A UK government revamp in search of a strategy

The UK business department has gone through more reincarnations than Doctor Who, the science fiction character who is a product of Britain’s highly successful creative industry. Prime Minister Rishi Sunak is now reorganising it again — hiving off parts of what was the Department for Business, Energy and Industrial Strategy, and merging the business rump with the international trade department. There are arguments in favour of the revamp. Unless it quickly produces results, however, it risks going down as just another restructuring in search of a strategy.

It is easy to be sceptical of another reshuffle of departmental nameplates. “Machinery of government” changes eat up time and money; the Institute for Government has suggested the latest shake-up could cost more than £100mn. These issues are even more pertinent with a government behind in the polls and facing an election in less than two years, after which a Labour administration might rejig things again.

The changes do make some sense, nonetheless. For energy security and net zero policy to be in its own department with a seat at the Cabinet table is logical. The need to safeguard energy supplies since Russia’s war on Ukraine must be carefully balanced with the imperative to accelerate the transition to renewables. While energy sources and costs are key issues for businesses — an argument for having them in one department — many felt energy had become predominant within BEIS, squeezing out the business focus.

There is a case, too, for putting science, innovation and technology under one roof — incorporating the digital portfolio that previously sat with culture, media and sport. True, rather than creating a new ministry, much of the science community might have preferred the government to patch up differences so it could rejoin the EU’s €95bn Horizon Europe programme. But the government believes for the UK to prosper, it needs to be a winner in technology and at the forefront of the green transition. Rather than ram these things together with business into a super-department, Sunak has chosen to give each its own champion.

Some parts of business are fretting, though, over the erosion of the “one-stop shop” approach. Technologies including quantum, AI and semiconductors, as well as life sciences and green technologies, are now the domain of the science department. Business more widely comes under Kemi Badenoch’s business and trade ministry, but many companies worry the business portfolio has been hollowed out after the first David Cameron premiership.

There are broader concerns, too. Wherever departmental dividing lines are drawn, the key to success will be how well they work together, but co-ordination has not been a strong point of Conservative administrations since 2010. And above all, companies prize continuity — of policy, funding and personnel. Since BEIS was created seven years ago, there have been seven secretaries of state responsible for business.

Change has occurred so frequently that business has become dubious over whether the reshuffles amount to much. Any underlying sense of vision has also been dissipated. Premier Theresa May’s 2017 industrial strategy was ditched by Kwasi Kwarteng as business secretary in 2021, though his department kept the idea in its name. Now that, too, is gone.

The key test will be whether the rejig delivers more coherent policy. Businesses are keen to see a sensible approach to reform of EU-derived regulations, signs of more support for enterprise and entrepreneurship, and a sound strategy for growth. Above all, they want the full clout of Downing Street and the Treasury put behind the latest changes. With an election looming, Sunak has limited time to show his structure can deliver.

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