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Derek Draper, a former Mandelson aide, argues that his return will be good for Labour
In a morning of promotions, demotions and departmental restructuring, the announcement that Peter Mandelson has been welcomed back to the front line of Government by Gordon Brown was the most unexpected news from the Prime Minister's first Cabinet reshuffle.
* Why Mandelson's return to government could be good news for business - Click here to read Peter MacMahon's blog *Details of the new ministerial line-up were expected to be officially confirmed by No 10 ahead of a 4.15pm Downing Street press conference by Mr Brown and Chancellor Alistair Darling.
In the most striking move, Mr Mandelson – who was twice forced to resign from the Government under a cloud – becomes Business and Enterprise Secretary.
Arriving today in Downing Street, Mr Mandelson – who leaves his job as Britain's EU Commissioner to take up the post – said it was a "great challenge and a great opportunity".
"Our economy, like every other, is facing a very hard challenge as a result of the global financial crisis. In a sense it's all hands on deck," he told reporters.
Asked about his relations with the Prime Minister, with whom he had a long-running feud after backing Tony Blair over him for the Labour leadership, Mr Mandelson said: "I get on with him fine, thank you very much. I think he is doing an exceptionally good job in what are very, very challenging conditions for our country."
He went on: "Of course we have had our ups and downs but we have also known each other for over 20 years and originally we worked very well together and I am very proud to have been invited to serve in his Government – it's not what I was seeking and it's not what I was expecting but nonetheless it is a great opportunity and a great challenge."
Mr Mandelson takes over from John Hutton, who was said to be heading for Defence where he will be replacing Des Browne who is expected to leave the Government.
In other moves, Chief Whip Geoff Hoon was said to be going to Transport, taking over from Ruth Kelly who is standing down to spend more time with her young family.
He is likely to be replaced by Deputy Chief Whip Nick Brown, one of the Prime Minister's closest political allies.
The Leader of the Lords, Baroness Ashton of Upholland, is to replace Mr Mandelson in Brussels.
As a peer, her appointment would avoid the need for a potentially difficult by-election if a sitting MP had been chosen for the post.
Former foreign secretary Margaret Beckett was also said to be making an unexpected return to the Government, although it was not immediately clear in what capacity.
Cabinet Office minister Ed Miliband, another key ally of Mr Brown, was being tipped to head a newly created department covering energy – currently part of the Business Department – and climate change, which is the responsibility of the Department of Environment.
However, the big surprise is the return of Mr Mandelson.
It marks the end of a feud with Mr Brown dating back more than a decade to when Mr Mandelson supported Tony Blair to become Labour leader following the death of John Smith.
The full article contains 542 words and appears in The Scotsman newspaper.
