Whitehall shake-up sidelines Prescott

John Prescott, the Deputy Prime Minister, appeared to have been sidelined last night in a Whitehall shake-up aimed at driving up standards in public services.

Tony Blair announced the creation of three new units as part of the long-promised overhaul of the Downing Street and Cabinet Office machine.

Michael Barber, director of standards and effectiveness at the Department of Education and Skills, will head the Delivery Unit.

It will focus on improvements in health, education, crime-reduction and transport.

When Mr Prescott was switched to the Cabinet Office after the election, the Prime Minister indicated he would have "full authority ... in overseeing the delivery of the manifesto pledges". But Downing Street announced Mr Barber would work day-to-day with Lord Macdonald, the Cabinet Office Minister, and report to the Prime Minister.

Mr Blair's official spokesman insisted Mr Prescott would play an "important role in this process".

Wendy Thomson, director of the inspection service at the Audit Commission, is head of the new office of Public Services Reform. It will report to Mr Blair "on how the Government's commitment to radical reform of the Civil Service and public services can be taken forward".

Geoff Mulgan, director of the Performance and Innovation Unit, becomes head of a new Forward Strategy Unit, which will look for fresh policy ideas.

The Prime Minister's spokesman said the changes would raise the taxpayers' salary bill for Downing Street.