The government's rail strategy lacks ambition and should be sent back to the drawing board as high fuel prices force motorists out of their cars, according to MPs.

The transport select committee said the transport secretary, Ruth Kelly, had ducked the issues of high-speed rail and electrification of the existing network when she unveiled a five-year plan for the railways last year. In a report published today, the committee adds that the rail white paper, which also included a 30-year vision for the future of the railways, is guilty of "modest ambition".

"After years of sustained growth in rail patronage, we urge the government to be bolder in its vision and to set out a proper long-term strategy," says the report. It adds that the high-level output statement (HLOS) that set out the railway strategy for 2009 to 2014 was based on models that assumed an average oil price far below $100 a barrel. With oil expected to stay above that level for the foreseeable future, the MPs say, demand for rail travel could exceed expectations as commuters and families are forced to use cars less.

"We think the government needs to consider making adjustments to the HLOS. We believe the massive increases in oil prices over the past year, and the fact that prices are expected to remain very high for the foreseeable future represent such a case."

The white paper's failure to embrace high-speed rail - the document said the need for a fast network "has not currently been established" - is also singled out for stern criticism by the committee, amid mounting enthusiasm among Conservative party politicians and Network Rail executives for the idea.

"It is deeply disappointing that the white paper dodged the decision on high-speed rail," says the report, which urges the government to act immediately once Network Rail, the company that owns and maintains the British rail system, completes a feasibility study on high-speed rail next year. It adds: "Hesitation [over high-speed rail] now will mean years of avoidable misery and overcrowding on the network."

Backed by analysis from the government-commissioned 2006 Eddington report into Britain's transport needs, the DfT argued in the white paper that there were no funds available for high-speed rail and added that the most environmentally friendly option was a link between London and Birmingham that operated at conventional speeds, using a patchwork of disused lines.

The committee also refers to the new year engineering overruns that occurred at Rugby, London's Liverpool Street and Shields Junction in Glasgow, citing Network Rail's failure to administrate those projects competently as grounds for doubting whether the company would complete the 2009-14 projects on time and on budget.

If Network Rail is to overhaul its project management performance, the MPs say, then it will need to change its much-criticised governance.

Critics within the rail industry, led by the likes of Virgin Trains and the Association of Train Operating Companies, argue that rail franchises do not have enough influence over Network Rail's board and senior management.

"Essential reforms of Network Rail's systems and processes of management will almost certainly require significant reforms in its governance," say the MPs.

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