What did Lord M do on holiday? Hung out with tycoons and ran Britain

Vauxhall crisis greets Mandelson on his return from Corfu

Lord Mandelson's top priority will be to save thousands of Vauxhall jobs when he swaps his sunlounger for his ministerial desk, Downing Street said yesterday.

The First Secretary of State returns to London this afternoon after running the Whitehall machine from his luxurious holiday hideaway in Corfu for three days. Officials have shrugged off accusations of chaos in the ministerial holiday rota by pointing out that he has been in constant touch by BlackBerry and mobile phone.

They insisted Lord Mandelson, who has been enjoying the hospitality of the Rothschild banking dynasty in a villa overlooking the Ionian Sea, had been unruffled by the furore over the way he has balanced work and play. One said: "Peter rises above these things." But the Conservatives claimed the unconventional arrangements in Gordon Brown's absence presented problems over the handling of sensitive intelligence and defence matters.

Andrew Lansley, the shadow Health Secretary, told the BBC: "You can't send Peter Mandelson information about security issues on a BlackBerry to Corfu."

Upon arriving in London Lord Mandelson will attempt to focus on the Government's efforts to boost industry – car manufacturing in particular – and create jobs. Ministers believe they are inching towards a deal to secure the long-term future of Vauxhall, which employs 5,000 workers in Luton and Ellesmere Port.

Two rival bidders are vying to buy Vauxhall's parent company, GM Europe, with the winner due to emerge within weeks. Lord Mandelson is preparing to announce a cash injection into the firm in return for a promise to keep job losses to a minimum. He will also trumpet the success of the car scrappage scheme under which motorists have been offered £2,000 off the price of a new car – half coming from the taxpayer – if they trade in a vehicle over ten years old. With half the £300 million allocated to the initiative already spent, he will warn the scheme is likely to close by Christmas.

Lord Mandelson will respond to further grim news on unemployment – dole queues are set to pass 2.5 million in figures to be announced on Wednesday – by pointing to jobs initiatives already in the pipeline.

His holiday companions on the Rothschild estate included Lord Rothschild, the father of his financier friend Nat, David Geffen, the American film producer and record executive, and the interior designer Nicky Haslam.

Mr Haslam told a newspaper yesterday that Lord Mandelson was "working extremely hard" during his week in the 30C sunshine. "He's always on the phone," he added. Despite problems with mobile phone coverage in the area, the First Secretary has barely ventured out of the grounds of the estate, apart from taking the odd dip from a nearby pebbly beach. The holiday home has a large swimming pool cut out of the rock face and enjoying sweeping views of the sea. The terrace alongside the pool is an ideal spot for leisurely meals.

Lord Mandelson took charge on Friday after Harriet Harman departed for Italy and will hand over to Alistair Darling, the Chancellor, on Sunday. Jack Straw, the Justice Secretary, will "mind the shop" for the final week of August before Mr Brown's return. The Prime Minister, who has spent the last fortnight in his Fife constituency, is expected to take a break in the Lake District shortly.