Peter Mandelson’s remark in Downing Street yesterday about “all hands on deck” at a time of hard challenges had a characteristic ambiguity. His return to the Cabinet is a response not only to the global economic turmoil, but also to Gordon Brown’s precarious position. The Prime Minister should now be secure at least until next June’s local and European elections.

The reshuffle has the linked themes of strengthening Mr Brown politically and the Government economically. Mr Mandelson’s return is meant to assist both. He is helping Mr Brown as much as he in turn is being given a wholly unexpected “third time lucky” return to high office.

An immediate threat to Mr Brown’s leadership disappeared last month as the financial crisis intensified. But clashes between some of Mr Brown’s allies and Blairite ministers left bruises that could have been worsened by a mishandled reshuffle.

Mr Mandelson is obviously a high-risk appointment. He is loathed by many Labour MPs and many in the media, and is hardly popular with voters but his decision to come back “on deck” reflects his and Tony Blair’s view that Mr Brown should be backed to prevent the destruction of new Labour. Key Blairite ministers remain in place and there is no prospect now of an early challenge to Mr Brown. The Mandelson move is balanced politically by the return as Chief Whip of Nick Brown, a fervent Brownite and enemy of the Blairites, who is seen as divisive by many Labour MPs.

The Prime Minister emphasised the creation of a stronger economic team: “serious people for serious times”. Mr Mandelson has been not only a highly regarded EU Trade Commissioner (at least outside France) but he was respected by business during his short spell as Trade and Industry Secretary a decade ago. Union leaders who have been pressing for the replacement of John Hutton have found themselves with a new Business Secretary who is even less congenial to them.

Other moves are also meant to reassure business: Lord Drayson, a respected ex-defence minister, as Science Minister; Lord Myners, with close knowledge of financial services, as City Minister, and of Stephen Carter, a former head of Ofcom, shifted from No 10 to be broadcasting minister.

But the new National Economic Council looks little more than a propaganda move. It is a revamped Cabinet committee, replacing the Economic Development Committee, with a similar agenda, although meeting more often and with a more high-powered membership and secretariat. The press notice emphasised that the Budget and PreBudget Report would continue to be handled by the Chancellor in the usual way, and financial stability issues would be addressed through existing tripartite arrangements.

There are questions: about what the energetic Jim Murphy will do all day in the redundant role of Scotland Secretary and about the point of yet another shake-up of Whitehall with the creation of the new Department of Energy and Climate Change. Overall, however, despite all the furore over Mr Mandelson, Mr Brown has strengthened his immediate political position.

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