A MAJOR £10 million rail deal which would bring more than 200 jobs to York is on the brink of collapse - because of a piece of wasteground.

The land in Holgate Road may also hold the key to York Central, the city's most important development project.

Holgate Rail Industries (HRI) has warned it will be forced to pull out of the deal to restore rail jobs to Thrall's wagonworks complex because it cannot secure a vital rail link across the land.

Owner Yorkshire Forward, the regional development agency, is believed to be holding on to the site to provide a potential York base for Jarvis if it moves from Leeman Road.

The future success of the huge York Teardrop development is dependant on the rail company moving elsewhere, although no move has yet been agreed.

HRI director Nigel Box, who plans to use the Thrall complex to carry out maintenance on rail support vehicles, says unless Yorkshire Forward agrees to the rail link by the end of December they will be forced out of York.

"We've just come up against a brick wall," he said.

"The crucial piece of the jigsaw is Yorkshire Forward's five-acre site. Without it there is no way we could operate. The stupidity of it is that we only need about 1.5 acres of it for the rail link."

It is understood that Yorkshire Forward will only release the land to HRI if it reaches an agreement with Jarvis over them potentially moving on to the site to enable York Central to go ahead.

Mr Box says they would be willing to share the five-acre site with Jarvis if it moved from Leeman Road and would even work next to Jarvis at the Thrall complex.

"We're in a race against time," he said. "We've been forced to look elsewhere but we still want to come to York."

City of York Council leader Steve Galloway said: "I recognise that there are difficulties in terms of land assessment with York Central. Council officials are working very hard with Yorkshire Forward, Holgate Rail and Jarvis to try to achieve a mutually acceptable solution which would allow rail maintenance activities to be restored at the Thrall site as quickly as possible."

Coun Galloway is meeting Yorkshire Forward later this month to discuss the issue.

A Yorkshire Forward spokesman said: "We've offered the land to Holgate Rail Industries subject to certain conditions which we need to ensure York Central goes ahead. We may need the land for other occupiers.

"We're trying to do what we can for Holgate Rail Industries, but we can't jeopardise the York Central site. We're doing our best to keep all sides happy."

A Jarvis spokesman said: "Jarvis has made no firm decisions on the future home of its Leeman Road depot if and when it's displaced by the Teardrop development.

"We will not be negotiating with anyone about the former Thrall site at present as this is only one of the options which we're exploring."

Updated: 10:41 Thursday, December 04, 2003