The appointment was viewed yesterday as a huge loss to BP but a coup for the Government, showing its determination to build a partnership with the business community. Sir David's move, at the personal instigation of Tony Blair, Prime Minister, is also another dramatic demonstration of the administration's more Euro-friendly approach.
He has been one of the leading advocates of closer European co-operation from the business community, regularly putting the case for the UK collaborating on moves towards a single currency and a vehement critic of Euro-scepticism.
Confirming his resignation as chairman, BP announced that Peter Sutherland, deputy chairman since 1995, would be taking over as interim chairman. The company said it would consider the issue of Sir David's long-term successor "in due course" though Mr Sutherland is almost certain to be confirmed in the job later this year. Another strong pro-European, Mr Sutherland is chairman of Goldman Sachs International and was a former European Commissioner responsible for competition policy. He also headed the World Trade Organisation.
Sir David will be made a life peer to enable him to take up the ministerial position and has also resigned from his other non-executive directorships, including RTZ and Deutsche Bank. He also ended his membership of the Court of the Bank of England, a role he took on two years ago.
Mr Blair's office described as "inaccurate" reports that Sir David had been sounded out for the post of Minister for Europe, a job later awarded to Doug Henderson.
Based in an office at the Department of Trade and Industry, Sir David will have a roving brief also covering the Treasury and charged with promoting the "competitiveness agenda" in Europe, pushing forward the drive to complete the single market and spreading the gospel of flexible labour markets. He will also chair an inter-departmental committee on European competitiveness.
Downing Street insisted last night that Sir David would have no involvement in the single currency question, though he will also be a member of cabinet committees covering economic and European affairs and the taskforce on the British presidency of the EU.
It also emerged that Sir David will not be paid during his government service. The normal middle-ranking ministerial salary is pounds 31,125. BP said he had severed all connections with the company, though he could receive a pay-off. A spokesman said: "He doesn't automatically get a pay-off. He may get something at the discretion of the company. He's served us well. But it won't be evident till we publish our annual report next year."
Sir David was paid a pounds 241,000 "chairman's fee" with BP last year and this year had not taken part in the group's generous long-term share bonus plan.
He has 247,091 shares in the company worth pounds 1,800,057 which are likely to be held in trust during his time in government. BP's share price fell 4p yesterday to 728.5p.
Starting as a graduate apprentice, Sir David joined BP full-time in 1961, rising to become chief executive of the downstream oil division in 1982. By 1986 he had been appointed chief operating officer and finance director, a role he unusually took on despite the lack of any formal accountancy qualification.
He became chief executive following the surprise departure of Bob Horton in 1992 after a long-running boardroom dispute. Faced with debts of pounds 16.3bn, Sir David masterminded a rescue strategy involving the loss of thousands of jobs. BP has since become one of the world's top performing oil companies with profits last year of pounds 2.6bn.
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