The party will propose that train operators should be allowed to run their own tracks, with one option being to create regional companies like those that dominated the network before the Second World War. David Cameron, the Tory leader, and Chris Grayling, the Shadow Transport Secretary, will visit Clapham Junction in South London to announce a review of the rail industry that will focus on reuniting wheel and rail.

They will admit that John Major?s decision to create one company to manage the tracks and another 25 to run trains was fatally flawed.

Mr Grayling told The Times that the divisions in the industry created by privatisation were partly responsible for the quadrupling in subsidy and the worsening problem of overcrowding. He said companies that controlled both trains and tracks would be more efficient.

?There are too many participants in the current structure,? he said. ?There is also an excessive level of contractualisation. Too much time is spent debating the fine detail of contracts and not enough on getting things done. With hindsight, the complete separation of track and train has not turned out to be the right way forward.?

A number of options would be considered, including creating joint ventures between train operators and Network Rail?s divisions. Operators might also be allowed to lease tracks for long periods.

?However, we are not going to simply break up Network Rail and sell it off,? he said.

The new structure is likely to be tested in areas where one train operator already dominates, such as Scotland, Merseyside and the South West Trains network, which operates from Waterloo station in London.

Network Rail will fiercely oppose any attempt to end its monopoly over Britain?s 21,000 miles of track. In April John Armitt, Network Rail?s chief executive, rejected a proposal from First, the biggest train operator, that it should be allowed to run its own tracks. He said that First would minimise investment.

?It would be more rational for us to go and lease the trains,? Mr Armitt said.

See also:

Tories admit rail privatisation flawed

Politics.co.uk: 17 Jul 2006

Shadow transport secretary Chris Grayling to announce shift on trains policy

The Conservatives have admitted they were wrong to split responsibility for trains and tracks when privatising the railways ten years ago.

Shadow transport secretary Chris Grayling said the creation of one company to manage the tracks and another 25 to run the trains had increased the costs of running the railways and delayed decisions about expanding capacity.

He was speaking at the launch of the Conservatives' rail review, which is due to report back in 2007 and will focus specifically on how the firms running tracks and trains are better integrated to allow them to better respond to increased passenger numbers.

The number of people travelling on the railways is set to grow by more than a third in the next eight years, but Mr Grayling warned there were no plans to increase capacity ? meaning overcrowding will get much worse, or fares will rise further.

"We don?t think it is realistic to keep expecting passengers to pay more and more to travel on trains that will be more and more overcrowded. And people won?t leave their car at home if that is the alternative. Something has to change," he said.

Speaking from Clapham Junction, Britain's busiest train station, Mr Grayling said a key problem was the structure of the industry as it was set up under John Major's Conservative government in 1996.

"We think, with hindsight, that the complete separation of track and train into separate businesses at the time of privatisation was not right for our railways," he said.

"We think that the separation has helped push up the cost of running the railways ? and hence fares ? and has slowed decisions about capacity improvements. Too many people and organisations are now involved in getting things done ? so nothing happens."

Public subsidies have ballooned in recent years to £3.7 billion this year and £2.9 billion next year, but much of this will be eaten up by Network Rail, which took over the running of the tracks, signals, tunnels and key stations from Railtrack in 2002.

The takeover came after three serious rail crashes in three years, at Hatfield, Southall and Paddington, which raised questions of who was responsible for safety when different firms were running the tracks and trains.

Mr Grayling's admission that Mr Major's policy was flawed was welcomed by rail minister Derek Twigg, but he warned that David Cameron's Conservatives appeared to have "learned nothing from it".

"The suggestion now is to break up Network Rail which is delivering real improvements in performance and reliability based on record investment by this Labour government," he said.

"For the first time since the 1960s Britain's railways are carrying more than one billion passengers a year. The Tories real agenda is to cut that investment which they opposed every step of the way."

See also:

Tories change policy on railways

BBC News: 2006/07/17

The Conservatives have admitted their decision to divide the track and train components of the rail network in 1996 was a mistake which increased costs.

Shadow transport secretary Chris Grayling told a meeting of rail industry figures there was a lack of clarity about who was in charge.

The Conservatives did not want a return to a British Rail structure but wanted more integration, he said.

Rail Minister Derek Twigg said they had not learnt from their old mistakes.

Railtrack, the company which used to be in charge of the network of train tracks, was wound up in 2001. It was replaced by Network Rail.

"We think that the separation of train and track has helped push up the cost of running the railways" - Chris Grayling, Shadow transport secretary

Mr Grayling says new thinking is needed because passenger numbers will increase by 40% in the next seven years.

He told BBC Radio 4: "There is no serious plan for additional capacity, for more trains in which those passengers can travel.

"The only people who are seriously talking about it are Network Rail who want £7 billion extra of taxpayers' money, on top of the huge amounts of money they are already receiving from government. I think we have to do things differently."

Profit share

In his speech, Mr Grayling said the Tories did not intend to take Network Rail back into private ownership.

Instead, the policy would mean integrated organisations working under shorter franchise deals rather than owning the track.

The Conservatives are starting a review, which will result in a strategy paper next year.

"We think, with hindsight, that the complete separation of track and train into separate businesses at the time of privatisation was not right for our railways," he said.

"We think that the separation has helped push up the cost of running the railways - and hence fares - and is now slowing decisions about capacity improvements.

"Too many people and organisations are now involved in getting things done - so nothing happens.

"As a result, the industry lacks clarity about who is in charge and accountable for decisions."

Strike fears

Mr Grayling also outlined plans to give rail workers a share in the financial successes of their industry in a bid to stave off more strike action.

He said: "We know how frustrating it can be to the travelling public to see regular threats of strike action used by unions as a negotiating tactic in their discussions with their employers.

"We regard the people who work on our railways as skilled professionals, responsible for the safety, operation, logistics and customer service of our network."

Rail Minister Derek Twigg dismissed the Conservative policy as "incoherent".

"The Tories have finally admitted that their rail privatisation was a mistake but they have learned nothing from it," he said.

"Driven by dogma in the 1990s John Major's Tories fragmented our railways and driven by the same dogma in the 21st century David Cameron's Tories appear to want to fragment them again."

The plans also came under fire from Liberal Democrat rail spokesman Alistair Carmichael.

"The Tories don't seem to have learnt anything from their past mistakes, this is merely a re-privatisation by the backdoor," he said.

"These proposals are muddled in thinking and would be muddled in implementation. Because in most areas several companies share the track, this policy would lead to more conflicts between operators."