By Elizabeth Piper, Andrew MacAskill and Alistair Smout
LONDON (Reuters) -British Prime Minister Rishi Sunak reshuffled his cabinet on Tuesday, breaking up two departments to better suit his pledges to spur the economy, reduce energy prices and turn around his party's fortunes before an election expected next year.
Sunak created a new energy security and net zero department, led by former business minister Grant Shapps, and three other departments, with one focusing on science and innovation, a personal passion for the British leader.
The former finance minister and multi-millionaire, who once worked for a hedge fund, is trying to steer the economy through a prolonged period of double-digit inflation and stagnation, a situation worsened by the soaring cost of energy.
He is also under pressure to try to prove his belief that Britain can reap the benefits of its departure from the European Union by developing new trade ties with international partners.
"The government needs to reflect the priorities of the British people and be designed to deliver for them," Sunak said on Twitter. "These changes will focus teams on the issues that will build a better future for our children and grandchildren."
He hailed the standalone energy and net zero ministry as one that would help Britain gain greater energy security and start producing cheaper, cleaner energy to avoid the kind of price hikes people had to pay after Russia's invasion of Ukraine.
His spokesperson said the changes, which were welcomed and criticised in equal measure by business groups and green energy supporters, might not offer a "silver bullet" to all Britain's ills, but would help Sunak try to deliver on his agenda.
In the changes, trade Secretary Kemi Badenoch was given an expanded role including business and trade.
Former culture minister Michelle Donelan was appointed to run the department for science, innovation and technology, while former housing minister Lucy Frazer took on the new role for culture, media and sport.
Greg Hands, a former trade minister and one-time party enforcer for the Conservatives, was appointed party chair.
'SHUFFLING DECKCHAIRS'
The timing surprised some in Sunak's party.
But after he fired his party chairman over his tax affairs and with an investigation into bullying allegations against his deputy prime minister Dominic Raab ongoing, several lawmakers said Sunak might be seizing a chance to stamp his mark.
Raab denies the allegations and Sunak told reporters he would wait for the end of the investigation before making a decision on his deputy premier.
"When I'm presented with conclusive, independent findings that someone in my government has not acted with the integrity or standards that I would expect of them, I won't hesitate to take swift and decisive action," he said.
Business leaders largely welcomed the changes, with Confederation of British Industry's (CBI) Director-General Tony Danker saying on Twitter: "It's a clear statement of intent and a couple of big bets for growth. Though obviously (there is) quite a bit of bureaucracy to mitigate against."
But some climate campaigners, while welcoming the creation of an energy and net zero department, said they feared it could become too distant from other ministries such as business.
Sunak's appointment of Hands as party chair finally filled a position made ever more important before the next national election expected in 2024, after Nadhim Zahawi was sacked nine days ago over his tax affairs.
It was largely welcomed by a party which is deeply divided and increasingly assertive after ousting two prime ministers last year over scandal and economic chaos.
Since entering Downing Street in October, Sunak has been under pressure to set out his stall, with some in his party questioning whether he was overly managerial and lacked an overriding ideology or vision for Britain.
He has so far failed to reduce the commanding lead in opinion polls held by the opposition Labour Party, which is increasingly presenting itself as Britain's next government.
Sunak promised in January to tackle Britain's most serious problems, from cutting inflation to fixing the National Health Service (NHS) and reducing illegal migration, aiming to convince his lawmakers he can lead them into the next election.
He has also passionately espoused the need for Britain to become the "next Silicon valley", pledging in January to increase public funding in research and development to 20 billion pounds ($24.06 billion).
But Tim Bale, a professor of politics at Queen Mary University in London, said even if some investors welcomed the move, he did not believe the departmental changes would make "a blind bit of difference to their fortunes at the next election".
"I am sure he will just get accused of shifting the deckchairs on the Titanic."