Lord Mandelson today told workers at a Vauxhall plant that the Government will underwrite a deal to buy out the group from General Motors (GM), its bankrupt parent, and that retaining production facilities in the UK remained a “top priority”.

Touring the company’s van making plant in Luton, the Business Secretary pledged the Government’s support in underwriting a deal to buy out the struggling group, whose future has been thrown into doubt following the collapse of GM and the sale of its European operations.

Lord Mandelson said: “I want workers at both Luton and Ellesmere Port to know that we are doing everything possible to secure a long term commercial future for Vauxhall.

“I and my officials are in constant contact with the US and German governments, GM US and GM Europe and others to ensure Britain’s interests are fully represented. We also continue to have detailed discussions with Magna and other interested parties.”

The fear is that Magna, the Canadian car-parts supplier and Sberbank, its Russian funding partner, who took control of the European unit of GM hours before the carmakers’s US parent became the biggest industrial failure in American corporate history, will look to close factories to cut costs.

In return for commitment on jobs it is believed Magna wants up to £350 million of the British taxpayer funds.

Lord Mandelson also backed unions at the Luton plant, saying that while in the past they may have been a problem, they were now very much part of the solution.

Magna agreed to take control of GM Europe, which owns Vauxhall and Opel factories, in May, as General Motors was preparing to file for Chapter 11 bankruptcy protection.

Magna has proposed paying €700 million (£610 million) for a 55 per cent slice of Opel and has handed over €300 million of emergency funding to keep GM Europe afloat.

But the bid to buy GM Europe is conditional on due diligence of both Opel and Vauxhall.

Lord Mandelson has already met Magna executives in Berlin in recent weeks to try to secure guarantees on Vauxhall's UK factories, but no firm commitments have yet been forthcoming.

Magna's proposal envisages up to 10,000 jobs being lost across GM Europe.

Vauxhall's Luton van plant employs 1,450 staff, provides work for a further 500 in-house contractors and supports another 4,000 jobs across the components and supply chain.

Today, Unite called on the Government to do all it can to protect Vauxhall jobs, not just at the Luton plant, but across Britain.

Rob Weir, a senior Unite shop steward at the Luton plant, said: "This plant is one of the most productive and efficient in Europe. We set the benchmark which other plants must follow and we are a brilliant advert for British manufacturing.

"So what we want to hear from Lord Mandelson today is that the UK Government is 100 per cent behind us and 100 per cent engaged in securing the Luton plant's future."

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