Brown hands 'poisoned chalice' to rival Johnson

Gordon Brown today handed potential rival Alan Johnson the post of Home Secretary as he began his make-or-break reshuffle – which also saw another cabinet minister quit.

Mr Johnson was given what could be the poisoned chalice of one of the most controversial jobs in Whitehall, as Defence Secretary John Hutton said he was leaving the government for family reasons.

In a headline-grabbing initiative it was also understood that businessman Alan Sugar will receive a peerage as he takes on a high-profile role boosting enterprise.

The Prime Minister began shuffling his cabinet pack in the wake of last night’s shock resignation as Work and Pensions Secretary of James Purnell, who urged the premier to quit.

Chancellor Alistair Darling will remain in his post despite speculation that Mr Brown wanted to shift him elsewhere. Sources also indicated that Jack Straw will stay as Justice Secretary.

Foreign Secretary David Miliband is expected to remain in his post. Peter Mandelson is expected to stay on as Business Secretary, and have responsibility for science added to his portfolio.

Mr Miliband said of Mr Purnell’s resignation as Work and Pensions Secretary: “He is obviously a big and serious person and I think it is a loss to government. However, I don’t share the judgment that he made.

“I have a different position, I think the voices that we need to listen to are the voices of people who depend on a strong and effective and progressive Labour government.

“I think we need to listen to the voices of people who are going out to work today, who are looking after their kids, who are worried about care for their parents.

“So today is a day for working not resigning and that is what I am going to do.”

Mr Hutton was one of Tony Blair’s closest allies, and was known to have private reservations about Mr Brown becoming leader.

However, he has been loyal since becoming a surprise inclusion in Mr Brown’s first cabinet in 2007. He was moved to defence last October.

The Prime Minister’s supporters do not now expect Mr Hutton to be a vocal critic from the backbenches.

There was speculation that Northern Ireland Secretary Shaun Woodward could replace Mr Hutton at defence, but there was no confirmation of the move.

Universities and Skills Secretary John Denham will take over at Communities and Local Government in the wake of Hazel Blears' resignation, according to sources.

Much of Mr Denham’s former portfolio is expected to be taken by Mandelson’s Business Department.

Mr Denham is understood to have “asked for and been given” the CLG brief, in which he has a “long-term interest” as a former councillor.

David Frost, director general of the British Chambers of Commerce said: ``It will be interesting to see how the 'you're fired' mentality goes down in government and the civil service in particular.

“Sir Alan has, however, encouraged young people to think about business in a way they have not before. We need a new spirit of enterprise in this country and if he can drive change in government to deliver policies that will stimulate this he will have achieved something valuable.”

Smiling, Labour's deputy leader Harriet Harman entered Number 10 by the front door for the second time today shortly after noon.

She did not respond to reporters’ questions.