Prime Minister Keir Starmer has moved to reorient his government toward economic growth by installing centrist figures in key departments in a dramatic reshuffle completed after the resignation of Deputy Leader Angela Rayner.
The changes, announced late on Sunday, include the appointment of Peter Kyle as Business Secretary and Pat McFadden to the Department for Work and Pensions. Party insiders signalled a renewed focus on reducing burdens on business and tackling a spiralling benefits bill, with Downing Street sources acknowledging that the government sees a tension between Net Zero commitments and immediate growth priorities.
A government source said the new structure would place business and energy responsibilities closer together, reflecting a desire to prioritise economic expansion. Michael Shanks is reported to be taking on a joint business and energy brief. Supporters of the reshuffle say the moves are intended to "tear down barriers and unleash the economy's potential," while critics on the Labour left have warned of internal conflict over employment and industrial relations reforms.
Peter Kyle, who takes on the business role formerly held by Jonathan Reynolds, said his mission would be to "drive forward economic growth and to give businesses across the country the opportunities they need to thrive." He is due to travel to the United States and China this week to represent the department.
Pat McFadden, as the new Work and Pensions Secretary, is expected to renew efforts to rein in benefit spending. The decision follows a previous attempt to change entitlements that was withdrawn after opposition from Labour backbenchers. Party officials and ministers said McFadden will be tasked with finding measures that control costs while remaining politically and legally viable.
The reshuffle comes amid rising unease within Labour ranks about the party's domestic performance. Dame Emily Thornberry, chair of the Commons Foreign Affairs Committee and a senior figure on the party's soft left, said the government's first year had been a "mixed picture" and warned that Labour "can't afford" repeated mistakes as support from some voters shifts toward Nigel Farage's Reform UK.
Unions, a traditional source of Labour funding and grassroots support, are also positioning themselves as a flashpoint. Unite's leadership, led by Sharon Graham, has threatened to withdraw financial backing if the party pursues policies the union opposes. The party's national executive is due to finalise the rules for a deputy leader contest this week after Ms Rayner's departure.
Senior ministers and business groups have urged a clearer emphasis on growth, arguing that investment and deregulation could boost productivity. Some government insiders told national newspapers that bringing business and energy closer together was designed to resolve what they described as a "tension between Net Zero and driving growth." The administration says it remains committed to its climate goals while seeking to minimise regulatory burdens on industry.
Labour's left-wing faction has signalled it will resist moves perceived as eroding employment protections or rolling back reforms to strike rules. Those tensions are likely to shape parliamentary battles in the coming months, with the party attempting to balance appeals to centrist voters and the demands of its activist base.
The reshuffle also reflects an urgency to respond to weak polling for Labour. Figures cited internally have shown a sharp decline since the 2024 election victory, prompting senior figures to argue for a course correction on domestic policy and communications. Downing Street said Friday's changes were intended to present a united front focused on growth and stability.
Starmer's team framed the reshuffle as pragmatic realignment rather than an ideological lurch, saying ministers were chosen for their experience in delivering economic outcomes. Opponents and some union leaders countered that personnel changes would not address deeper questions about policy direction and engagement with organised labour.
The new ministerial line-up will be watched closely by business groups, trade unions and international partners as the government seeks to stabilise support at home and maintain its standing abroad. Peter Kyle's upcoming visits to the United States and China will be among his first opportunities to signal the administration's economic priorities to foreign investors and counterparts.