Newton Aycliffe wins approval for Hitachi investment

By Business & Industry Correspondent Ian Reeve BBC Look North

It was hoped the Hitachi-built trains would be in operation by 2014

The government has decided to press ahead with plans to build a new generation of intercity trains in Newton Aycliffe.

Transport Secretary Phillip Hammond confirmed to the House of Commons that Agility Trains is the preferred bidder to provide the new rolling stock.

Agility had already committed to build its assembly plant in Newton Aycliffe, should it win the contract.

It is hoped the contract details can be finalised by the end of the year.

Agility Trains is a consortium that includes Japanese technology company Hitachi.

Transport Secretary Philip Hammond said: "I can now announce that I am resuming the IEP (Intercity Express Programme) procurement and proceeding with the proposal that Agility trains (the consortium) have put forward as preferred bidder.

"We will now work with Agility trains with a view to reaching financial close by the end of this year."

Green fields

Geoff Hunton is casting his eye over 40 acres of land at Newton Aycliffe. It's scrubby, scruffy fields. Sheep are dotted around.

But in his mind's-eye the property developer can see a state-of- the-art factory here, rather than fields.

Gleaming train carriages are being built in the facility by the Japanese company Hitachi.

500 people are making them, and thousands more are engaged in work that feeds into the plant.

As the owner of the land, Mr Hunton knows it's the best place for the company to build new carriages that will replace aging rolling stock - initially on the East Coast and Great Western mainlines.

Well placed

The plant is being touted as the biggest investment in the region since Nissan.

The site is long enough to have a test track. It's hard by the Shildon rail spur that connects with the East Coast Mainline, and it's close to the A1M. It is Hitachi's preferred site.

But it's been something of a saga getting to this stage. The idea of replacing rolling stock was the idea of the previous Labour government. The programme was slated to cost more than £7bn.

Possibly surprised by that figure, former Transport Secretary Lord Adonis asked Sir Andrew Foster to examine the plan to see if it offered value for money.

His report was then passed on to the coalition government, and was apparently relied upon in the recent comprehensive spending review.

Hard fight

To get to preferred site status Newton Aycliffe had to fight off competition from 50 other sites around the country, but by all accounts it's been worth it.

It's estimated that the Hitachi facility would see £600m pumped into the regional economy over the next 20 years. It has been touted as the biggest investment in the region since Nissan.

Not all roses

It would bring benefits in terms of up to 200 construction jobs over the next 18 months to two years, then Hitachi themselves will have about 500 direct employees on site. Geoff Hunton, developer

And yet, not everyone has welcomed the move to give the contract to build new carriages to Hitachi (in partnership with John Laing and Barclays Private Equity - a consortium dubbed Agility Trains).

The trades unions point out that initial manufacturing will be done in Japan, with the carriages merely fitted out in this country.

The first 70 carriages could be made entirely in Kasado, with the shells of the remaining 1,330 carriages shipped to the UK for fitting out.

The RMT Union claims that the best deal would have been to give the work to Canadian-owned Bombardier. It already has a manufacturing base in Derby which is in need of new contracts.

Bob Crow, general secretary of the National Union of Rail, Maritime and Transport Workers, said: "If Japan can manage to ensure that the high-speed fleet that operates on its own railways are manufactured entirely at home, there is no earthly reason why Britain cannot either."

He also, "doesn't believe for one moment" that the deal will create the mooted thousands of jobs.

However, the government has obviously been persuaded of the merits of the scheme - possibly because it won't have to start paying for the carriages - which will then be leased to the train operators - until 2015.

And by then the economy should be on the mend.