LORD MANDELSON confirmed the accusations of car makers yesterday (Thursday, March 12), when he admitted the government has dragged its heels on help for the recession-hit industry.

In surprise comments, the Business Secretary said investigations into ways to tempt nervous motorists back into showrooms should have "gone quicker than they have".

The Society of Motor Manufacturers and Traders (SMMT) leapt on the admission as evidence that the government’s efforts to stave off disaster lacked "urgency and priority".

And the Tories claimed it exposed a division at the heart of government, with the Treasury blocking Lord Mandelson’s attempts to win the go-ahead for car-buyers to be offered cheap loans.

In January, the Business Secretary unveiled a £2.3bn package to guarantee "green" loans to the car giants and large suppliers, including £1.3bn from the European Union

But the aid fell far short of expectations, because it failed to tackle the issue at the heart of the devastating slump in car sales - the lack of demand.

Both Jaguar Land Rover (JLR), which employs 2,000 people at its Halewood plant, and Vauxhall, which boasts 2,200 workers at its Ellesmere Port factory, had lobbied for help for their finance arms, to allow cut-price deals for potential buyers.

But Lord Mandelson merely said he was "looking at steps" to improve car financing arms' access to funding and set up an inquiry, headed by trade minister Lord Davies.

Nearly two months on, the car industry is enforcing widespread shutdowns to reduce output as sales plunge, after slashing thousands of jobs.

Yesterday, the Business Secretary laid bare his frustration, when he said: "I wish our discussions with the Treasury and the Bank of England - and it is the Bank of England that is in pole position on this - had gone quicker than they have. I readily acknowledge that.

"The discussions are nonetheless making progress and I hope that it will be possible to help those car financing arms because that goes hand in hand with our other efforts to boost this market."

Paul Everitt, the SMMT’s chief executive, said: "We are watching a situation unfold that deserves urgency and priority, but it doesn’t appear to be there with the government."