Howard Davies: The MT Diary
By Howard Davies Wednesday, 01 December 2010
Why the Rolls Royce boss still smells of Roses; Browne report good, Green report bad; Asia hots up.
'Can I offer you a bread item at all?' is the sort of question you don't want to wake up to on a long flight home from Singapore. It makes you instantly nostalgic for the clipped abbreviation of Singlish. But the Singapore Airlines Airbus A380s were not flying while their Rolls engines were in for an MOT, so a tired BA jumbo it had to be.
At Rolls-Royce, John Rose's reign has been outstandingly successful. He has not suffered much from his near-pathological aversion to the media, though a succession of hapless corporate relations directors have tried to change his mind. But this time, one wonders. Might a reassuring interview not have been a good idea, to calm nerves and show the company cared? Maybe those unfortunate PR guys weren't all wrong.
One reason for Rose's success, I believe, has been his single-minded focus on managing the business. He has kept out of romantic entanglements with successive govern- ments. Not for him a loopy and wholly failed Branson campaign to rid the London streets of litter, or a Sugary flirtation with late-period Brown. That led to ermine but little else.
An enduring fantasy of British prime ministers is that if they could recruit the right business folk into Whitehall all would be well. Departments would focus relentlessly on the bottom line, waste would be eliminated, and those tiresome civil service memos that clog up the weekend boxes would be reduced to a side of A4.
This dream dates back at least to Edward Heath. Readers of this column now in their Twilight Homes will recall that the Private Eye conceit then, following 'Mrs Wilson's Diary', was that government communications emerged in the form of bulletins from the managing director of Heathco. Consistent with that image, Heath appointed John Davies as Secretary of State for Trade and Industry, who had been director general of the CBI.
It was not a success. Indeed, it is hard to think of similar appointments that have made a positive difference. There are two views of Lord (David) Young's twin spells in high office - his and other people's. And there's an accountability problem about secretaries of state who do not sit in the Commons. There has been more success with businessmen (all male so far) in the trade promotion job, where business skills are more relevant. Mervyn Davies was well respected, though Digby Jones famously hated his time in government.
The more recent fashion, though, has been for the advisory board. Brown had a Business Council for Britain. Indeed he had two, though the one full of foreigners met only once, with about a third of them present, and was then quietly forgotten. Cameron has put this behind him and appointed a business advisory group, clearly quite a different animal. What do these groups actually do? Well, it is probably best not to ask such a blunt question.
Occasionally, though, there's a specific task that one can evaluate. The recent report by John Browne on university funding is an example. The recommendations were not great for the LSE, as it happens, but it undoubtedly cut through many arguments in an illuminating way, was drafted in a clear and comprehensible style, usefully distant from normal White Paperese, and pointed a clear way forward. The coalition government have now amended their policy in quite significant ways. So, for better or worse, Browne will probably have an impact on British universities for some time to come.
At the other extreme comes the Philip Green report on government efficiency. It was spun heavily on the day of publication, with exotic stories of wildly different costs for paperclips and cups of coffee from department to department. With their insatiable appetite for tales of hapless and greedy civil servants, the media swallowed them whole.
As I'd spent five years at the Audit Commission trying to get a handle on the paperclip problem, I tried to read the report. After some hours, when the stories had been written, it finally emerged. And one could quickly see why the Government had been so coy. Green's team had found a few headline-grabbing examples of odd costings and extrapolated cheerfully about the savings that could be made if all purchasing was centralised. But could that make sense? Does Shell have a single point of purchasing for pens and pencils, or coffee?
I hope not. Most very large companies would accept that cost control is best managed by delegated budgets and strong accountability for performance. Why is that so obviously wrong for government? It will be interesting to monitor the outcome of the Green work. So far, the exercise is just an embarrassment. There's lots of cost to be cut in government, but it won't be done by pretending the cause of high spending is inefficient bureaucrats drinking expensive coffee. There are some big policy issues to address.
As it happens, I didn't take a bread item - at all. I was nursing a tummy full of delicious tiffin from Raffles hotel, which fuelled my entire trip home.
Once again, a trip to Asia was a tonic. The financial crisis is a distant memory. No double dips out there. No sovereign debt crises or comprehensive spending reviews. All the talk is of double-digit growth, overheating and real estate bubbles. It is deja vu all over again.
Howard Davies is the director of the London School of Economics










