Mandelson to Scotland: Stop being so darned pessimistic
The Business Secretary provoked anger by telling an audience on a visit to Scotland to cheer up and not be so gloomy about the country's prospects.
His comments overshadowed a historic first visit to Scotland by a UK Cabinet in 88 years and what had been planned as a day of positive publicity for the Brown government north of the Border.
Prime Minister Gordon Brown decided to use this mass visit to Scotland by UK ministers to say "sorry" for the first time for the Tory smear e-mails sent by his adviser, Damian McBride, while in Westminster prosecutors said they had decided that Conservative front-bencher Damian Green would not face criminal charges after he had been accused of leaking sensitive information.
But the Business Secretary's remarks dominated events, coming as the International Monetary Fund warned the recession would be longer and more severe than forecast.
They also followed a succession of economic indicators showing the slowdown to be the worst in living memory, with unemployment rising faster than at any time since records began in 1971 and the national debt at to its highest since the Second World War.
Lord Mandelson was at the Scottish Exhibition and Conference Centre in Glasgow with the rest of the Cabinet, part of a series of events linking the UK government with regions and cities outside London.
The Prime Minister used a public question-and-answer session before the Cabinet meeting to declare that next week's Budget would be a "Budget for jobs", with a package of measures due to be announced to keep workers in employment and create opportunities for those already out of work.
He declared: "I know there are many people afraid that unemployment is going to hit them; I know many people are worried someone close to them may lose their job."
Mr Brown added: "Our aim throughout is to get people back into jobs as quickly as possible and to prevent jobs going, to help school leavers this year and people leaving college and universities to get the jobs or training they need.
"Next week's Budget will be a Budget about jobs."
But the Prime Minister found his message knocked sideways by Lord Mandelson, who decided to hit out at those he believes are guilty of talking the country down.
He said: "There are still really major sources of opportunities for us. There are huge growing economies out there, with rising incomes among growing populations, that are going to be demanding and buying the sort of goods and services that we excel at producing."
And he added: "When people talk about the world with such pessimism, they are ignoring all the opportunities and concentrating only on the risks.
"So frankly it's about time people stopped being so darned pessimistic, looked at it on the upside and looked at what we're good at in this country."
With Scotland's economy heavily dependent on a healthy financial services sector, a sector which has been rocked by the loss of HBOS, the partial nationalisation of RBS and the projected loss of at least 11,000 jobs, Lord Mandelson's remarks generated a furious reaction from his political opponents.
John Mason, the SNP's work and pensions spokesman, said: "Peter Mandelson's extraordinary remarks are yet another indication of just how out of touch the UK Labour government is.
"Lord Mandelson may not be feeling the pinch, but when families and businesses across Scotland are really struggling – with figures this week showing sharply rising unemployment in Glasgow – it is bad taste and bad judgment for him to deny the reality of the Downing Street downturn."
And he added: "If Peter Mandelson can only lecture people – and cannot understand what is actually going on in the economy – then he has wasted the public money spent on the Cabinet's visit to Glasgow, because he has clearly learnt nothing about the impact of Labour's recession."
Philip Hammond, shadow chief secretary to the Treasury, said: "The world may look bright to Lord Mandelson, but for hard-working families facing rising unemployment, stagnant wages and shrinking credit, the contrast couldn't be more stark.
"Labour's failure to understand how the world looks to ordinary families makes them part of the problem, not the solution."
And David Mundell, the shadow secretary of state for Scotland, added: "Scotland is being hit hard by Labour's recession and doesn't need cheer-up lectures from Peter Mandelson. He needs to get out more and experience the real world and the turmoil created by Labour's broken economy."
Lord Mandelson was one of a number of Cabinet ministers who took part in a series of Cabinet events across Scotland yesterday. He and Geoff Hoon were at Knockhill to announce a subsidy of 2,000 to 5,000 for purchasing electric cars.
It coincided with the launch of a new electric Mini, although the new car's appeal will primarily be in London and the south-east.
Home Secretary Jacqui Smith praised workers who dealt with the terrorists who targeted Glasgow Airport as she visited the scene of the attack.
She was shown security improvements introduced after the incident on 30 June, 2007, when a Jeep loaded with gas cylinders and petrol crashed into the main terminal.
Foreign Secretary David Miliband met Muslim community leaders at the Central Mosque in Glasgow and then attended a question and answer session with mainly Pakistani-Scottish Muslims at the Kabana restaurant in the city's south side.
Mr Miliband defended the government's military involvement in Afghanistan, pointing out that the southern region was only now seeing some form of security due to international intervention, and denied that the instability in Pakistan was as a result of British presence in the neighbouring country.
Additional reporting by: David Maddox, Jenny Haworth, Stephen McGinty and Craig Brown