The Government was too slow to help regions such as the West Midlands deal with the effects of the recession, Business Secretary Lord Mandelson has admitted.

But he insisted it was now creating new jobs, particularly in the manufacture of low-carbon vehicles, as he warned Britain faced an economic “war” to revive industry.

With an election imminent, Lord Mandelson placed support for regional economies at the heart of Labour’s campaign and attacked Tory plans to abolish Regional Development Agencies (RDAs), the Government bodies which support industry.

But Conservatives accused him of “a shameless election gimmick” after he spoke at length against their policies at a two-hour London press conference attended by the heads of the agencies themselves.

They included Mick Laverty, chief executive of Advantage West Midlands, the Government body set up to help firms in the region, which spends £300 million each year.

Latest unemployment figures showed 252,000 people are still out of work in the West Midlands, giving an unemployment rate of 9.4 per cent.

This is more than 100,000 higher than in the same period two years ago, when unemployment was 151,000, a rate of 5.7 per cent.

Lord Mandelson said the Government was helping the Midlands and the North-east take a global lead in the development of ultra low-carbon vehicles.

He said: “Drawing on our industrial expertise, in the Midlands and North-east, we are working to develop a lead in the development of ultra low carbon vehicles, and that’s going well, with Advantage West Midlands and the East Midlands Development Agency co-ordinating £50 million of investment.”

But he also admitted: “Frankly, we didn’t have that growth plan sufficiently in place a year ago. We weren’t sufficiently identifying the growth sectors and market and technologies where we are going to find our future jobs.

“And we learnt from that. And we’ve changed the way in which we approach these matters. And that’s why we are doing better.

“But we are at the beginning of this, not at the end of what is a colossal competitive struggle that we’ve got to mount.

A sort of competitive war in the global economy that we’ve got to wage on behalf of the British people, British regions and British skills and British jobs and that’s precisely what we’re doing.”

Lord Mandelson pointed out that business organisations including the CBI and Chambers of Commerce had criticised Conservative proposals to abolish RDAs.

The press conference followed a meeting in London of the Government’s regional economic committee, which involves regional ministers such as Ian Austin (Lab Dudley North), the Minister for the West Midlands, and RDA officials.

But it was condemned as “nothing more than a shameless election gimmick” by Shadow Business Secretary Ken Clarke.

Lord Mandelson defended his decision to cut RDA budgets, including a £48 million reduction in Advantage West Midlands’ funding.

He said: “The public purse is just feeling a little squeezed. When you have had a hole in your balance sheet blown by the sort of crisis we have seen in the banks, it’s going to make a difference.”

And he also defended cuts in university funding, which Prof David Eastwood, Birmingham University’s vice-chancellor, has warned could lead to larger class sizes.

Lord Mandelson said: “All this baloney about ancient universities being bought to their knees in the coming year we are actually investing £400 million more in capital in universities in this coming year than we were in the last year.”