PUBLIC transport group Go-Ahead spent £13.8m yesterday to extend its services on the south coast.

The Newcastle company has agreed a deal with the board of Southern Vectis, which operates buses on the Isle of Wight, Southampton and southern Hampshire.

The region, known as the Solent Gateway, has been earmarked by Deputy Prime Minister John Prescott for a major house building programme.

Go-Ahead chief executive Chris Moyes said: "This is targeted at the recent announcement by the Office of the Deputy Prime Minister regarding the Solent Gateway.

"It gives us a platform to build on in an expanding market."

Stock market-listed Southern Vectis has more than 150 buses and is the Isle of Wight's largest bus operator.

In addition to scheduled services, it runs open-top tourist buses on the island and in the New Forest on the mainland.

It also provides services in Southampton and southern Hampshire under the Solent Blue Line brand.

It is the first time Go-Ahead has made a purchase since 2003, when it added Bournemouth and Poole bus operator Wilts and Dorset to its businesses in Brighton, Hove, Crawley and Oxford.

Mr Moyes said: "While it has faced some challenges in recent times, we are confident that we can improve Southern Vectis' financial performance through best practice and operational efficiencies."

The group, which operates the Go North East services in the region, has built a successful business concentrating on areas with a high commuter population.

It has a number of businesses in London, the Thames Valley and on the south coast.

Mr Moyes revealed that more expansion is planned, and Go-Ahead has already submitted a bid for Bournemouth Transport Limited.

"In general, we are still acquisitive and looking for opportunities in the bus market," he said.

He gave a strong hint that Go-Ahead, which operates the Brighton Thameslink train franchise, was unlikely to bid for new rail business.

"In our view, the franchises are too short, given the level of commitment you have to make," he said.

"What has happened to us a couple of times is you can be running a fairly successful franchise, but lose out when it is merged with a neighbouring franchise."

He said expansion in the company's native North-East was unlikely, as the company already had about a third of the market share.

"We are looking to areas where we see long term population growth," he said.

"Sadly, there is more of that in the South than in the North."