The MT diary

Party over for the DTI?; two hats still bad for Beeb; Exchange partners; Laporta's logic.

by Howard Davies, the director of the London School of Economics
Last Updated: 31 Aug 2010

Six months ago, I noted that Robin Young, permanent secretary at the DTI, had decided to take early retirement.

I speculated that such a wily Whitehall warrior might have had advance warning of the impending dissolution of his department - a consummation devoutly to be wished.

Imagine my disappointment, then, to receive an impressive crested stiffy from Patricia Hewitt inviting me to Lancaster House to say farewell to Sir Robin and to welcome his successor.

But all was not as it seemed, for there was no successor in sight. A week before the party, Number 10 announced that no appointment would be made until after the retirement of the cabinet secretary, Andrew Turnbull (and until after the election). What can this mean? Speculation is feverish ... well, as feverish as civil servants get. Generous early retirement packages are on offer and being gratefully accepted. Last one out, please turn off the voicemail.

One imaginative rumour has it that Lord Birt, in Iago mode, has been whispering into the PM's shell-like, and that a big ministerial merry-go-round is on the cards in May, with some restructuring to match. Watch this space.

Although his department might not be lamented, Young will certainly be missed, as his retirement speech reminded us. It was a masterpiece of the genre.

He noted that Hewitt had recently become the longest-serving Labour President of the Board of Trade since Harold Wilson and had even exceeded Michael Heseltine's tenure. But, he noted, she was unlike both, in that she doesn't smoke a pipe, and her hair is shorter and more manageable than Lord Heseltine's.

He then told a hilarious anecdote from his days at the Department of the Environment involving Lord Heseltine, Saddam Hussein and a sea-walrus.

It is a great sadness to me that Heseltine's position as publisher of this great magazine makes it impossible for me to recount the details.

I would not wish this column to be my last.

There will not be much restructuring at the BBC, following the Charter Review Green Paper. The paper persuasively explains why the existing governance of the BBC does not work, with the governors playing the roles of both regulator and manager. (In his memoirs, Greg Dyke says the Beeb's governance structure is more suited to a small charity than a major corporation.) Then the Government proposes a strange solution with a trust and a board, both within the corporation. The trust, to represent the public interest, will be chaired by the existing chairman of governors, Michael Grade.

And the board will be chaired by the director-general, with only a minority of non-executive directors.

It is as if Cadbury, Hampel, Greenbury and Higgs had never put pen to paper. The BBC, a £3 billion media enterprise, will have a combined chairman/CEO, just as this breed has been hunted to extinction in the private sector. That would never do. So will the regulatory trust effectively also be the corporate board? Surely not. That would mean nothing had changed and that the two-hatted problem remained unsolved.

One understands why, ahead of the election, the Government did not want a fight with the BBC. But in that case, why issue the non-paper at all, when the current charter runs until December 2006? These are deep waters, Moriarty.

The waters proved too deep for Werner Seifert, who was obliged by his shareholders to sail his gunboat back down the Thames and across the North Sea. Bizarrely, he sought to blame the London Stock Exchange for not being prepared to recommend a bid that, technically, was never made. They do things differently in Frankfurt, it seems.

Which leaves Jean-Francois Theodore, who, in contrast, paddled quietly up the river with muffled oars - like Wolff at Quebec (an analogy that would make him angry, I'm sure).

In the European Stock Exchange All-Comers Handicap, I always favoured the French filly, which has a more appealing look in her eye and is prepared to sport any colours to suit local taste. This could just be her moment, though even the French have shareholders to think about now.

All sorts of folk pop in and speak at my LSE, which is not under siege. Joan Laporta, the president of Barcelona FC, came along before the Chelsea game - invited by our many Catalan students.

His explanation of the economics of big-club football in Europe is that, roughly, it's all about increasing income and cutting costs - a cunning idea yet to reach our football boardrooms. The cost-cutting part is mainly about player salaries. Barcelona spends only 57% of its income on the wage bill. The income side is now about the Far East and the US. The club believes the European market for its product is close to saturation, and that Man U's EUR250 million is about as far as you can go on this continent.

Clear-thinking Laporta overthrew the old leadership when Barca went three years without a trophy. My own team, Manchester City, with the third-highest gates in England, is now in its 29th season since last winning the League Cup. Sadly, Laporta didn't seem to fancy another challenge in the rainy north.

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