#TradeTuesday - The new Department for Business and Trade: Happily, ever after?

By Sabine Tyldesley

This Valentine’s Day business should be feeling the love from government. Last week it just went and did the only thing that made sense: to merge the Department for International Trade with the Department for Business… leaving behind the parts of BEIS which focussed on energy. 

The Department for Business and Trade (DBT) […no we checked, it’s sadly not BAT] is meant to be “a single, coherent voice for business inside government, focused on growing the economy with better regulation, new trade deals abroad, and a renewed culture of enterprise at home.” After three years of businesses feeling torn about who to engage with when faced with business regulatory challenges alongside supply chain, trading and investment challenges, the two remits now sit together in one department. 

A match made in heaven. But will it work?

Pundits decried the reorganisation as rearranging the deck-chairs, but there is something to be said for reserving judgement for once Secretary of State Kemi Badenoch has had a stab at making this work. It’s no mean feat, having first come unscathed out of the last leadership contest, secure a Cabinet seat, get her role as Trade Chief and then not only survive but secure a de facto promotion by swallowing the Business brief too in this first reshuffle. 

She describes herself as “problem-solver-in-chief”, encouraging businesses to come to her team with barriers they face: “It’s too easy for trade to become stuck and blocked. For well-meaning rules to become needless regulation. But I can’t solve your problems if I don’t know what they are. I need to know which keys are sticking, which levers need pulling, which wheels need greasing” she said a few weeks before the new restructure was announced. 

This invitation will not go unanswered. 

Academic analysis suggested there needed to be greater thought given to how trade and industrial policy could actually be used to improve export performance, rather than treating the signing of new trade deals as the ultimate goal. Badenoch herself agrees with this, and said as much when she told MPs “I would like us to move away from DIT being seen as the 'Department for Free-Trade Agreements”.

Business organisations welcomed this move but asked for the department to focus more on business investment and warned of rushing work on the Retained EU Law Bill. A fair challenge after latest reporting showed that Brexit wiped out £29bn in business investment and made UK productivity slowdowns worse, according to a Bank of England interest rate setter.

Small businesses made the plea that changes had to be “felt on the ground” with a focus on reform to domestic regulation to reduce small business paperwork, among other things. 

These requests will likely be the key to showing businesses some love, after a period of Brexit turmoil and uncertainty and will help unblock exports towards Badenoch’s £1tn annual export target. This is currently projected to be hit 15 years late (in 2035, after David Cameron first made the pledge in 2012 that he would hit the mark by 2020) based on current trends. 

So instead of chocolates and roses, Badenoch will need to come back with not just more deals (last week she visited Mexico to sort deal 2.0 after signing a deal with Italy). She will need to present a proverbial ring to UK business by committing to a good relationship: pro-enterprise regulatory system, competitive markets, Brexit freedoms without creating parallel systems to key trading geographies…. that’s how the new department will win the hearts of industry.