Tens of thousands of jobs in the steel and car industries could be on the line as Lord Mandelson, the Business Secretary, appears ready to rebuff demands for wage subsidies of up to 75 per cent to keep people in work, The Times has learnt.

Labour’s biggest union donor met Gordon Brown secretly in Downing Street this week amid signs that the Government will resist pressure for a manufacturing bailout.

Tony Woodley, joint general secretary of Unite, demanded the meeting after clashing with Lord Mandelson over the limits of state intervention during talks last week called amid fears that large parts of industry could be brought to a standstill by the economic downturn.

The Business Secretary is due to meet the head of Tata Group, which owns Jaguar Land Rover and Corus, the steelmaker, during a trade mission to India this week. Both companies have suffered dramatic falls in orders and face laying off thousands of workers.

Corus, which employs 25,000 people, is cutting output by 30 per cent after key customers in construction and the car industry slashed orders. Phillipe Varin, its chief executive, has urged the Prime Minister to provide direct help. He wants Britain to follow the example of the Dutch Government, which has promised to meet up to 75 per cent of workers’ wages during lay-offs in an effort to safeguard jobs.

Senior Whitehall sources expect Ratan Tata, the chairman of Tata Group, to ask for a similar deal at Jaguar Land Rover.

Lord Mandelson is resisting the demands, which he believes would be uncompetitive and could merely delay job losses that are inevitable.

The British premium car division has also asked the Government to help it to secure a £1 billion two-year bridging loan.

Although the Department of Business, Enterprise and Regulatory Reform insists that it has received no formal requests for help, senior sources admit that the option of wage subsidy was raised directly with Mr Brown and Lord Mandelson at the “jobs summit” a week last Monday.

“Although we would never say ‘never’, our position is that we are generally opposed to wage subsidies of this sort, which are often uncompetitive and can simply delay job losses which are inevitable,” a Whitehall official said.

Yesterday Lord Mandelson came under further attack when the main postal union increased its opposition to his plans to sell a stake in Royal Mail to a rival postal group. Leaders of the Communication Workers’ Union (CWU), which could break its affiliation to the Labour Party over the issue, called on the Business Secretary to rethink the plans, which involve the Government taking on Royal Mail’s deficit and selling a minority stake to a rival company, such as TNT, the Dutch postal group. The pension deficit could soon soar to £9 billion when it is recalculated by actuaries.

Billy Hayes, the CWU’s general secretary, said that the move amounted to nationalising the debt of the state-owned organisation and privatising the profits.

Mr Hayes made the comments at a hearing of the Business and Enterprise Select Committee in which the union and MPs on the committee criticised Royal Mail for a lack of clarity over its finances. Royal Mail has been heavily criticised by Lord Mandelson for not modernising quickly enough. The group has so far spent only half of the £1.2 billion in direct investment money given to it by the Government two years ago and will not have spent the rest until 2011.

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