The appliance of science to a tough Treasury portfolio; THE MONDAY INTERVIEW; Angela Knight

The new Economic Secretary is the second woman with a chemistry qualification to rise rapidly through Tory ranks. She talked to Diane Coyle

Angela Knight has made a stellar ascent since her election to Parliament in 1992 as Conservative MP for Erewash in Yorkshire. Appointed Parliamentary Private Secretary to Kenneth Clarke just over a year ago, she was promoted to become Economic Secretary to the Treasury after John Major's leadership victory this summer.

This newcomer on the national scene has landed a portfolio of some of the Treasury's - and her party's - most challenging areas of policy: financial regulation, small business, funding of the Government's borrowing requirement and European Monetary Union, for starters.

Success in the bear pit of Sheffield Council politics is a clear signal of her toughness, but there is no doubt that her new task is demanding.

However, Mrs Knight is better qualified than most politicians for at least one of the Economic Secretary's beats. She ran her own chemical engineering firm for 15 years before entering Parliament. Like Mrs Thatcher, Mrs Knight trained as a chemist and went to work in industry straight from university. "I always wanted to go into industry from my early teens," Mrs Knight says. An engineering degree would have been more useful, she believes, but girls' schools in the 1960s did not send their pupils off to train as engineers.

Running her company was a good preparation for her subsequent career, she reckons. "I think it has given me a breadth of view on a whole range of issues, not just related to industry and science - when you have been in industry you do truly understand in a way you never can from the outside."

Mrs Knight is now playing a prominent role in the consultation with small businesses launched recently by the Prime Minister, an exercise curiously similar to Labour's bid to strengthen contacts with business. Today sees the first meeting of Mr Major's ministerial task-force. She identifies finance as the main problem that small firms face: "I have seen from the other side both the difficulties a company has in raising money and the various effects government had on industry through the 1970s."

The Economic Secretary has recently written to all the big clearing banks about the thorny issue of how they treat small business customers. "I have said to them: 'Can you look again perhaps at how you are dealing with small businesses. Are there ways in which the relationship could be better?' "

The puzzle about this latest drive is that numerous official reports over the decades have come to the conclusion that there is no systematic market failure in the provision of finance to small firms. Only last year the Bank of England looked at banks' relationships with small businesses. It found room for improvement in customer relations, but no basic problems with the provision of overdrafts and loans.

Mrs Knight accepts this. "There will always be a lot of dashed dreams, where a great idea does not translate properly into a business plan," she says.

However, she argues that the Government can help by giving small firms access to professional financial planning so they understand how to go about financing their expansion. "These are not ways of bucking the market. They are ways of making the market work better, and I think we can do it."

The vehicles delivering these services to small firms will be the Business Links, the one-stop advice centres currently being opened across the country. She has high hopes for the Business Links - her local office opened on Friday.

Although this is clearly a subject dear to her, the area that looms largest in Mrs Knight's job is financial regulation. She is continuing the massive spring-cleaning prompted by unfortunate episodes like the pensions mis- selling scandal and home income plans.

Mrs Knight does not dismiss out of hand the idea of radical regulatory changes - such as a switch from the current system of self-regulation by the industry to statutory regulation, increasingly favoured by the Commons Treasury and Civil Service Select Committee, for example. But she argues strongly that it would be impractical. There would, at the very least, be a long period of uncertainty and disruption.

What's more, it might not be possible to achieve an improved system. "There is no such thing as easy change. Anything that one puts through Parliament would end up as a compromise out the other side," she says. Mrs Knight's conclusion: "Getting the existing financial framework working properly is something that I see as a very high priority."

Rebuilding confidence in financial services is essential if this or any future government hopes to persuade the public to bear more of the burden of pensions, health care or long-term care through private schemes.

"Confidence is something that you lose quickly and gain slowly - I'm conscious of that," says Mrs Knight. "It is something for which there is no magic solution."

In the new Economic Secretary, however, the Chancellor seems to have found a particularly competent pair of hands in which to place this problem. Officials report that Mrs Knight is intelligent, efficient and down-to- earth.

The price exacted from her for her new prominence is time. Like any working mother, she regards her children - two young sons - as the highest priority of all; work comes second, relaxation and sleep last. "I will deal with the work I have to do after my children have gone to sleep, which will mean sometimes I'll be doing files late at night or in the early hours of the morning," she says.

Party politics aside, it is encouraging to know that the policy issues addressed in those files are being tackled by somebody who has passed two of the biggest managerial challenges of all - running a small business, and motherhood.