Rishi Sunak, despite warnings from his government that it could be a distraction, has tried to boost his government’s growth plans by dismantling its business department.
Sunak used a reshuffle in order to fill the post of Conservative party Chair and to perform major Whitehall surgery. He created three new departments to place a greater emphasis on energy security, and help Britain become a “science superpower”.
Hannah White, Director of the Institute for Government, stated that “This is an enormous reorganisation in government.” She said that while the Whitehall shakeup would ultimately bring attention to priority areas, it could also cost “well above PS100mn” over time and take many years to fully integrate.
Downing Street refused to disclose the cost of the overhaul. It said that the changes would “ensure” the right skills and team to focus on the prime minister’s promises to halve inflation, increase the economy, reduce the debt, cut waiting lists for the NHS, and clamp down on illegal immigration.
At a time when the economy is likely to enter recession and families are facing the largest drop in their living standards in decades, the government seeks to cover a deficit of 20 points in polls to the Labour party.
Former prime minister Liz Truss urged Sunak this week to do more for the UK’s economy, including tax cuts and deregulation. Tory MPs and business leaders called for a clearer strategy to grow.
Whitehall veterans are skeptical about changes to the “machinery government”, warning that they can cause uncertainty and disruption in the short-term.Sunak, who had been the focal point of the changes, dismantled the Department for Business, Energy and Industrial Strategy, which was the subject of numerous Whitehall reorganisations. He then restructured his cabinet to concentrate on his political priorities.
Sunak’s first reshuffle after becoming prime minister in Oct last year saw Greg Hands, trade minister, replace Nadhim Zhawi as Tory party chair. This was to allow him to prepare for the expected election next year.
Grant Shapps, who was previously the business secretary, will lead a new Department for Energy Security and Net Zero. This ministry is charged with increasing Britain’s energy supply and helping it transition away from fossil fuels.
Michelle Donelan (ex-culture secretary) will lead a new science and innovation and technology department. This department will combine the digital responsibilities from her old department with the science portfolio at BEIS.
According to government insiders, Michael Gove, levelling-up secretary was “sounded out”, but decided to keep his current job.
The remaining BEIS will be combined with Kemi Badenoch’s Department for International Trade in order to create the business and trade department.
Lucy Frazer, the former housing minister, will lead a “refocused Department for Culture, Media and Sport”. It will lose its tech responsibilities and will be able to “build upon the UK’s global leadership in the creative arts.”
Tony Danker, the head of the CBI employers group, stated that he liked the changes to the government structure. He said, “It’s clear to see the intent and there are a few big bets for growth.”
However, some business groups were concerned about the spread of related policy areas across three departments — such as science, regulation and new energy technology —
Downing Street confirmed that Sunak wanted to be focused on innovation, but it also wanted to “move forward” from the “industrial strategies” adopted six years ago by Theresa May’s government.
The business department has been redesigned by successive prime ministers to reflect their priorities. It was renamed BEIS by May’s government in 2016 to include industrial strategy.
Kwasi Kwarteng was the business secretary at the time. He said that the government’s industrial strategy was “pudding without any theme” in 2021.
Badenoch’s brand new trade and business department is responsible for “promoting investment and championing trade”, as well as export promotion and negotiating post-Brexit trade agreements.
Sunak has given the Department for Science, Innovation and Technology the task of “turning scientific and technological innovations into practical, useful solutions” and “making the UK the most innovative country in the world”.
Shadow energy secretary for Labour Ed Miliband said that seven years after the disastrous decision of removing the Department of Energy, Conservatives now admit that they made a mistake. It will not save the country to reorganize the deckchairs of the sinking Titanic caused by failed Conservative energy policies.