Hundreds of jobs at a County Durham train factory have been given a lifeline after owners Hitachi struck a £500 million deal with rail operator FirstGroup.

The deal, announced on Friday, will see Hitachi’s Newton Aycliffe plant build 14 new trains, with an option for an additional £460 million investment.

Uncertainty had surrounded the future of the plant and the 700 people employed there due to declining orders.

Before the election, Sir Keir Starmer visited the factory to accuse the then-government of leaving Britain’s rail manufacturing sector “teetering on the brink”.

He said: “The workforce here at Hitachi is staring down the barrel of devastating job losses.

“Communities and local businesses across the North East will be hit hard if our proud manufacturing base here is not preserved.”

Friday’s deal will see FirstGroup lease 14 new trains, a total of 70 cars, for use on its new Carmarthen-London route and other Hull Trains and East Coast Mainline services.

Jim Brewin, UK and Ireland chief director for Hitachi Rail, said the contract was “a positive step forward” and “just recognition for the hard work and patience of our teams”.

He also thanked local MPs and North East Mayor Kim McGuinness, saying they had “worked tirelessly in support of this private sector investment”.

Ms McGuinness hailed the deal, saying it was “great news for Christmas for workers at Hitachi in Newton Aycliffe”.