THE chief executive of Stagecoach Group has made a strong plea for vertical integration to be restored on the railways. Speaking at the annual conference of the Derby and Derbyshire Rail Forum, Brian Souter said the present division of responsibilities between train operators and Network Rail leads to wasteful duplication of jobs.

Mr Souter said his group had stripped out £90 million of unnecessary expenditure at its rail franchises over the past two years, although he conceded that his company had made mistakes in the past.

"When we first took over South West Trains in 1996, we treated it like a bus company. Our reduction in the number of drivers and the resulting disruption scared us skinny, and after that we backed away from widescale economies.

"But we have learnt that there are substantial savings to be made, particularly among some middle managers who neither have a grasp of strategy nor know about the detail.

"However, we need to go further, and a major source of waste is the division between us and Network Rail. Everything takes so long: there are so many different people involved. Network Rail should not be operating the railway, but be reduced to a property company. We need a return to vertical integration if Sir Roy McNulty's ambition of a major reduction in railway costs is to be realised."

Mr Souter also accused the Department for Transport of helping to waste money.

"Instead of getting on with the job, we find we have to write essays for the DfT. We're not particularly good at writing essays: we run trains and buses. We reduced the number of reports we were supposed to produce by 40 per cent, and nobody questioned why they weren't being provided.

"innovation is very difficult, because there is no incentive. We introduced Megatrain discounted tickets, although they were technically illegal under the rules. When it succeeded everyone signed up to it.

"We are also proud to buy British whenever we can, and we have been buying British-built double deck buses that are world leaders. The railway supply industry needs to be at the cutting edge -- and sometimes it isn't."

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