LONDON BRIEFING:IN ORDINARY circumstances, it would have been considered good news. During a visit to the Derby factory of train-maker Bombardier on Monday, transport minister Theresa Villiers announced that the company had secured a £15 million contract to build carriages for ScotRail.

But it was not the announcement that workers in the factory had hoped for.

News of her trip had raised hopes among workers that the government might be considering a reversal of the controversial decision in June to award a £1.4 billion contract to build 1,200 trains for the Thameslink line, which runs between Bedford and Brighton via London, to the German manufacturer Siemens.

As a result of losing the contract, Bombardier, the only company of any size making trains in Britain, said it would cut 1,400 jobs, a devastating loss for the city – Derby has been making trains for 135 years and about 20 per cent of the local economy comes from the industry.

The cuts, as four out of five production lines fall idle, amount to almost half the Bombardier workforce.

“She raised their hopes and then dashed them in the run-up to Christmas,” said a local union official. Bob Crow, the general secretary of the Rail Maritime and Transport Union spoke vividly of “the betrayal of Bombardier”.

With the Bank of England preparing to cut growth forecasts and youth unemployment nudging one million, the Bombardier case goes to the heart of an increasingly important political fight. There are signs that the coalition is beginning to wake up to the idea that the economy is in need of stimulus, as well as the austerity measures it asserts are necessary to cut debt and maintain Britain’s credit rating.

Nick Clegg, the deputy prime minister, has spoken recently of accelerating capital spending projects (although there is no new money). And it emerged over the weekend that the government is drawing up plans to invest £50 billion in a construction boom, including housing, roads and power stations – the hope being that private investors can be tempted to pay for it all in return for revenue streams from rents, road tolls and energy bills.

What is crucial is how the money is spent. The government has spoken of the need to rebuild Britain’s manufacturing base, but the infrastructure spending will be wasted if the investment is simply going overseas and failing to sustain local employment.

The government has insisted that nothing can now be done about the Thameslink contract because of EU procurement rules. Villiers repeated the coalition stance on Monday that it is “legally bound by the criteria set by the previous government”.

But last week, in one of his first public statements as shadow business secretary, Chuka Umunna suggested government contracts should be able to favour companies that provide the most benefit to local employment, even under restrictive EU rules.

A former employment lawyer, he cited two instances where governments had successfully argued favouring local companies. Both the French (in 1998) and the Dutch (in 1988) have won cases in Brussels, which allowed that combating local unemployment might be included as criteria in a contract. “Value for money for taxpayers is not simply about who can win the contract for the lowest price,”he said.

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It is rare these days that there is any good news at all for the newspaper industry. But, as James Murdoch was being grilled in Westminster last week over the phone-hacking affair, Trinity Mirror was happy to announce that annual profits this year would be slightly better than expectations.

The reason for the improvement though was neither down to long-term fundamentals, nor anything the owner of the Daily Mirrorhad put in place. Instead, the firm was benefiting from the closure of the News of the World, the Murdoch-owned Sunday tabloid at the centre of the phone-hacking scandal.

The closure of the title had led to a 61 per cent increase in circulation for the Sunday Mirrorand a 58 per cent boost to the People.

The additional circulation revenue meant turnover at the group was flat – without the aid of the News of the World, it would have continued to decline. Advertising in the four months to the end of September was down by 8 per cent.

By Monday of this week, it was back to what has depressingly become business as usual in the newspaper industry. The company announced it was shutting three more titles in the Midlands and cutting another 66 jobs.

The closure of the News of the Worldhas simply bought a little more breathing space.

David Teather writes for the

Guardian

in London