BT named Patricia Hewitt, the former Health Secretary, as its new senior independent director yesterday.

She will play a central role in rebuilding the confidence of shareholders, who have expressed concerns about the telecom group's ballooning pension fund deficit, the fate of the dividend and disastrous losses at BT’s Global Services IT consultancy division. The Government is one of the unit’s biggest customers, having awarded it several contracts to provide IT services to the NHS in 2003 and 2004.

Ms Hewitt, who ran the Department of Health between 2005 and 2007, will replace Maarten van den Bergh, who steps down at BT’s annual meeting on July 15. Other BT non-executive directors who could have taken the senior job include Eric Daniels, the chief executive of Lloyds Banking Group, and Phil Hodkinson, the former finance director at HBOS.

BT has paid Ms Hewitt £75,000 for the year to the end of March. She is likely to earn about £110,000 a year when she takes on her new responsibilities. Ms Hewitt, a BT director for 15 months, is the second high-profile name to be linked with senior BT responsibility in less than a week. On Wednesday Tony Ball, the former chief executive of BSkyB, joined BT as a non-executive director. Mr Ball was tipped as the next chief executive of ITV but his new role at BT cast doubt on whether he would get the job at the commercial broadcaster.

Ms Hewitt, 60, was Secretary of State at the former Department for Trade and Industry and Minister for Women between 2001 and 2005. She remains a senior adviser to Cinven, the private equity group, and a senior consultant to Alliance Boots, the privately owned chemists chain.

The Australian born Ms Hewitt stepped back from frontline politics when Gordon Brown replaced Tony Blair as Prime Minister and she will retire as MP for Leicester West at the next general election. Ms Hewitt was a director of European research at Andersen Consulting, now part of Accenture, which until two years ago had the contract to upgrade the NHS’s computer system.

Ian Livingston, BT’s chief executive, is under pressure from leading shareholder to turn the group around. Several have said that they will consider agitating for his departure if things do not improve in the next 12 months. BT raised concerns among some of its shareholders by agreeing a £2.85 million pay package for Mr Livingston, despite the group’s poor performance.

Accounting problems at Global Services forced the division to record a £2.04 billion operating loss last year and tipped the group into an annual pre-tax loss of £134 million. BT more than halved the dividend to 6.5p and unveiled plans to cut 15,000 jobs over the next 12 months, having axed a similar number last year. It also said that it would inject a further £280 million a year into its pension fund to help to plug a £4 billion deficit.

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