Page last updated at 13:45 GMT, Wednesday, 14 January 2009

Banker becomes business minister

Mervyn Davies and Lord Mandelson
Lord Mandelson welcomed Mr Davies to his new role

The chairman of Standard Chartered Bank Mervyn Davies has been made a life peer and trade minister by Gordon Brown.

The BBC's Nick Robinson says he will effectively replace the ex-head of the Confederation of British Industry Digby Jones, who left in the last reshuffle.

Mr Davies will be seen as adding bank experience to the government at a time of continuing economic difficulties.

Meanwhile Tory former cabinet minister - now peer- Gillian Shephard has joined a government panel on social mobility.

Baroness Shephard, who was education secretary in John Major's government, is on the Panel on Fair Access to Professions, chaired by Alan Milburn, whose members also include ITV chairman Michael Grade and equalities commission chairman Trevor Phillips.

Unpaid role

When Mr Brown became prime minister he appointed several non-Labour figures to government positions, calling for a "government of all the talents".

But Lord Jones's appointment to a ministerial position proved controversial, particularly as he was not a Labour Party member and he expressed concerns about government plans to tax "non domiciled" foreigners in Britain.

The prime minister certainly likes using appointments to the House of Lords doesn't he?
Peter Luff
Business committee chairman

Business Secretary Lord Mandelson said Mr Davies, who had already been advising the government as a Business Council for Britain member, would join the Labour Party and would not be paid in his new role.

A Standard Chartered spokesman said Mr Davies had resigned with effect from Wednesday and he will now be a minister in the Department for Business, Enterprise and Regulatory Reform.

Welcoming him to the new role, Lord Mandelson said the government would value his banking experience in helping deal with the current crisis, as well as promoting trade and investment.

Lord Davies will be one of seven ministers in the Business, Enterprise and Regulatory Reform (BERR) department - another three of whom are peers - Shriti Vadera, Stephen Carter and business secretary Lord Mandelson.

'Best person'

Lord Mandelson defended the appointment of another minister from the Lords while being grilled by the Commons business committee.

Labour MP Lindsay Hoyle asked if there could be another full-time minister based in the Commons "just to get a bit of balance back", in the interests of accountability and scrutiny.

And chairman Peter Luff, a Conservative MP, added: "The prime minister certainly likes using appointments to the House of Lords doesn't he?"

The business secretary responded: "He likes getting the best person in harness to serve the country and I think that all these ministers are doing precisely that - but not to the exclusion of the Commons."

He said he recognised concerns about so many ministers being in the Lords rather than Commons but said he hoped ministers would keep up their "level of responsiveness" to the Commons and told the committee to keep them in check if they did not.

And Employment Minister Tony McNulty told the BBC this latest appointment showed Gordon Brown was "not shy" of drawing on skills and expertise from specific areas where needed.

It had previously been thought Mr Davies, who was appointed CBE in 2002 for services to the financial sector, might become chairman of the Royal Bank of Scotland.

His appointment comes as the government outlines a plan to guarantee up to 20bn of loans to small businesses.

In October, three major British banks - RBS, HBOS and Lloyds TSB - were bailed out with 37bn package aimed at helping banks shore up their balance books and make affordable funding available.

But banks have drawn in their lending - business leaders have said a lack of available finance played a part in the downturn of the UK economy.

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