Mandelson’s Fifth Column

The British government’s business department exists to undermine democracy.

By George Monbiot. Published in the Guardian, 4th May 2009.

There isn’t much to be said for Nicholas Ridley, the most desiccated market fundamentalist in Mrs Thatcher’s cabinet, but at least he was aware of the government’s contradictions. When he took over the Department of Trade and Industry in 1989 he asked, “What is the DTI for? I’ve got bugger all to do, and thousands of staff to help me do it.”(1) Thatcher’s government had spent ten years preaching that people should stand on their own two feet and that the market should be free from meddling by the state. But it ran a large department whose purpose was to nanny free enterprise.

The name has changed, to Business, Enterprise and Regulatory Reform, but the department’s policies have not. I think, however, that I have an answer to Mr Ridley’s question. BERR, now run by Lord Mandelson, functions as a fifth column within government, working for corporations to undermine democracy and the public interest. Since he became business secretary in October, Mandelson has been quietly building a bonfire of the measures that protect us from predatory corporate behaviour.

You don’t have to look very far to see where BERR’s interests lie. Most government departments contain either one unelected minister or none. Two departments (the Foreign Office and Innovation, Universities and Skills) each accommodate two unelected ministers. But BERR has four(2). It is the only department of government in which unelected ministers outnumber members of parliament.

Until he became minister for communications in BERR, Lord Carter was the chief executive of Brunswick Group, a big corporate PR firm whose clients include British Airways, Barclays, Unilever, Rolls Royce and BT(3). Lord Davies, the minister for trade and investment, was chairman of Standard Chartered and a non-executive director of Tesco(4). Until October, the trade minister was Digby Jones, formerly the director-general of the Confederation of British Industry. Lord Jones refused to join the Labour Party, or to say which party he would support at the next election(5).

As for Lord Mandelson, who was twice obliged to resign from the government and who previously ranked second on Mr Brown’s execution list, the only convincing explanation for his appointment is that business demanded it. Mandelson, who once avowed that “we are intensely relaxed about people getting filthy rich”(6) was partly responsible, both in Blair’s government and as European trade commissioner, for promoting the culture of deregulation that catalysed the economic crisis. Yet even today he boasts about “a decade of reform that has given the UK the most open and flexible product and labour markets in the world.”(7)

These unelected ministers appear to have formed their own lobby group within government, to prevent those upstart parliamentarians from interfering with the democratic rights of business. They are responsible for some of the policies which now threaten to tear the Labour party apart.

Mandelson is the promoter of Labour’s crazy scheme to part-privatise Royal Mail. Wildly unpopular with both the public and Labour MPs, it breaks a manifesto commitment and could provoke a parliamentary rebellion big enough to unseat the prime minister.

But most of his assaults on democracy have achieved much less attention. Last week he helped to neuter the EU’s working time directive by ensuring that European companies will still be able to push their employees into working for more than 48 hours a week. BERR issued a gleeful press release bragging that talks on the directive “have broken down without agreement being reached” as a result of government filibusters(8). Mandelson’s attempt to prevent companies from exploiting their female workers was less successful. The equality bill sought to audit large companies to ensure that they were not paying women less than men for the same jobs. Mandelson insisted that the audits should be voluntary, and that the policy should first be approved by the Confederation of British Industry(9), which often seems to be the real government of this country.

Last month, though it passed almost unnoticed, BERR deregulated the news distribution industry(10). This is a gift to the supermarkets, but a disaster for both small newsagents and freedom of speech. The companies which distribute newspapers and magazines to the shops had guaranteed, in return for exclusive delivery rights, to supply whatever stock a shop requests, however small the order might be. This allowed small newsagents to survive, and protected publishers from censorship by powerful retailers(11). (In the United States, supermarkets often dictate the contents of the magazines they sell). Tesco has been trying to break the distribution agreement since 2000(12,13); now Mandelson has delivered.

A few days ago, the Guardian revealed that BERR has set up a new unit, whose purpose appears to be to lobby another department on behalf of business(14). The business department relinquished its responsibility for energy policy only six months ago. Now it has created an Energy and Climate Change Unit(15), whose brief and title look suspiciously similar to Ed Miliband’s Department for Energy and Climate Change. While Miliband gets the environment, Mandelson appears to be doing everything in his power to trash it. Over the past year he has secured £2.6bn in subsidies, loans and guarantees for the motor industry. He boasts that this is “effectively the same as underwriting the entire vehicle sector’s research and development and capital expenditure for a year.”(16) He is widely blamed for the decision to build a third runway at Heathrow.

Last month BERR launched a consultation about the European Union’s attempts to strengthen its directives on waste electrical equipment and hazardous substances. The EU is trying to cut the amount of cyberjunk going into landfill and to prevent companies from sending dead computers overseas to be dissolved in acid by child labourers. In drafting the consultation document, Mandelson’s department conferred with ten industry bodies but no trade unions or environment or development groups(17).

In the strategic plan it released last month, BERR announced that it wants the government to “match … the influence it exercises in the economy to the strategic needs of business.”(18) It also wants to second even more people from the private sector into government(19), which is already infested with people whose public duties conflict with their commercial interests. It revealed that, as of last month, “grant applicants to all Research Councils will have to set out the economic impact of their proposed research”(20). This appears to mark the end of the pursuit of knowledge for its own sake: all research, whether funded by the state or corporations, must now consider the needs of business.

Business is perfectly capable of making its own representations. It does not require a cell inside government to ensure that its voice is heard; it should compete, like the rest of us, for the attention of ministers. Mandelson’s department has one legitimate function: simplifying and clarifying regulations. The others – the trade missions, the lobbying, the feather-bedding – achieve the rare distinction of undermining both social democracy and free markets.

BERR now has a budget of £1.92 billion, £460m bigger than it was last year(21). The government is looking for savings. It should close this department down.


1. Quoted by Jean Eaglesham, 9th April 2007. Whitehall shake-up recycles DTI roles. Financial Times.

2. The fourth is Baroness Vadera.


4. Amy Wilson, 1st October 2008. Tesco breaks governance standard. Daily Telegraph.

5. Deborah Summers, 3rd October 2008. Profile: Lord (Digby) Jones. The Guardian.

6. eg Tim Adams, 21st December 2008. The comeback kid: Peter Mandelson. The Observer.

7. Lord Mandelson, 25th March 2009. Britain and Brazil. Speech to the FIESP Event, Sao Paulo, Brazil.

8. BERR, 28th April 2009. UK protects working time opt out.

9. Gaby Hinsliff, 26th April 2009. Peter Mandelson sidelined as cabinet shifts to left. The Observer.

10. BERR, 20th April 2009. Regulation to be removed from newspaper distribution arrangements.


12. Clayton Hirst, 25th June 2000. Publishers hit out at ‘bully’ Tesco. The Independent on Sunday.

13. Jojo Moyes, 1st August 2000. Do it our way – or get off the shelf. The Independent.

14. Tim Webb, 27th April 2009. BERR takes on lobbying role. The Guardian.


16. Lord Mandelson, 5th February 2009. Speech to the CBI manufacturing dinner.

17. BERR, April 2009. Government consultation on European Commission proposals to recast the EC Directives on Waste Electrical and Electronic Equipment (WEEE) and on the Restriction of the use of certain Hazardous Substances in electrical and electronic equipment (RoHS).

18. BERR, April 2009. New Industry, New Jobs, para 1.17.

19. ibid, para 4.25.

20. ibid, para 3.12.

21. BERR, pers comm.