Lord Mandelson has defended the enlargement of his business department, which some have criticised as expensive tampering with the machinery of government.

The new Department for Business, Innovation and Skills (BIS) was announced on Friday as part of the prime minister’s high-profile cabinet reshuffle, with the Department for Business, Enterprise and Regulatory Reform (BERR) merged with the Department for Innovation, Universities and Skills (DIUS).

The business secretary told an audience at London’s Science Museum that the new department would help integrate the enterprise, research and further education agendas at a time when the world economy was being transformed.

But speaking to Civil Service Network on Monday, Commons public administration committee chair Tony Wright said such changes needed to be subject to “consultation and parliamentary approval”, while FDA union general secretary Jonathan Baume described the abolition of the two-year-old Department for Innovation, Universities and Skills (DIUS) as a “farce”.

Mandelson said the merging of the departments would prove crucial in the years ahead. “As you know, at the reshuffle we created the new Department for Business, Innovation and Skills. Why do that? Why bring responsibility for business policy together with science, higher and further education, skills and innovation policy?” Mandelson said.

“The answer is because a new world is emerging; one on the edge of a new industrial revolution that’s driven by new technologies, and the world’s shift to low-carbon, and where global competition will be even tougher.”

Yesterday in the Lords, Mandelson, who has also gained the honorific title of First Secretary of State, told peers that the new department would “help the economy come through the recession stronger and more competitive and enable it to grow in the future”.