Trains and tracks could be reunited and put under public control for the first time since privatisation, under plans to make Scotland a test case for the rest of the rail industry, The Times has learnt.

Network Rail, the not-for-profit company created by the Government to run Britain’s tracks, has held secret talks with Scottish Labour politicians about taking control of trains north of the Border. The move would reverse the fragmentation of the industry after British Rail was broken up and sold off in the mid1990s.

Labour’s Scottish election manifesto, published on Tuesday, contains a thinly veiled reference to the idea of Scotland pioneering a new structure for the rail industry. It states: “The case for running the Scottish franchise on a not-for-profit basis needs to be fully examined as part of the preparation for the next franchise.”

The Times has learnt that Iain Coucher, Network Rail’s deputy chief executive, who will step up to the chief executive position in July, has held private talks about Network Rail taking over the franchise. He met senior Labour politicians at the party’s Scottish conference in November and indicated that Network Rail would be willing to cooperate with plans to reintegrate Scotland’s tracks and trains.

Scotland is seen as the ideal place for such a test because its network is largely self-contained, with more than 90 per cent of services run by one company, First ScotRail. The only exceptions are the crossborder long-distance trains run by Virgin and GNER, which would not be part of the test.

The new integrated operation could be introduced in 2011, when First ScotRail’s franchise is due to be renegotiated.

Bristow Muldoon, the chairman of Labour’s Scottish Policy Forum, said that bringing tracks and trains back under the control of a single body, serving in the public interest rather than generating profits for shareholders, could bring huge benefits. “I believe there is a high possibility that reintegrating tracks and trains would deliver better value for money,” he said.

“The savings could be reinvested in improving the rail infrastructure or in reducing fares for passengers. There could also be benefits to the taxpayer in terms of reducing the amount of subsidy needed for services. It is clear that Network Rail would be a possible operator of such a model.”

Mr Muldoon, who was also the chairman of the Scottish Parliament’s transport committee before the Parliament was dissolved ahead of next month’s election, said that Labour was not opposed ideologically to private sector involvement in the railways but wanted to find the best way of operating the system in the interests of passengers and taxpayers.

Britain’s rail network will consume more than £5 billion in subsidy this year, more than three times what British Rail received. Public funding was supposed to be phased out under privatisation but has risen sharply in the past ten years, despite a doubling in the total amount paid in fares by passengers over the same period.

ScotRail is one of the most highly subsidised franchises, receiving £1.9 billion over the seven years to 2011.

A Network Rail spokesman said the company would be willing to consider operating trains in Scotland if that was proposed by the Scottish Executive.

Gerry Doherty, the general secretary of the TSSA, the white-collar rail union, said: “We welcome this proposal because Scotland is a very good place to test the benefits of a single public-interest operator running tracks and trains.

“If it works, as we believe it will, it could be extended to cover the whole of Britain and finally end the damaging fragmentation caused by privatisation.”

The Conservatives at Westminster are also developing proposals for reintegrating tracks and trains, but they favour splitting the network into regions, each controlled by a single private company.

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