Battle brewing over train deal...

Labour’s business and transport teams are going on the full offensive over the Government’s decision to award the £1.4bn Thameslink train-building contract to German firm Siemens over British based Bombardier.

John Denham and Maria Eagle will tomorrow visit Bombardier’s Derby factory which would have made the trains had the contract been won.

I revealed the decision a fortnight ago and ever since Labour MPs from the area have been attacking the Government for letting the chance to boost UK manufacturing slip through its fingers.

Missing the opportunity to give the contract to Bombardier puts 3,000 jobs at risk in Derby and thousands more in the supply chain and, the MPs say, that all runs counter to the Coalition’s stated aim of promoting a private sector recovery.

There are a couple of things to remember however. One is that a few years back a Labour government also failed to give Bombardier the larger Intercity Express Programme (IEP) contract, worth £7.5bn at the time though it was later downgraded, which perpetuated the financial troubles the UK based manufacturer has experienced.

On that occasion Transport Secretary Geoff Hoon said his hands were tied by EU regulation which meant he could not favour UK based industry – the same reason that current Transport Secretary Philip Hammond gave when he confirmed that Siemens would win the Thameslink deal on June 16.

The question is how binding can these EU rules really be when both the French and German governments somehow manage to award almost all their train building contracts to home-based producers.

Labour MPs have suggested that the Government can, at the point of making a final decision, interpret the EU rules as they wish and therefore award the contract to who they wish.

Derby MP Margaret Beckett admitted to me that Labour made the wrong call on the IEP deal and should have given the work to Bombardier adding that the incident should also have diverted the new Government from 'making the same mistake again' with Thameslink.

But senior Government figures tell me the way to rig the tender a lá France is to fix the conditions to favour home-based manufacturers right at the very start of the process.

That of course would mean Bombardier’s loss of both IEP and Thameslink, the tender for which was set by Ruth Kelly back in 2007, were problems created by Labour.

With the Tories now ensconced in the DfT with access to the documents that tell the full story, or at least the part of it they want to tell, Labour may be walking a dangerous path by trying to pin the Thameslink decision on the current Government, then again they really have very little choice but to try.