Jonathan Reynolds returns as business secretary

Jonathan Reynolds has been appointed secretary of state for business, innovation, science and trade, returning to the department he led at the start of Sir Keir Starmer’s government, as new prime minister Andy Burnham scraps the standalone science and technology department just three years after its creation.

The appointment hands Reynolds a substantially enlarged empire. The Department for Science, Innovation and Technology (DSIT), created under Rishi Sunak in 2023, has been abolished, with the bulk of its responsibilities folded into the new super-ministry. According to the Financial Times, officials had been asked to move remaining functions to the Department for Culture, Media and Sport, with oversight of AI in the public sector passing to cabinet secretary Antonia Romeo rather than a minister.

Reynolds held the business and trade brief from July 2024 until last September, when he handed the role to Peter Kyle and became chief whip, a job he made little secret of not enjoying. His first spell was defined by trade agreement negotiations and the emergency legislation that secured the future of British Steel’s blast furnaces, and he built strong relationships with employers and trade unions along the way.

For business owners, the return of a known quantity will be welcome. The manner of his arrival is another matter. Scrapping DSIT sparked a revolt among tech founders and investors within hours of the plans emerging, and the row now lands squarely on Reynolds’ desk.

The practical stakes are considerable. DSIT sponsored UKRI, the research funding body that sits above Innovate UK grants, as well as the Government Digital Service. All of that machinery now goes into flux just as firms are being urged to adopt AI and invest in innovation.

Julian Harris, chief executive of techUK, and Dom Hallas, executive director of Startup Coalition, called the proposal “the wrong change at the wrong time” in a letter to the new prime minister when the plans first surfaced.

Matt Clifford, who served as Starmer’s AI opportunities adviser, was blunter still. “This would be a big mistake,” he wrote on X. “Right now is a critical moment for tech as an economic and national security issue. Tying up our most senior science and tech officials in a reorg wastes time and energy that’s desperately needed for the actual substance.”

Burnham’s calculation is that a single, muscular business department serves his reindustrialisation agenda better than a separate science ministry. “I will be a pro-business leader of the Labour Party as I was a pro-business mayor of Greater Manchester,” he said in his first speech as Labour leader. One Labour figure told the FT the enlarged department could eventually be rebranded a “Ministry of Industry”.

Business groups are prepared to give him the benefit of the doubt, up to a point. Rain Newton-Smith, chief executive of the CBI, said: “We want Andy Burnham and his team to succeed. ‘Manchesterism’ provides a coherent theory of growth… The challenge is execution.”

That word, execution, is the one for SME owners to hold on to. Sentiment towards the new administration is fragile, with just 13 per cent of firms expecting taxes to fall under Labour’s new leadership. Reynolds inherits goodwill from his first stint, but also a department mid-rewiring, a tech sector in open dissent and a grants system that thousands of growing firms need to keep functioning while the nameplates change.

His first job is proving that a bigger department means a stronger champion for business, not a slower one.

Paul Jones

Harvard alumni and former New York Times journalist. Editor of Business Matters for over 15 years, the UKs largest business magazine. I am also head of Capital Business Media’s automotive division working for clients such as Red Bull Racing, Honda, Aston Martin and Infiniti.