Rishi Sunak’s Whitehall carve up merely rearranges the deckchairs

The prime minister hopes this reorganisation will bring faster growth, but he will be disappointed

Rishi Sunak has become the latest occupant of Downing Street to shuffle the Whitehall pack in the hope that a reorganisation of the machinery of government will lead to faster economic growth. History suggests he will not be the last.

Since Edward Heath created the Department of Trade and Industry as one of his new “super-ministries” in 1970, it has been a process of almost constant change for the department that looks after business. Responsibilities have been added and taken away under politicians who have barely had time to find their feet before being moved on again.

Kemi Badenoch, the new business and trade secretary, is the seventh holder of the post in less than seven years. Her department takes back responsibility for trade but loses energy. A wholly new department of science, innovation and technology – which harks back to Harold Wilson’s “white heat” 1960s vision of a modern Britain – has been created.

As with all the previous shake-ups, Sunak’s begins with the highest of ambitions. The new ministerial teams would, the prime minister insisted, help build a better future for “our children and grandchildren”.

Former business secretaries can see why – after 15 years of sluggish activity – there is a desire in Downing Street to do better. They doubt, however, whether this latest reorganisation will do the trick.

Michael Heseltine, the Conservative trade and industry secretary under John Major in the 1990s, said: “The organisation I ran had the structure right: industry, trade and energy with a minister of state for each of the three components.”

Lord Heseltine, now a non-affiliated peer, said he did not think hiving off energy to a separate department was a good idea, arguing that energy provision was important for industry. “If we are going to have an industrial strategy – which we should have – you need to look at these components as a whole,” he said.

“Having two ministers and two sets of officials means overall coordination is difficult to achieve. It’s like having two bosses.”

Vince Cable, who was business secretary in the Conservative-Liberal Democrat coalition government between 2010 and 2015, said the shake-up was “ill-timed and ill-advised”.

Cable said it made sense to bring business and trade back together but said new forms of energy were pivotal to industrial strategy. “It seems a strange time to delink them,” he said. “Moving around the Whitehall furniture achieves very little.”

Traditionally, there are three reasons for amalgamating or splitting up the government departments that deal with business: to boost productivity and investment, to create a sizeable portfolio for a political “big beast”, or to clip the wings of the Treasury by creating a rival economic power base.

The last of those motivations can be ruled out this time. Sunak is a former chancellor and wants his old department to make haste on reducing public borrowing. He has no desire to neuter the Treasury.

There were rumours – not denied by Downing Street – that Michael Gove was being lined up to take on the new science, innovation and technology portfolio but preferred to stay in his current job as levelling up secretary.

Peter Mandelson, a former Labour industry secretary, said the shake-up appeared to have been predicated on the basis of creating a job for a “big beast”. He doubted whether it would do much to boost Britain’s growth prospects.

“I can understand why Sunak wants to galvanise the whole of government and get business, industry, science and technology, and energy transition behind growth goals for the economy. But instead of galvanising it, he appears to be fracturing this effort,” Lord Mandelson said.

The result, he added, would be that investor sentiment would be weakened and the growth prospects for the economy impaired. “I can’t see how government will be strengthened as a result of this.”

The last three business secretaries – Kwasi Kwarteng, Jacob Rees-Mogg and Grant Shapps – served less than two years between them, leaving industry eager for a period of stability.

Stephen Phipson, the chief executive of Make UK, which represents manufacturers, said he wanted to see a long-term plan to allow British firms to compete more effectively internationally.

“The continued emphasis on science and innovation demonstrates the government’s commitment to ensuring the UK remains a science superpower but it is critical that we continue the scale-up of innovation within Britain’s businesses to boost growth and tackle the UK’s longstanding issues with under-investment and productivity.”

But with less than two years until the next general election, the chances of the new team – Badenoch, Shapps at energy and Michelle Donelan at science, innovation and technology – delivering Phipson’s long-term vision seem slim.

Meanwhile, there are those who say they have seen it all before. Nick Macpherson, the former top mandarin at the Treasury, said: “For students of rearranged deckchairs, this seems strangely reminiscent of Gordon Brown’s 2007 vision: Department of Energy and Climate Change, Department of Innovation, Universities and Skills, and Department for Business, Enterprise and Regulatory Reform.”


Larry Elliott

The GuardianTramp

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