THE dream of bringing train-building back to the region of its birth - along with thousands of desperately-needed manufacturing jobs - finally came true yesterday.

After months of frustration and fear, Hitachi's ambitious plans to build a factory - and a manufacturing base to serve all of Europe - at Newton Aycliffe, County Durham, was given the go-ahead, to universal delight.

The £4.5bn Intercity Express Programme (IEP) deal secures at least 500 high-quality jobs in England's poorest region, plus many thousands more in manufacturing and service supply chains.

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The Hitachi-led Agility consortium will deliver at least 530 new rail carriages, bringing faster, more reliable journeys - and 11,000 extra seats - on key inter-city routes.

The factory - dubbed the 'new Nissan', because of its importance - will be built next year, to open in 2013. The first 'bi-mode', diesel and electric trains will be delivered three years later, with all 100 on stream by 2018.

The long-delayed announcement triggered delight from campaigners, led by Sedgefield MP Phil Wilson, and victory for The Northern Echo's much-praised 'Back On Track' campaign.

Party hostilities were temporarily forgotten as Labour MPs heaped praise on Philip Hammond, the Conservative transport secretary. Darlington MP Jenny Chapman tweeted: "I could kiss you!!"

Both Tories and Liberal Democrat were quick to trumpet the second big investment delivered to Labour's most loyal region within days, after last Thursday's rescue of steelmaking on Teesside.

In a statement, Mr Hammond told MPs: "Coming just days after the news of the re-opening of the Redcar steel works, this is a massive - and very welcome - shot in the arm for the skilled work forces of the North-East's industrial heartland."

The delight and relief was crystal clear in the reaction of Mr Wilson, who said: "I'm just relieved that all our hard work has paid off."

Praising everyone from the North-East Chamber of Commerce, to trade unions, Durham County Council and The Northern Echo, Mr Wilson said; "We showed what the North-East is good at, which is working in partnership.

"We put together a factual economic case as to why Hitachi should be allowed to build its factory at Newton Aycliffe, which the government could not ignore.

"I lived through the 1980s and very high levels of unemployment - and I didn't want my constituents to have to live through that again."

Within minutes, Business Secretary Vince Cable announced that his department was offering "conditional funding" to Hitachi, although there was no hint of the size of the likely backing.

The good news was sealed by Mr Hammond's decision to opt for Hitachi's revolutionary 'bi-mode' proposal - while rejecting the alternative, of 'coupling' electric trains with diesel locomotives, as "second rate".

The Northern Echo revealed how this alternative proposal was unlikely to create any British jobs, because both the trains and engines would be bought "off the shelf", from abroad.

In stark contrast, transport ministers were presented with a study suggesting Hitachi's factory would deliver a £660m boost to the North-East over 20 years - £48 for every £1 invested.

Yesterday does not signal the end of drawn-out procurement process.

Agility Trains remains the "preferred bidder", with exact details of how the project will be financed still to be tied down.

However, Westminster sources suggested that only an unlikely intervention from the EU - over the legality of the re-tendering process - could now derail expected financial close by the end of the year.

Interviewed by The Northern Echo, a bullish Mr Hammond said: "We have spent a lot of time looking at the legal position. We would not proceed unless we were confident that we were complaint with our obligations."

Explaining his belief that the deal will be sealed by the end of 2011, Mr Hammond said: "Both parties are very confident that we have done a tremendous amount of work over the last few months.

"Hitachi have to line up their financing. They have the Japanese import-export bank behind them, but will also need to line up some financing in Europe.

"There are a few steps to go through yet, but everyone is confident that, for a company of the size and strength of Hitachi, these are not problems - these are processes, that have to be gone through."

The £4.5bn contract, to last 20 years, will be what Mr Hammond called an "innovative" PFI deal, making Hitachi responsible for building, owning, supplying and, also, maintaining its trains.

He said: "They get paid only for train availability - so if a train is out of service, or is rejected because it is not clean enough, they don't get paid for that journey."

The contract is £3bn cheaper- creating fewer jobs, to build 300 fewer carriages - than proposed when Hitachi was first declared the preferred bidder exactly two years ago, because of developing plans for high-speed rail.

Most trains running on the East Coast line will not be replaced, because the existing, electric 225 fleet can operate for a further "10-15 years" - by which time the first high-speed link will be imminent.

Most of the IEP trains will run on the Great Western line from London to Cardiff, which will be electrified, cutting the journey time to the Welsh capital to 1 hour 42 minutes.

Some new trains will be introduced on the East Coast, to add extra peak-hour services to Leeds and Newcastle and to serve towns such as Skipton - which are off the electric track.

On the decision to opt for 'bi-mode' trains, Mr Hammond said advocates of the rival option had been unable to prove that the 'coupling' of diesel locomotives could be done quickly enough.

He explained: "They were not prepared to put blood on paper for less than about nine minutes - and that's too long.

"That's a very big time penalty. When you are sitting in a station for nine minutes, waiting for a locomotive to be changed, that will feel like a very second-rate service."

Agility was also able to offer higher value for money, in its revised bid last September - and ministers were concerned of new risks if they went back to square one, he explained.

The Transport Secretary hinted at the sophisticated lobbying campaign by the Japanese government, which was desperate to secure its European foothold in County Durham.

He revealed: "I have become firm friends and personal acquaintances with the Japanese ambassador over the last nine months - he has his own chair in my office.

"I even got invited to the Emperor's birthday party last year, in London."

However, he stressed that Hitachi's plans to deliver a huge jobs boost in England's poorest region had not been a factor in his decision, because such an approach would be "illegal".

But he added: "Of course, it's a huge added bonus that, by coincidence, Hitachi are committed to building these trains in the North-East."

And Mr Hammond praised this paper's 'Back on Track' campaign, saying: "I recognise the huge head of steam that there has been behind the Northern Echo's campaign."