Andy Burnham enters Downing Street today with his first industry revolt already under way, after reports that his government could abolish the department responsible for science, technology and the funding streams thousands of growing firms depend on.

According to the Financial Times, officials have been asked to draw up plans to close the Department for Science, Innovation and Technology (DSIT) and move its responsibilities to the Department for Business and Trade and the Department for Culture, Media and Sport.

A Labour source told the FT that “it needs to be mainstreamed and there is the sense that DSIT has not been firing on all cylinders”. The sector’s response has been rather less diplomatic.

For business owners, the stakes are practical rather than presentational. DSIT sponsors UKRI, the research funding body that sits above Innovate UK grants, as well as the Government Digital Service. Any reorganisation would put the machinery behind those programmes into flux just as firms are being urged to adopt AI and invest in innovation.

That concern sits at the heart of a letter sent to the new prime minister by Julian Harris, CEO at Tech UK, and Dom Hallas, executive director at Startup Coalition, who called the proposal “the wrong change at the wrong time”.

“DSIT works because it brings researchers, AI practitioners, innovators and policymakers together in one department – a single front door that gives the tech sector clarity, pace and a government partner that understands technology and champions the sector in the Cabinet,” they wrote.

“Breaking up the work of DSIT endeavours such as the world-leading AI Safety Institute, the Sovereign AI fund, GDS and UKRI would slow momentum at a time when pace is essential for both the growth of the economy and our standing on the global stage. It also sends a terrible signal to a sector that is growing at 10% a year. This is clear from the immediate reaction of the sector to these reports thus far.

“We are supportive of your vision to bring growth to every postcode in Britain, and we want you to be able to leverage the tech sector to deliver on your ambitions to change our economy and society for the better. To do so, we should use this moment to strengthen tech leadership at the heart of government, not dismantle it.”

Matt Clifford, who served as Keir Starmer’s AI opportunities adviser, was blunter still. “This would be a big mistake,” he wrote on X. “Right now is a critical moment for tech as an economic and national security issue. Tying up our most senior science and tech officials in a reorg wastes time and energy that’s desperately needed for the actual substance.”

Labour MP Peter Fortune agreed, responding: “DSIT does need focus but it is vital we promote our excellent tech sector if we are going to encourage growth and innovation. Our AI sector (thanks to Matt for everything he has done) is amazing – but it could be even better. We need to signal our determination to lead.”

Not every founder is manning the barricades. Commenting on LinkedIn, Atif Syed, founder of Wootzano, said: “It’s definitely a bold move, but let’s be honest – DSIT is in need of a serious overhaul to radically support tech businesses on the ground. I look forward to seeing what will replace it and how the new administration intends to back our sector.”

The row lands at an awkward moment for a prime minister who has promised a “pro-business” government and has already signalled movement on tax and business rates for high street firms. Whether he can win over Britain’s entrepreneurs may depend in part on how he handles this first test.

His Cabinet is due to be announced imminently. The FT reported that Jonathan Reynolds could return as business secretary, the role he handed to Peter Kyle last autumn, while Shabana Mahmood and Ed Miliband are among those tipped for chancellor. Despite the threat to DSIT, Burnham is thought to be planning to appoint an AI minister at Cabinet level.

For SMEs, the message from the sector’s leaders is simple: whatever the Whitehall wiring diagram ends up looking like, firms need clarity on who champions technology in government before grants, standards and AI policy grind through a year of reorganisation.