Brown ally is put in charge of benefit reforms

Andrew Smith was on holiday in Italy with his family when the telephone rang. It was Number 10 Downing Street offering him promotion and the biggest spending brief in Whitehall.

The former Chief Secretary to the Treasury will break off preparations for the summer's three-year spending review to start work behind his desk at the Department for Work and Pensions today after ending his holiday early.

Mr Smith's task as Secretary of State will be to drive forward controversial reforms linking benefits with social policy. The changes were first floated by Tony Blair last month when he suggested cutting child benefits paid to the parents of persistent truants and slicing housing benefits from "neighbours from hell".

For Mr Smith, one of Gordon Brown's closest allies in the Government, the Work and Pensions brief represents his third appointment to a Government post at the heart of New Labour's welfare policy.

He is not one of Westminster's most colourful political figures but is regarded as a highly able minister.

However, he is still living down his now infamous speech to Labour's 1996 party conference when, as the party's Transport spokesman, he insisted that air traffic control would not be privatised. He said "our air is not for sale", only to see the new Government's policy change soon after.

The former sociology tutor, who is married with one son, won his Oxford East seat in the 1987 election aged 36, defeating Steven Norris, the former Transport minister. Mr Smith, who lives in a former council house on Oxford's notorious Blackbird Leys estate, spent 10 years cultivating support in the seat after graduating from Oxford University, finally being selected as the candidate at 31.

Yesterday Downing Street praised Mr Smith, 51, for his work on the New Deal for the Unemployed and insisted that reform of welfare was "vital" to Labour's second term.

He will also have to deal with the growing crisis in personal and company pensions, with a major review of pensions policy due to be completed in July.

But he comes to the job with a wealth of knowledge about the benefits system from his time at employment and his work on developing tax credits at the Treasury. He also enjoys the confidence of colleagues who have been impressed by his ability to tackle a series of complex briefs and keep the lid on major programmes of reform.

Mr Smith said: "I am thrilled to have been given this job. This is an exciting time for the department as it creates a 21st century service.

"The job is also about helping people achieve decent incomes for their retirement and I look forward to the challenge of building on the foundation already in place to encourage people to save more for their old age."