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A £170m railway franchise is "flawed" and has led to a decade of overcrowding, a former transport minister has said.

Plaid Cymru leader Ieuan Wyn Jones inherited the Arriva Trains Wales contract in 2007.

He told �鶹������ҳ��� Wales of his frustration at the franchise and said it should undergo a radical overhaul in 2018.

Arriva said it had invested tens of millions in services, in many cases over and above its commitments.

The Welsh government said it was looking at how to get better value for money.

�鶹������ҳ��� Wales has been examining spending on rail subsidies as part of an analysis of government expenditure.

The Welsh government is committed to paying Arriva Trains Wales (ATW) a subsidy of £170m a year under the terms of a 15-year deal signed in 2003. It is due to expire in 2018.

According to figures from the Office for Rail Regulation, last year ATW received the highest public subsidy per passenger mile of any franchise across the UK.

Mr Jones said: "What was obvious is that this wasn't a contract that recognised the substantial increase in train passengers that there's been since 2003.

"It was predicated on the basis that it would grow far more slowly than it has, so you have the examples of many trains, particularly the Valley Lines services, where you had severe overcrowding and you hadn't got more services available."

'No obligation'

He added: "Because the franchise was written in the way it was, Arriva was under no obligation to provide extra services, and because we felt that it was necessary to meet some of the demand, we had to pay for that under our own revenue, so we were paying over and above the franchise money simply to order to deal with capacity issues.

"The original contract was flawed because it didn't anticipate the increase in passenger numbers."

The former minister now wants to see major changes, including a "not for dividend" model for the franchise after 2018, where profits would be re-invested in the service, rather than being paid to shareholders.

Transport expert Prof Stuart Cole, from the University of Glamorgan, said the model could deliver real improvements for Welsh travellers.

"It has the potential to keep the profits that are made on the business, and any other surpluses within Wales and within the railway franchise," he said.

"It's fair to say that any of the train operating companies have to make profits for their shareholders.

"The particular problem we had with the Welsh franchise was that it was designed for a low level of demand, and that low level of demand has not, in fact, continued - it has grown substantially.

"The Welsh government had to acquire more trains, through Arriva, and all that builds up the cost."

ATW said that while the original franchise let by the then strategic rail authority made little provision for investment, it had invested more than £30m in improving passenger facilities at stations and on trains.

A spokesman said: "We have also increased the number of services running in Wales where possible in areas of high passenger demand in response to growing passenger numbers.

"Many of these changes have been provided over and above Arriva Trains Wales' commitments in its franchise and at no additional cost to tax payers."

'Significant investment'

He added: "Since taking over the franchise, customer satisfaction and performance remain high and passenger numbers continue to grow. Arriva Trains Wales remains in discussions with the Department for Transport and Welsh government, who have also invested significantly, regarding future service provision and accommodating further passenger growth."

A Welsh government spokesman said: "The Welsh government will lead on the process to relet the Wales and Borders rail franchise from its expiry in 2018, and we are in the early stages of preparing for this.

"We are committed to exploring the option of the next franchise being operated on a not-for-dividend basis.

"As part of this officials are considering how better value for money could be achieved."

He said the work was linked to other projects, particularly the electrification of the Cardiff Valley Lines network. The Welsh government is working with the Department for Transport on a joint business case, to be finished next month.