Business fears reshuffle uncertainty

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The sweeping government reshuffle implemented by Tony Blair on Friday in an attempt to restore his fortunes will create uncertainty and could hold up vital policies, business groups warned on Monday.

Leading industry bodies played down concerns over infighting in government. But they told the FT they were concerned about the shake-up of ministerial jobs, particularly at the Department of Trade and Industry.

Alan Johnson was replaced by Alistair Darling as secretary of state after only a year and in total the DTI lost four ministers and was given three new ones.

David Frost, the director-general of the British Chamber of Commerce, said the “pretty wholesale clear-out” in the DTI “raises the question [whether] the government is committed to enterprise and understands the importance of business”. Business is disappointed by the replacement of Mr Johnson, who was seen as understanding employers’ needs.

Miles Templeman, the director-general of the Institute of Directors, said Mr Johnson “was just getting to grips with DTI issues in very complex areas, such as energy. Now a new guy has got to come in and start afresh.” Martin Temple, director-general of the EEF engineers’ body, warned that the extent of the reshuffle militated against the business desire for “stability and clear direction in all areas” from government.

One of industry’s main concerns is that the reshuffle could affect reviews under way in areas affecting business, including energy, pensions and transport. “If any of the key decisions that are in the process of being made get stalled, that does become a problem for business and the country as a whole,” Mr Templeman said.

Business appears relatively relaxed about the wrangling in government over the succession to Mr Blair. But business bodies warned they would be concerned if the infighting started affecting government policy. “I don’t think the present hiatus is causing that much concern for business. It’s the fundamentals of the economy and the way that’s moving which are much more important,” said Mr Frost.

The handover to Gordon Brown, the chancellor, is viewed with relative equanimity by business provided it does not precipitate the return to old Labour values and policies that Mr Blair on Monday warned some rebel MPs were seeking. Such a reversion “would be absolutely disastrous”, Mr Templeman said. “Whoever comes in as leader, it’s absolutely vital that the New Labour agenda – which is probably very close to what the Tory agenda would be – carries on.”

Mr Brown has insisted he will carry on and even intensify the public sector reform programme instigated by Mr Blair. The prime minister on Monday said he had no doubt the chancellor would be “absolutely New Labour to his fingertips in power”. But business waits to be convinced this will be realised in practice under a Brown government, in particular if unions gain more influence.

Many employers fear Mr Brown will “kill off” public sector reform when he takes over, a CBI employers’ body survey earlier this year found. Fewer than one in five of the businesses polled had confidence the momentum of public sector reform would be maintained after Mr Blair goes.

Sir Digby Jones, director-general of the CBI, warned on Monday: “Whoever succeeds the prime minister and whenever that happens, the meaningful and far-reaching reform of public services must continue, the deregulation of the business environment must be stepped up, and Britain’s place as a major player in a fiercely competitive global economy must be assured.”

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