Former CBI chief Digby Jones has clashed with Ministers who accused him of “protectionism” for urging police forces to buy British vehicles.

Lord Jones of Birmingham said businesses were being urged to pay more tax and employ more people - while the Government refused to support them by buying British-made products.

But he was criticised by Home Office Minister Lord Henley, who said the Government had no intention of telling police chief constables what cars to buy.

Lord Jones, who led the CBI for six years, joined the House of Lords in 2007 when he was appointed a business minister by Labour. He now sits as an independent.

The clash took place as Peers discussed the decision of police in Merseyside to phase out locally-made Vauxhall cars in favour of new cheaper Hyundais, made in Korea.

Lord Jones said: “Would the Minister agree with me that it is becoming increasingly difficult for the businesses of this nation to believe that Her Majesty’s Government want business to employ more people and pay more tax when they buy their ships from South Korea, their police vehicles from Korea, their trains from Germany and their cars from Japan?

“Further, would he agree that the EU procurement rules talk about best value and not best price, and that the Government increasingly show that they know the price of everything and the value of nothing?”

But Lord Henley told him: “I would not want to go down the line that the noble Lord is suggesting, which smacks, dare I say it, of protectionism.

“I want the police authorities and chief constables to buy the cars that they feel are best for their needs.”

Lord Jones was later backed by Black Country MP John Spellar (Lab Warley), who said: “The comments from 8th Baron Henley shows how out-of-touch our ruling class are.

“Every other European country backs their companies and workers. It shows how contemptuous they are of the people who produce the country’s wealth, employers and workers alike.”