Jaguar Land Rover is to pump £5 billion into the West Midlands’ biggest manufacturer, creating thousands of new UK jobs – and the firm’s iconic Castle Bromwich factory is safe for at least ten years.

The death sentence was at last lifted from the plant on Friday, in a remarkable about-turn by JLR owners Tata.

Just over a year after stunning the West Midlands with a scheme to close one of its two regional factories, JLR delighted its 16,000-strong UK workforce with plans for new models and volume growth.

The company is ploughing in £5 billion, all three manfacturing plants at Solihull, Castle Bromwich and Halewood will be retained, a range of new models will be introduced and an industry-leading pay deal is recommended for acceptance.

And JLR said it would create thousands of new jobs in Britain over the next decade as increases in the model range boost global volumes across its markets worldwide.

Chief executive Ralf Speth said: “We have ambitious plans for growth and the success of our products around the world and this agreement will allow us to accelerate and realize those plans.

“The agreement is a great deal for our workers and the company and we can now really get on with working together to achieve an even more exciting future for the Jaguar and Land Rover brands.

“We have already started by beginning to hire 1,500 new employees to support the launch of the new Range Rover Evoque at Halewood.

“Our parent company Tata supported us through the recession and our employees also made sacrifices but now we are seeing a great turnaround in the business. This is truly the beginning of a new era for Jaguar Land Rover.”

The terms of the agreement include a pay rise of five per cent for employees next month – with a further rise of at least three per cent next November.

New recruits will come in on lower rates of pay, receiving lower shift premiums, but existing employees are unaffected and there will be an extension of performance-related pay for salaried employees.

As unions and workers celebrated outside the Castle Bromwich factory yesterday, Erdington MP Jack Dromey, who helped spearhead the fight to save the site, said: “This is brilliant news in bleak times.

“Castle Bromwich built Spitfires during the war and two generations of the Jaguar afterwards, and now its future is secure.

“Jaguar is the jewel in the crown of manufacturing excellence in my constituency of Erdington, one of the ten poorest in Britain.

“£5 billion of investment will now go into Jaguar Land Rover, securing the future of one of Britain’s premium vehicle manufacturing companies. This is a triumph for Britain and Birmingham, and tens of thousands of jobs will be saved as a consequence.

“This is a great deal for unions. The new management came in in March and undertook a 100-day strategy rethink. They have now reached a ground-breaking agreement that secures the future of Jaguar at Castle Bromwich.”

Brian McGuigan, a union shop steward and member of the joint negotiating committee, said: “We are absolutely overjoyed. This secures the future of Jaguar here at Castle Bromwich for at least ten years. Negotiations have been very tough indeed but this is a famous victory for us.”

Birmingham City Council member Lynda Clinton, representing the Tyburn ward, said: “This is great news for all the workers, the factory and the entire community, and now we are celebrating early for Christmas.

“This was undoubtedly the factory that was going to close rather than Solihull.”

Fellow Tyburn ward Councillor Mike Sharpe said: “Jaguar is a very special name in this part of the world. This gives the youth of the area real hope for the future.”

An internal JLR employee bulletin distributed to workers said: “The company will retain all three manufacturing sites until at least 2020.”

Summarising the recommended deal, the bulletin says: “Both the company and the trade unions recognise that these negotiations come at a critical point in the history of Jaguar Land Rover.

“With many exciting new products planned over the next decade, this agreement maximises the company’s ability to develop and manufacture these products here in the UK.”

“The company’s offer of a two-year and conditions agreement provides much needed predictability and stability for the company and employees.”