Help for businesses in 'few days'

Business Secretary Lord Mandelson conceded that firms were facing a "very difficult" credit climate, but he made it clear Government intervention would be targeted to give genuine help to businesses as well as value for money for the taxpayer. Business groups and unions have been urging the Government to take action to unblock lending to smaller firms, warning that the number going bust is fast approaching 100 every day.

A new raft of job losses or redundancy warnings were announced, including the threat of 400 cuts at Nottingham City Council, up to 200 through the closure of a distribution site for high street giant Argos and the threat of more than 230 redundancies after administrators said they were seeking a buyer for failed clutch manufacturer AP Driveline, based in Leamington Spa.

The maker of the Aga cooker said it had reduced its workforce by around 400 jobs in the last year and shortened factory hours to cut costs, while as many as 2,000 City jobs were reportedly facing the axe after the merger of investment banking giants Merrill Lynch and Bank of America.

The package of measures to help businesses formed part of a discussion on the global economic crisis which dominated a meeting of the Cabinet at 10 Downing Street.

Lord Mandelson said after the meeting: "I want to make sure that when we intervene, we intervene in a way that is really effective, really targets genuine business needs in a way that gives value for money from the Government and the taxpayers' point of view, and is genuinely going to help businesses in what is a very difficult credit situation.

"I'm going to deliver real help which targets real need which is going to make a real difference. I'm going to announce that during the course of this week."

He dismissed rival proposals put forward by the Tories for a £50 billion national loan guarantee scheme, adding: "I could alternatively pluck any large figure out of the air, produce a slogan, roll out some fine words and then walk away. That's the Opposition's job. That is not the Government's job and that's not what I'm going to do."

But shadow chancellor George Osborne insisted the Government appeared to be offering a belated version of the £50 billion loans guarantee scheme floated by the Tories several weeks ago. He said: "With Conservative policies to help get unemployed people back into work and guarantee business lending now being adopted by the Government, it is clear that the Conservatives are setting the serious policy agenda for the recession.

"We have been calling on Gordon Brown to introduce a national loan guarantee scheme for two months and while the Prime Minister has dithered dozens of businesses and thousands of jobs have been lost. Let us hope that they will properly implement this Conservative policy rather than a pale imitation, or else they run the risk of repeating the mistakes of their expensive temporary VAT cut and achieving nothing."