Peter Mandelson’s return to the Cabinet, from his post as EU Commissioner for Trade, to replace John Hutton as Secretary for Business, was today welcomed by business groups today.

His chequered career in politics has already featured two high-profile resignations.

The first was in December 1998 when, as Secretary of State for Trade and Industry, he failed to declare a £373,000 loan from Geoffrey Robinson, a fellow Labour MP whose business dealings his department was investigating.

After rejoining the Cabinet 10 months later as Secretary of State for Northern Ireland, Mr Mandelson resigned again after calling a Home Office minister on behalf of Srichand Hinduja, an Indian businessman trying to become a British citizen. Mr Hinduja was under investigation by the Indian government at the time.

A subsequent inquiry found that Mr Mandelson had not acted improperly.

John Cridland, deputy director-general of the CBI, said: “John Hutton has succeeded in giving the new Department for Business a sense of mission and drive that was lacking at its predecessor, the DTI. In particular, he has taken decisive action to try to deliver energy security of supply in the future.

“The Department for Business must have a heavyweight political big hitter at the Cabinet table, and we are encouraged that Peter Mandelson is returning to this role.”

John Wright, chairman of the Federation of Small Businesses, said: “This shock return is no surprise to us, given Mr Mandelson’s previous tenure at the DTI and his current position as Britain’s European Commissioner for Trade.

“Mr Mandelson’s experience will mean that he can do away with the probationary period and get straight into the business of dealing with the current credit crunch.”

Martin Temple, chairman of the Engineering Employers Federation, said: “John Hutton was a good advocate fighting for business across Whitehall and it was important that they replaced him with a big hitter - which Mr Mandelson certainly is.

“His experience as EU Trade Commissioner, and having previously been at the old DTI, should be invaluable in ensuring that business continues to have a strong voice at the Cabinet table.”

David Frost, director general of the British Chambers of Commerce, said: “Peter Mandelson did a good job at the DTI and clearly understands business.

“His work in Europe and involvement in global trade discussions also mean that he knows where the UK fits within the international context. We look forward to working with him in these challenging economic times.”

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