The MT diary: Howard Davies

Turnbull's chip off an old block; Gordon's hatchet man; what is worrying Mervyn King?

Last Updated: 31 Aug 2010

It was the end of an era. Tony Blair, John Major, Margaret Thatcher, Geoffrey Howe, Nigel Lawson, Norman Lamont and Ken Clarke were all on hand to mark it. The baton was passed, the reins handed over, the sacred flame transferred from mandarin to mandarin. The occasion? Sir Andrew (now Lord) Turnbull's retirement from the Cabinet Secretary's job in favour of Sir Gus O'Donnell. In a move heavy with symbolism, yet whose meaning remained obscure, the celebrations took place in the Treasury, but with the First Lord, rather than the Chancellor, buying the drinks.

The speeches were collectors' items. The First Lord was gracious, his Secretary waspish and witty. Turnbull recalled his first serious Treasury job as editor of the 1970 Public Expenditure White Paper. The printing was done by an in-house outfit, housed in the bowels of the Foreign Office next door.

There was just one bar chart in the whole document, showing how spending was expected to grow, quite modestly, over the next five years. But at the last minute it was found that the figures given to the printers had been too high - by quite a lot. So the young Turnbull was dispatched to sort out the corrections. Not a chance, he was told, the chart was printed from a lead block, moulded days before, and had now been firmly fixed to a wooden frame. It would take far too long to make another.

Frightened to go back across King Charles Street with this news, and showing the resourcefulness that marked him out for greater things in the future, Turnbull prised the lead block from its wooden mount, filed half an inch off each column, and nailed it back down. Problem solved - though spending grew so fast in the early '70s that the chart would have been more accurate if he hadn't bothered.

The Whitehall merry-go-round has been spinning giddily in recent months. There will be a new face at the Treasury (to replace O'Donnell) and at the DTI as well. Brian Bender has taken over from Catherine Bell, who had been locum tenens in Victoria Street since Robin Young's retirement. If anyone can make sense of that odd empire it is Bender, a man with great experience in the corridors.

As for the Treasury, at one point it seemed that John Gieve, now on the nailiest of beds at the Home Office, might go back over to the Dark Side.

But the Chancellor has plumped for Nick Macpherson, who has been handling public spending for the past few years - which might suggest that the Comprehensive Spending Review ordered by Gordon Brown will be the main focus of the Treasury's work this Parliament.

It seems that the Chancellor will soon face an awkward choice - a tax increase or spending cuts. Since tax rises are unlikely to help with a leadership bid, Macpherson may well come to need all Turnbull's facility with a steel file.

At the Turnbull wake, Mervyn King was looking distinctly gloomy. A reflection on the state of the economy? Hardly. Like all top central bankers, Mervyn will go to remarkable lengths to avoid giving any hint of his intentions for the interest rate. Even body language is carefully controlled. Careless frowns cost lives, is his motto. No, the gloom was entirely about Aston Villa's prospects for the new season.

We can count ourselves fortunate that our Governor's greatest concern is Villa's threadbare strikeforce. How unlike life in the Eternal City, where Antonio Fazio, capo dei capi at the Bank of Italy, was phone-tapped by Milanese magistrates investigating the fraught takeover battle for Banca Antonveneta. Fazio has, it would seem, been trying to block a bid from ABN-Amro, in favour of an all-Italian combination with BPI.

In a midnight call to the CEO of BPI, Fazio is heard inviting him in the next day for a chat, reminding him to come in the back way as usual, to avoid detection. He tells him he has approved his bank's bid, ahead of the public announcement. The securities regulator has suspended the bid pending inquiries - rather as if the FSA were investigating the Bank of England for alleged market abuse (now there's a thought).

For the moment, Fazio remains in post. Like the Pope, he is appointed for life. But he is surely now in office but not in power, to coin a phrase.

Still, we English ought to be gentle with the Italians. Their rugby team may soon be the only one we can hope to beat. After the Lions tour, where I witnessed the last two Test defeats, it was back to London just in time for the Lords debacle. At least that was cheap to get to - only a 10-minute bike ride away.

I suppose we have come to expect to be beaten at rugby by the All-Blacks, and at cricket by the Australians. But, normally, we take the edge off the pain with our self-effacing brand of gallows humour, while the other lot cheer when they've won, which is just not on.

Nowadays, though, the Antipodeans even have the best jokes. Auckland was decked out with banners reading 'Auckland welcomes the Lions' followed by another reading 'Here, kitty kitty'. Now my mailbox is clogged with e-mails from 'friends' down under (some of whom I never knew I had). What would Glen McGrath be called if he were English? An all-rounder. What do Geraint Jones and Michael Jackson have in common? They both wear gloves for no apparent reason. Very droll, I'm sure.

Howard Davies is the director of the London School of Economics.

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