The authoritative source for independent research on UK-EU relations

08 Feb 2023


Politics and Society

Jill Rutter assesses Rishi Sunak’s reorganisation of the machinery of government, looking at whether the changes make sense and whether they are likely to last.

In the past, government departments have been created to find roles for critical people. That was true in 2008 when Gordon Brown created the mega-department of Business, Innovation and Skills to tempt Peter Mandelson back into government and the Department of Energy and Climate Change (DECC) to bring Ed Miliband into the Cabinet.

Rishi Sunak has done the reverse. The faces remain the same – but there has been a very substantial reorganisation of the economic departments – reflecting it appears his view from the Treasury of what was, and what was not, working in government. Permanent secretaries have also been reshuffled – which, given the transience of ministers, may, in the end, matter more to the people working in or with the departments than the photo at the top of the display in the entrance foyer.

Any reorganisation comes at a price of temporary disruption and distraction – as well as additional costs. Mergers are arguably easiest to manage on paper as long as it’s possible to create a coherent departmental culture. The hardest to manage are those where a new department is created out of lots of bits of different departments, as the new top team have to battle to get any sort of corporate budget from the departments losing functions.

There is no right way of organising government – so two questions on the new structures: do they make more sense than the structure that preceded it? And will they last?

The easiest change to understand is the recreation of the Department of Energy and Climate Change, abolished by Theresa May in 2016 to make room for her new Brexit departments. Abolition of the department was controversial at the time. It provoked a debate between supporters of the need for a focus on energy and climate policy with its own distinctive voice at the Cabinet table versus those who felt that DECC was a small, underpowered department, without much clout – and that it benefited from the added heft of being part of the business empire.

But that was before energy rose to the top of the political agenda. The changed context provides the rationale for the new name – we have never had a Department for Energy Security before. The initial briefing suggests that the addition of net zero was perhaps a bit of an afterthought.

In current circumstances, Grant Shapps will be a big Cabinet player – though he may still want to look at the proposals in Chris Skidmore’s Net Zero Review for an Office of Net Zero Delivery to bolster the department’s ability to get the rest of government lined up behind it. He will be helped by having a new permanent secretary, Jeremy Pocklington, who was Director General for Energy before his move to the levelling up department.

This change looks like it could survive a change of government too. Labour already has a secretary for climate change and net zero in the shape of Ed Miliband. He may regard this move as securing his place in a Starmer cabinet and, based on his DECC experience, be looking around Whitehall to see whether there are any areas he would like to add to the core Shapps will be creating.

When Theresa May created the Department for International Trade (DIT), she took the small trade policy functions out of the then business department and the promotion functions of UK Trade and Investment and put them in the new department. That formed the nucleus of the department that then had to expand to take on new trade negotiating responsibilities after Brexit. There were always two departments that thought DIT should merge with them. The first was the Foreign Office, where both Boris Johnson as Foreign Secretary and Simon McDonald as permanent secretary thought that trade diplomacy naturally fell to them. The other was the business department, recalling the old days of the Department of Trade and Industry. Sunak has opted for the latter.

In terms of organisation, that may well stick too. Sunak seems less keen on trade deals for the sake of them than his predecessors, and new trade deals are unlikely to be a priority for a Labour government, which favours trying to get closer to the EU and easing business relations with the UK’s biggest business partner.

But it will be interesting to see how new secretary of state Kemi Badenoch plays the business role. Not least, whether she continues the more pragmatic approach to divergence from EU regulations detectable since Sunak became PM, and whether she presses ahead at full speed with the Retained EU Law Bill, which will probably stay in her department. Will she be open, as Shapps seemed to be, to business concerns – or will she have one eye on burnishing her Brexit credentials before a potential post-election leadership election?

The hardest change to make work is the one that Sunak probably regards as the most important – his new Science, Innovation and Technology department. That seems to be being assembled from bits of departments and appears to hark back in thinking to Gordon Brown’s very short-lived Department of Innovation, Universities and Skills. This seems to involve taking the digital and data out of Digital, Culture, Media and Sport, and combining it with the innovation side of the business department. It’s being seen as the vehicle for Sunak’s growth agenda, but with added public sector reform.

Sunak needs to be very clear very quickly about what exactly should move to the new department and what stays put, otherwise there will be lengthy wrangling. He also needs to make sure the Treasury coughs up the cash for core functions – otherwise the department will spend its first year collecting crumbs.

Briefings suggest that Michael Gove was first choice to run it – instead there is the relatively inexperienced Michelle Donelan in charge. She will not have much time to make her mark before she goes on ‘short’ maternity leave, so that will need to be managed well to avoid a hiatus.

Her new permanent secretary, Sarah Munby, was the former head of the business department – an interesting move if Sunak really thought the business department was punching below its weight.  But Munby is an ex-McKinsey consultant – just the sort of person government might call on to help reorganise government.

So, some changes that may last. But Sunak will need to put his weight behind his new Secretary of State at the Department for Science, Innovation and Technology to prove that the change makes sense.

By Jill Rutter, Senior Research Fellow, UK in a Changing Europe.


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