rail system will do to ensure that the people of Scotland can have the cheap, efficient and reliable public transport they deserve.

The Scottish Greens, who also support public ownership of the franchise, welcomed Matheson’s decision.

The party’s transport spokesman John Finnie said: “Delays, cancellations and overcrowding have occurred far too often on Scotland’s railways in recent years.

“The Scottish Government must now ensure that a robust public sector bid is in place so that our railways can be run in the public interest in future, rather than for private profit as now.

“In light of noises coming from down south that the UK Government intends to attack hard-won rail workers’ rights, it’s also vital that Scottish ministers engage with trade unions at every step of the process in developing the next franchise, to ensure workers’ rights are at the heart of future ScotRail services and that there is no attempt to roll out driver only operation.”

Scottish Liberal Democrat transport spokesman Mike Rumbles said: “I very much welcome this decision to end Abellio’s contract.

“It’s not up to the job. The Liberal Democrats have been calling for this move for some time.

“Passengers are sick to the back teeth of the poor service that has been provided by this company.”

He added: “The government must now take action to make sure that there is stronger protection for customers in the future franchise agreement.

“They also need to look carefully at including more break points in the new contract to ensure there is a much better chance to correct poor performance earlier on.”