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'Proud' Mandelson back in Cabinet 'Proud' Mandelson back in Cabinet
(30 minutes later)
Peter Mandelson has been drafted back into government in a surprise move, as Gordon Brown reshuffles his cabinet. Peter Mandelson has said he is surprised but "proud" to be drafted back into the Cabinet as business secretary.
The EU trade commissioner was twice forced to resign from Tony Blair's cabinet. He will be made business secretary with a seat in the Lords. The EU trade commissioner was twice forced to resign from Tony Blair's cabinet - speaking in Downing Street he said it was "third time lucky".
Speaking outside Downing Street he said he had not expected or sought to return but it was "all hands on deck". In other moves, John Hutton replaces Des Brown as defence secretary.
Asked why he had risked returning to the government after two resignations he joked: "Third time lucky." Labour veteran Margaret Beckett gets housing and Ed Miliband heads up a new climate and energy department.
In other moves, Business Secretary John Hutton replaces Des Browne at defence and Geoff Hoon replaces Ruth Kelly at transport. Geoff Hoon replaces Ruth Kelly, whose resignation as transport secretary triggered the reshuffle.
Labour veteran Margaret Beckett returns the government as housing minister, replacing Caroline Flint, while Ed Miliband is to head up a new climate and energy department. CABINET MOVES Peter Mandelson to business Margaret Beckett to housing Geoff Hoon to transport Des Browne to leave Ed Miliband to climate/energy John Hutton to defence class="" href="/1/hi/uk_politics/7648551.stm">LIVE TEXT - Cabinet reshuffle class="" href="/1/hi/uk_politics/7650780.stm">In quotes: Reshuffle reaction class="" href="/1/hi/uk_politics/7651134.stm">Third time lucky, says Mandelson class="" href="/1/hi/uk_politics/7651229.stm">In full: Cabinet reshuffle
Immigration minister Liam Byrne has been promoted to the new role of policy coordinator, not a full cabinet role but he will attend cabinet meetings. Immigration minister Liam Byrne has been promoted to the new role of policy coordinator, not a full cabinet role but he will attend cabinet meetings. Mrs Beckett will replace Caroline Flint as housing minister.
Defence Secretary Mr Browne is to leave the government. The BBC understands he turned down both the job of Secretary of State for Scotland and Northern Ireland Secretary as he felt it would be an insult to the armed forces to leave as defence secretary and then take another job. Defence Secretary Mr Browne is to leave the government after turning down two job offers from Mr Brown.
CABINET MOVES Peter Mandelson to businessMargaret Beckett to housingGeoff Hoon to transportDes Browne to leaveEd Miliband to climate/energyJohn Hutton to defence class="" href="/1/hi/uk_politics/7648551.stm">LIVE TEXT - Cabinet reshuffle class="" href="/1/hi/uk_politics/7650780.stm">In quotes: Reshuffle reaction Former agriculture minister, and close Gordon Brown ally, Nick Brown returns as chief whip, to replace Mr Hoon. Leader of the House of Lords, Baroness Ashton, will replace Mr Mandelson in Brussels.
Former cabinet minister Nick Brown is also expected to return as chief whip, to replace Mr Hoon. Leader of the House of Lords, Baroness Ashton, will replace Mr Mandelson in Brussels. 'Ups and downs'
Controversial figure
Northern Ireland Secretary Shaun Woodward and Environment Secretary Hilary Benn are expected to remain in their current posts - as are those in the top jobs, chancellor, home secretary and foreign secretary.Northern Ireland Secretary Shaun Woodward and Environment Secretary Hilary Benn are expected to remain in their current posts - as are those in the top jobs, chancellor, home secretary and foreign secretary.
The reshuffle is taking place after the announcement that Ms Kelly is to stand down to spend more time with her family. Trade minister Lord Jones has also said he wants to step down.The reshuffle is taking place after the announcement that Ms Kelly is to stand down to spend more time with her family. Trade minister Lord Jones has also said he wants to step down.
The announcement that Mr Mandelson was to return to the cabinet came as the biggest surprise.
This is an extraordinary step backwards into the worst elements of the Blair era, to reinstate possibly the most divisive figure in Labour's recent history John McDonnellLeft wing Labour MP Profile: Peter MandelsonBrowne quits cabinetBusiness hails Mandelson returnThis is an extraordinary step backwards into the worst elements of the Blair era, to reinstate possibly the most divisive figure in Labour's recent history John McDonnellLeft wing Labour MP Profile: Peter MandelsonBrowne quits cabinetBusiness hails Mandelson return
Sources have told the BBC the reshuffle is not merely a "tidying up exercise" but an attempt to reconfigure government to tackle the economic crisis. The former Northern Ireland and trade and industry secretary said he was not expecting to be asked but was looking forward to the challenge.
Reporters suggested his feud with Mr Brown had been one of the frostiest periods in modern politics, he replied: "Well I think you're exaggerating to make a point.
"But of course we've had our ups and downs but we have also known each other for over 20 years and originally we worked very well together and I am very proud to have been invited to serve in his government."
He said Mr Brown was doing "an exceptionally good job in what are very, very challenging conditions for our country".
There have been tensions between Mr Brown and Mr Mandelson for years, since the two men fell out when Mr Mandelson backed Tony Blair for the Labour leadership in 1994.There have been tensions between Mr Brown and Mr Mandelson for years, since the two men fell out when Mr Mandelson backed Tony Blair for the Labour leadership in 1994.
Sarkozy row
But at the height of a row between Mr Mandelson and French President Nicholas Sarkozy over international trade talks this summer, the prime minister backed the trade commissioner, saying he was doing "excellent work".But at the height of a row between Mr Mandelson and French President Nicholas Sarkozy over international trade talks this summer, the prime minister backed the trade commissioner, saying he was doing "excellent work".
Mr Brown will be keen to draw on his global finance experience gained during his four years as EU trade commissioner.Mr Brown will be keen to draw on his global finance experience gained during his four years as EU trade commissioner.
'A masterstroke'
Mr Mandelson has been a controversial figure, resigning twice from cabinet posts - once over a loan from his ministerial colleague Geoffrey Robinson and once over allegations of misconduct over a passport application for the Hinduja brothers. He was later cleared of any wrongdoing.Mr Mandelson has been a controversial figure, resigning twice from cabinet posts - once over a loan from his ministerial colleague Geoffrey Robinson and once over allegations of misconduct over a passport application for the Hinduja brothers. He was later cleared of any wrongdoing.
Derek Draper: 'It's absolutely fantastic news for the Labour party' class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYBrown has lost his marbles if he thinks that bringing Mandelson back will give him credibility Tim, Wirral class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5446">Send us your comments
Former home secretary David Blunkett described his appointment as a "masterstroke" and told the BBC it would unite the government.Former home secretary David Blunkett described his appointment as a "masterstroke" and told the BBC it would unite the government.
"It is embracing someone who, in the past, had been seen as being very close to Tony Blair, so it's an inclusive measure," he said."It is embracing someone who, in the past, had been seen as being very close to Tony Blair, so it's an inclusive measure," he said.
"It's someone who's got a tremendous breath of political experience and I think that adds to the weight of the cabinet.""It's someone who's got a tremendous breath of political experience and I think that adds to the weight of the cabinet."
Justice Secretary Jack Straw said Mr Mandelson would fit the job as business secretary "like a glove" and the appointment showed, after "a few wobbles over the summer ... the whole party is getting behind Gordon".Justice Secretary Jack Straw said Mr Mandelson would fit the job as business secretary "like a glove" and the appointment showed, after "a few wobbles over the summer ... the whole party is getting behind Gordon".
But left wing Labour MP John McDonnell said he was "absolutely gobsmacked": "This is an extraordinary step backwards into the worst elements of the Blair era, to reinstate possibly the most divisive figure in Labour's recent history."But left wing Labour MP John McDonnell said he was "absolutely gobsmacked": "This is an extraordinary step backwards into the worst elements of the Blair era, to reinstate possibly the most divisive figure in Labour's recent history."
Business ambassador
The Conservatives described it as a "stunning failure of judgment" by Mr Brown.The Conservatives described it as a "stunning failure of judgment" by Mr Brown.
Shadow foreign secretary William Hague said: "In bringing back Peter Mandelson - the man who created Labour spin - he has broken his promise to govern in an honest and open way."Shadow foreign secretary William Hague said: "In bringing back Peter Mandelson - the man who created Labour spin - he has broken his promise to govern in an honest and open way."
HAVE YOUR SAYBrown has lost his marbles if he thinks that bringing Mandelson back will give him credibility Tim, WirralSend us your comments
He added: "By leaving in place a chancellor who has failed and a foreign secretary who has undermined him at every opportunity Gordon Brown has also been exposed as weak."He added: "By leaving in place a chancellor who has failed and a foreign secretary who has undermined him at every opportunity Gordon Brown has also been exposed as weak."
For the Liberal Democrats, Danny Alexander said: "Resurrecting ex-ministers from the political graveyard is not going to breathe new life into Gordon Brown's zombie government."For the Liberal Democrats, Danny Alexander said: "Resurrecting ex-ministers from the political graveyard is not going to breathe new life into Gordon Brown's zombie government."
In a separate development, Sir John Bond, the chairman of Vodafone, is to become a "business ambassador" for the government.In a separate development, Sir John Bond, the chairman of Vodafone, is to become a "business ambassador" for the government.
Mr Brown's press secretary and special adviser for media affairs, Damian McBride, is to to take a "more back room role" and will no longer speak to the media on the government's behalf. Government officials stress it was his decision.Mr Brown's press secretary and special adviser for media affairs, Damian McBride, is to to take a "more back room role" and will no longer speak to the media on the government's behalf. Government officials stress it was his decision.