New BBC head leaves Labour over bias row

Multimillionaire economist confirmed as chairman and resigns membership amid Tory claims of cronyism

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A career spanning banking to broadcasting

The multimillionaire economist Gavyn Davies was confirmed yesterday as the new chairman of the BBC, and immediately agreed to resign his membership of the Labour Party amid Tory claims of cronyism.

Mr Davies, a close friend of the Prime Minister and the Chancellor, said the "appropriate" action was to leave the party he has supported for decades, although he insisted the independence of the BBC was not at risk.

"I am absolutely confident the public will feel comfortable that the impartiality of the BBC is uppermost in my mind," Mr Davies said.

Speaking shortly after his much-expected appointment was announced formally, Mr Davies, the 50-year-old chief international economist for the investment bank Goldman Sachs, called it "the greatest thrill and privilege of my professional life".

He promised the corporation would become more accountable in the years to come. But in a shot across the bows of the BBC's critics, he also defended the much-derided system of governors as forming a "cornerstone" of its governance.

Commercial rivals have argued for the BBC to be brought under the regulation of the proposed Ofcom watchdog, but Mr Davies said: "The public is better served by our arrangements than in an unproven situation."

The new chairman said he had emerged from an open and independent appointments process. He beat rivals including the broadcaster David Dimbleby, Michael Grade, who runs Pinewood Studios, and the Labour peer Baroness Jay of Paddington for the four days a week post, which will pay him £77,590 a year, pocket money to a man worth more than £100m.

"It's the first time a decision has been taken in this manner in the UK but mine was the only name put forward to the Prime Minister," he said.

In addition to resigning from the Labour Party, Mr Davies will also step down from Goldman Sachs but may take on a part-time consultancy with the company.

With the Tories clamouring to turn the appointment into a political embarrassment, Downing Street launched an immediate rebuttal of charges of cronyism. Tony Blair's official spokesman insisted that the Government had played no part in the selection process.

"The independent committee considered all aspects of this appointment and believed that he was the best candidate. It would be strange for the Government to overrule an independent committee," the spokesman said.

For the appointment to have been blocked would have meant anyone with "any perceived political affiliation" not being eligible for such a post.

But the Conservatives denounced the choice as an "insult to people's intelligence". Tim Yeo, the shadow Culture Secretary, said: "The fact that both the director general [Greg Dyke] and chairman of the BBC are overt supporters of the same political party is a break with all previous precedents and will make life difficult for the BBC itself.

"The only way for the BBC to salvage their reputation for political impartiality would be for them to appoint an identifiable Conservative vice-chairman."

Mark Oaten, the Liberal Democrat chairman, said his party would be monitoring Mr Davies' stewardship of the BBC very closely.

The post of chairman of the BBC governors is one of the most important in British broadcasting because it combines formulating the corporation's strategy with safeguarding the public interest.

Mr Davies, who said yesterday he has not given more than £1,200 a year to Labour in recent years, has been vice-chair since Christmas. The same independent procedures will now be used to find his replacement. Although Mr Davies has no say in the appointment, he indicated that he agreed with the tradition of having a political mix in the senior jobs of the corporation.

The board of governors jointly welcomed Mr Davies' appointment. "His insight into the challenges faced by the organisation is unparalleled," the governors said.