RADICAL reform of Scotland's railways is being frustrated by UK laws introduced when the industry was privatised nearly two decades ago, the SNP has claimed.

Infrastructure and Capital Investment Secretary Alex Neil called yesterday for "full rail devolution" to give Scotland's ministers complete control over the network and cut soaring subsidies which have risen to more than £700 million a year.

In an open letter to the UK Transport Secretary, Justine Greening, he attacked rail legislation from 1993 which split ownership of track and trains among separate private firms, as being "not fit for purpose" and at odds with the investment made in Scottish rail services.

His comments, ahead of an official statement later this week on the future of Scottish railways, angered opposition parties. They said he was putting the SNP's independence agenda ahead of passengers.

Mr Neil called it "perverse" that reserved legislation stopped the Scottish Government setting up a company to directly operate rail services but let foreign state-owned firms bid for them. "As the analysis of the various outcomes from our Rail 2014 consultation progresses, I am growing increasingly concerned and frustrated at the extent to which the legislative framework currently in place for rail across Great Britain constrains the options which we are able to consider," Mr Neil wrote.

"Domestic UK legislation, which remains largely reserved to the Westminster Parliament, is placing unnecessary constraints on our ability to look at all of the options for the provision of rail services that the people of Scotland have asked us to consider.

"I have come to the view that it did not fully envisage the extent to which the Scottish Government would invest in rail services, nor the role that railways would play in Scotland's social as well as economic wellbeing. Therefore, put simply, it is not currently fit for purpose."

His remarks imply radical proposals to re-integrate Scotland's railways and reverse the fragmentation of privatisation have been shelved ahead of the 2014 renewal of the ScotRail passenger franchise. However, it suggests they could re-emerge later this decade when it is renewed again, probably in 2019.

Officials at Government agency Transport Scotland have examined proposals to merge Network Rail, the not-for-profit company which oversees track and signalling infrastructure, with ScotRail, which operates more than 95% of passenger services north of the border. However, the plans were not featured in the Rail 2014 consultation issued last November.

Labour's Scottish infrastructure and capital investment spokesman, Richard Baker, said: "It is important that all options for the future operation of our railways can be fully considered, and since devolution further powers over railways have been devolved to the Scottish Parliament. But Alex Neil can't hide the fact that his proposals for our railways have been more crowded trains, higher fares and closing stations and that is why so many people have been frustrated by the SNP's approach."

Scottish Conservative transport spokesman Alex Johnstone said: "The regulations governing rail franchises are an essential protection for rail passengers against a Government which would like nothing better than to take us back to the years of nationalised railways which were run for the benefit of the trade unions."

Scottish Liberal Democrat transport spokesman Jim Hume, said: "The SNP Government have once again shown that their only concern is independence. If this wasn't the case, the Cabinet Secretary would have highlighted this legislative anomaly much earlier."