Rishi Sunak has announced a mini-reshuffle to stamp his authority on the fractured Conservative party, alongside a sweeping Whitehall restructure that created four new government departments.
The prime minister promoted Greg Hands, a trade minister, to Conservative party chair tasked with running the May elections campaign, replacing Nadhim Zahawi who was sacked last week for failing to declare his tax affairs.
Lee Anderson, the MP for Ashfield and a former Labour party councillor, was appointed his deputy at Conservative headquarters amid hopes the former miner can connect with red wall voters.
However, Anderson has been embroiled in a string of “anti-woke” controversies, attracting criticism for saying he would boycott England matches over the players’ decision to take the knee and saying that food bank users “cannot budget”.
Sunak, who pledged during the summer Tory leadership campaign to reinstate the energy department, scrapped by Theresa May in 2016, announced plans to carve up the Department for Business, Energy and Industrial Strategy into three new departments.
The first of these will be the new department for energy supply and net zero, while the other two will be science, innovation and technology and also business and trade as the prime minister aims to boost economic growth and address the energy crisis. The fourth new ministry is a slimline Department for Culture, Media and Sport.
On a visit in central London, Sunak said: “We’ve seen over the last year in particular the impact that happens to people’s bills at home when energy policy doesn’t work properly, when we’re reliant on imported energy from hostile countries. That’s why the creation today of a new department focused specifically on energy security and net zero is so important.”
However, some government insiders are concerned the changes could mean that officials spend the next six months focusing on process, rather than on policy. One said: “We can’t afford the disruption. Time is not on our side. We need to be entirely focused on delivery if we’re going to have any chance of winning the next election.”
Sunak is hoping that the changes in personnel and structure will finally put his premiership on the front foot after months of fire-fighting, with his attempts to get the economy back on track overshadowed by a series of standards rows involving senior Tory MPs.
The most recent of these saw Zahawi getting the sack. However, the prime minister still has to make a decision on the fate of his deputy, Dominic Raab, once an inquiry into alleged bullying of officials completes in the next few weeks, which could prompt a further mini-reshuffle.
There were no sackings or demotions in his reshuffle, with existing ministers moved to lead the new departments. In a significant promotion, Kemi Badenoch, the existing trade secretary who ran against Sunak and is tipped as a future Tory leader, will lead the new business and trade department, as well as retaining her role as minister for women and equalities.
Grant Shapps, who was previously business secretary, takes over the new department for energy security and net zero, amid promises to cut household bills and halve inflation. Labour’s secretary for climate change and net zero, Ed Miliband, said “a rearranging of deckchairs on the sinking Titanic of failed Conservative energy policy will not rescue the country”.
The new science, innovation and technology department will be run by Michelle Donelan, who is understood to be retaining oversight of the online harms bill, while Lucy Frazer will be promoted to the slimmed-down Department for Culture, Media and Sport.
Frazer’s departure from the Department of Levelling Up means that Sunak is on the search for the government’s sixth housing minister in the last 12 months, and the 15th to hold the post since the Conservatives returned to power in 2010.
Downing Street said on Tuesday the changes would help the prime minister achieve his government’s main priorities, and would help bring down inflation by improving energy security in the long term.
The prime minister’s spokesman admitted the changes will not be a “silver bullet” to address the problems facing the UK but said the moves have been “worked on for some time”.
Hands, who is seen as a safe choice, has held several senior ministerial briefs, including energy and trade, since he was made David Cameron’s chief secretary to the Treasury after the 2015 election.
The Chelsea and Fulham MP, who was a staunch remainer, takes over the role before May’s local elections – Sunak’s first electoral test since becoming prime minister. However, Hands’ most onerous task will be getting the party ready for the next general election, which many Tory MPs fear they will lose.
The appointment of Anderson will cheer some “red wall” colleagues who fear the election is already lost, but has dismayed others in more traditional Tory areas. One said: “I look forward to him campaigning in the Lib Dem marginals.”
Sunak picked Anderson as deputy chairman despite the MP apparently criticising the government’s approach to immigration. In messages leaked from a WhatsApp group, he is said to have accused ministers of acting “like the band on the Titanic”.
To many critics, including numerous opposition MPs, he is known as “30p Lee” for another outspoken intervention, in which he argued that food bank users did not understand how to budget, and that entire, nutritious meals could be cooked for 30p a time.
Downing Street would not comment on reports that Sunak had originally offered the science job to Michael Gove, the levelling up secretary. However, a Whitehall source said Gove had “discussed machinery of government changes in general” but had never been formally offered the role.
It is not yet clear exactly how much the Whitehall reorganisation will cost. However, the Institute for Government found that the upfront costs of creating a new government department can be around £15m. The bulk of that spending comes from acquiring and fitting out new office space, as well as integrating IT and HR systems.
The research also found that new departments rarely hit the ground running, and that there is a productivity cost to reconfiguring Whitehall at the top levels. Civil servants often have to spend time discussing such basic issues such as new office furniture, or salary parity among the new department staff, which is time they cannot use to focus on policy issues.
Additionally, general confusion, lack of focus and resistance to change can lead to further productivity loss, which the IfG roughly estimates as one in five staff members losing a fifth of their output for 10 months. Applied to the staff costs for BEIS in the department’s latest financial reports, that works out at around £28.9m.
