Job losses leave PM with nowhere to run

Economic gloom deepens with 2,500 redundancies at Corus

The Government is expected to reject growing demands for it to limit the wave of redundancies by paying companies temporary grants to train workers rather than sack them.

Ministers say they are "not persuaded" that short-term job subsidies widely used on the Continent, would work in Britain. They will discuss the proposal with the CBI and TUC but an early study suggests they would not be effective or provide taxpayer value.

The Government's view will worry Labour MPs and trade unions, who have been calling on ministers to copy schemes from countries including France, Germany and the Netherlands, where the state tops up the wages of workers on "short time".

Supporters, including some manufacturers, say it would ensure that skilled workers were available after the recession and would also be cheaper than paying unemployment benefits to sacked workers.

A Gordon Brown ally said yesterday: "We don't think that job subsidies would work here. His focus is on helping people to find their next job, not keeping them in their existing one."

Although unions renewed their calls for such a scheme after the steelmaker Corus confirmed 2,500 redundancies in Britain, ministers said the announcement proved their point.

Corus bosses in the UK and India told Lord Mandelson, the Business Secretary, that short-term job subsidies would not have stopped the cuts.

Globally, yesterday was also one of the blackest days since the start of the economic downturn, with more than 70,000 people estimated to have lost their jobs in the US, Europe and Asia.

Corus, a subsidiary of India's Tata Steel, is axing 3,500 jobs worldwide after a substantial fall in global demand. It employs 24,000 people in the UK and 42,000 around the world.

Corus will temporarily close a factory at Llanwern near Newport, South Wales, where 600 jobs will go, as part of 1,100 cuts across the company's Welsh operations. A further 1,400 jobs will be lost at other UK sites, including 713 in Rotherham, 108 at Wednesbury in the West Midlands, 93 in Scunthorpe, and 61 at Wolverhampton. About 80 will disappear in Scotland.

"This is a body blow for UK manufacturing," said John Wilson, senior officer of the GMB union. "It is essential that the UK Government offers this industry the same support being offered to the banking sector because steel is the bedrock of our economy."

Mr Brown pointed to "an international economic hurricane sweeping the world and lashing our country". He said: "We are taking action to calm the storm ... so Britain can be better placed to benefit as the storm passes – as pass it will."

The footwear chains Barratts and PriceLess, which together employ 5,450 staff, also called in the administrators yesterday.

* Further evidence that the Conservatives are re-establishing a clear lead in the polls has emerged, following The Independent/ComRes poll yesterday. A Guardian/ICM poll gives the party a 12-point lead over Labour.

The poll puts the Tories on 44 per cent, Labour on 32 per cent and the Liberal Democrats on 16 per cent.