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C O N F I D E N T I A L SECTION 01 OF 02 LONDON 002525 
C O R R E C T E D C O P Y - FINAL PARAGRAPH RENUMBERED

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 STATE FOR EU/WE, NSC FOR BRADLEY E.O. 12958: DECL: 10/03/2018 TAGS: PGOV PREL PINR UK

 SUBJECT: GORDON BROWN RESHUFFLES CABINET TO FOCUS ON ECONOMIC DIFFICULTIES LONDON 00002525 001.2 OF 002 

Classified By: PolMinCouns Gregory L. Berry, reasons 1.4 b, d

¶1. (C/NF) Summary and comment. PM Gordon Brown announced October 3 a new cabinet line up designed to deal with the economic challenges facing Britain, including the rise in oil and food prices. The PM also announced the formation of a new National Economic Council, which will meet twice a week to focus on Britain's economic problems. Brown's appointment of EU Commissioner Peter Mandelson as Secretary for Business, Enterprise and Regulatory Reform was the major surprise of the reshuffle; Mandelson resigned twice from cabinet positions under Tony Blair, and his relations with Gordon Brown have been described as "poisonous." The other major change in the reshuffle is Des Browne, who stepped down as Secretary for Defence and Secretary for Scotland. The reason behind Browne's ouster is unclear, but one Cabinet office official told us Browne may return to the cabinet in another position at some point. In focusing so heavily on the economy in his reshuffle, Brown has reinforced his image as an experienced economist that the British public can rely on in times of crisis. The fact that he was willing to bring Mandelson back into the cabinet is, at least for now, being represented as a show of his willingness to put his personal feelings aside for the good of the country. End summary and comment. 

Who's Staying -------------

¶2. (SBU) Most of the cabinet stays put, including Chancellor Alistair Darling, Foreign Secretary David Miliband, Home Secretary Jacqui Smith, Justice Secretary Jack Straw, Children's Secretary Ed Balls, Secretary for International Development Douglas Alexander, and Environment Secretary Hilary Benn.

 Who's In --------

¶3. (SBU) Below are the major new faces in the cabinet: -- EU Commissioner Peter Mandelson takes over from John Hutton as Secretary of State for Business, Enterprise, and Regulatory Reform. This is the biggest surprise of the reshuffle: Mandelson resigned twice from cabinet positions under Tony Blair, and his relations with Gordon Brown have been described as "poisonous." Nonetheless, he is unquestionably a heavy hitter on the economy. In announcing Mandelson's appointment, Brown said Mandelson has "invaluable experience." The British business community has overwhelmingly applauded Mandelson's return, while several union leaders have raised concerns about Mandelson's perceived too-close ties to business. -- Margaret Beckett returns to the cabinet as Housing Minister. Beckett lost her cabinet position in July 2007, when David Miliband replaced her as Foreign Secretary. Although Housing Minister is not a cabinet-level position, Beckett will have the right to attend cabinet meetings. -- Deputy Whip Nick Brown succeeds Geoff Hoon as Chief Whip, even though some Blairites, who believe Nick Brown played a role in undermining Tony Blair, briefed the press anonymously that they opposed this appointment. -- Baroness Royall of Blaisdon replaces Baroness Ashton as Leader of the House of Lords. 

Who's Out ---------

¶4. (SBU) Three major cabinet members have lost their jobs: -- Defense Secretary Des Browne: The reason for Browne's ouster is unclear: he is well-liked by his Cabinet colleagues and within the MOD, and rumors of health problems appear to be just that. When Gordon Brown asked Browne to step down as Defence Secretary, he reportedly offered that Browne keep his portfolio as Secretary for Scottish Affairs and take over the Northern Ireland and Wales portfolio as well. Browne decided to resign from the cabinet altogether. -- Transport Secretary Ruth Kelly: As previously reported, Kelly is leaving the Cabinet to spend more time with her family, which includes four children under the age of

12.Kelly announced today she will not seek reelection when her current term as MP comes to an end. LONDON 00002525 002.2 OF 002 -- Lord Digby Jones: Lord Jones announced October 2 that he would leave his position as Trade Minister, emphasizing that he always meant to leave at the first major reshuffle and that his leaving was not a reflection on Gordon Brown's premiership.

 Who's Moved -----------

¶5. (SBU) Below are the some of the major changes among existing cabinet members: -- Leader of the House of Lords Baroness Ashton takes over from Peter Mandelson as EU Commissioner. Although Geoff Hoon had been the odds-on favorite for the job, he would have had to resign as an MP to take the job, leading to a by-election that Labour can ill afford to lose. Brown gets around this by appointing Ashton, a life peer, to the position. -- Cabinet Office Minister Ed Miliband becomes Secretary for Energy and Climate Change (a new department). -- Chief Whip Geoff Hoon takes over from Ruth Kelly as Transport Secretary. -- Business Secretary John Hutton replaces Des Browne as Secretary of Defence -- FCO Minister for Europe Jim Murphy becomes Secretary for Scotland. This is seen as a reward for his work on the Lisbon Treaty. -- Housing Minister Caroline Flint replaces Murphy as FCO Minister for Europe. -- Steven Carter, Director of Communications at No. 10, becomes Minister for Communications, Technology and Broadcasting in the House of Lords.

¶6. (C/NF) Although this was not announced publicly, a Labour insider tells us that New York Post Editor David Yelland is being brought in to No. 10 as a chief spin doctor. Visit London's Classified Website: XXXXXXXXXXXX
LeBaron