CBI chief in line for Bank job

William Kay on what is likely to prove a potent double act with George
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The Independent Online
Eddie George and Howard Davies could be the most potent double act the Bank of England has seen for generations.

Coming from similar backgrounds - Mr George's father was a postman, Mr Davies' a pub estate manager - both went to grammar school and Oxbridge. And both are quietly committed to the greater independence of the Bank.

After less than three years as director-general, Mr Davies is expected to be confirmed today as Rupert Pennant-Rea's replacement as deputy governor of the Bank. Mr Pennant-Rea, married for nine years to the former Helen Jay, resigned last month after revelations about his three-year affair with Mary Ellen Synon, a US journalist.

Mr Davies' appointment, which is formally made by the Queen, will continue the tradition of having an outsider and a careerist running the Bank in tandem. The Governor has worked for the Bank since he left Cambridge in 1962 while Mr Pennant-Rea was previously editor of the Economist.

However, unlike his predecessor, Mr Davies combines the virtue of being an outsider with an intimate knowledge of Whitehall.

So close has he been to the levers of power that he was known for a time as an ex-officio member of the Cabinet.

Mr Davies, 44, spent his first 10 years after Oxford in the civil service, firstly with the Foreign Office and then the Treasury, where he struck up an enduring friendship with John Major.

He then spent five years with McKinsey & Co, the US management consultants, his only direct experience so far of working for a private-sector business. But even there he kept his Whitehall contacts in good order: he was a special adviser to Nigel Lawson, the chancellor of the exchequer.

He is unconventional. Sir Nicholas Henderson, the former ambassador to Paris, who employed Mr Davies in his Foreign Office days, recalled: "From the beginning he stood out as exceptionally independent-minded and a man who didn't like the confines of official life."

A one-time Labour Party supporter, Mr Davies often prefers a bike to his official car and has a journalistic streak that he has vented with articles in the Economist, Spectator and Evening Standard. His wife, Prudence Keely, is a broadcast journalist.

Since 1987, Mr Davies' career has closely tracked that of another McKinsey alumnus, Sir John Banham. They met on a flight from New Zealand to London when Sir John was moving from controller of the Audit Commission to be director-general of the CBI.

"Who's getting your old job?" Mr Davies asked. "You are," Sir John replied. He was right - twice. After succeeeding Sir John at the Audit Commission, five years later he filled his shoes at the CBI.

Perhaps one of Mr Davies' motives for moving on from the CBI so quickly is that he has constantly been irked by the jibe that he is a Banham clone.

But when someone as adept at job-hopping moves from the CBI to the Bank of England, it may say as much about the relative standing of those two institutions as it does about the high-flying Mr Davies.

While the CBI does a valuable job of representing its members' interests, like its counterpart the Trades Union Congress, it has never wielded the power it did in the corporatist era of Harold Wilson and Edward Heath. But the monthly meetings between Mr George and Kenneth Clarke, the Chancellor, have put the spotlight on the Bank.

Indeed, Mr George may find he has his work cut out to get a mention in the papers in future. The headline-grabbing Mr Davies is unlikely to be content with Mr Pennant-Rea's responsibilities for the Bank's administration, discipline and personnel. On the other hand, all concerned will be hoping that, unlike his predecessor, Mr Davies grabs the right sort of headlines.

The words of Howard Davies

On monetary policy

"It is an unusual move. We would not like at this stage to see rates rise much further.'' On last September's interest-rate rise.

"Conditions did not require a further rise.'' On February's interest rate rise.

On social policy

"It is a sign of a malfunctioning economy.'' On the widening gap between rich and poor. (11.12.94).

On Europe

"Britain would be obliged to dance to the European Union tune, while not being included in the orchestra.'' On the risk of withdrawing from Europe. (10.2.95).

"By insisting that job creation is its central objective, it recognises the concerns expressed by Europe's employers about current high levels of unemployment.'' On EU social policy. (13.4.95).

On Britain's bosses

"We have been operating with a large, amateur sector in the upper reaches of our companies, and it shows.'' (1.10.94)

"The CBI believes that directors' pay is primarily a matter for shareholders. But, of course, changes in corporate governance procedures can sometimes require amendments to the Companies Act.'' On legislation to curb ``fat cat'' pay deals. (1.3.95).