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New entry to Bank of England governor stakes

Former UK Treasury mandarins jostle for top job


My apologies to subscribers who – following my tip – have placed bets on Gus O’Donnell to be next Bank of England Governor (RP’s Diary 14/09/12). They might lose their money.

How did I come to overlook the irresistible charms of (Lord) Terry Burns? Terry is a pukka economist who followed a respectable academic record with a meteoric rise up the ranks of the UK Treasury becoming chief economic advisor and top dog as permanent secretary. During his long stint at the top from 1980 to 1998 he was one of the architects of the Thatcher-Lawson revolution that has done so much to transform the British economy for the better in the past 30 years.

But above all Burns has real banking experience as chairman of Santander UK, the third largest UK bank in terms of deposits (formed when the Spanish bank, Santander, acquiied the business of Abbey National, the former UK building society, in 2004). This marks him out from all other candidates, especially from rival Gus, who has again blotted his copybook by callling for even higher pay for senor civil servants. Just when the public is furious that mistakes in the Ministry of Transport mean they will foot a large bill for renegotiating certain rail franchises, O’Donnell has claimed in a radio inteview that it showed that certain civil servants should be paid more – sometimes “considerably more”. This was as silly as his call for the pay of senior Treasury officials to be topped up by the City of London; talk of regulatory capture! . In May 2010 the Prime Minister  David Cameron said the Labour Government (advised by O’Donnell) gave bonuses to “something like 75% of senior civil servants”, adding that this was a “crazy thing to do”. And don’t forget it was on O’Donnell’s advice that Gordon Brown sold half of Britain ‘s gold reserves – certainly among the worst investment decisions ever taken by a UK government.

Burns has remained scrupulously non-political. Usefully, he supports the broad thrust of the reforms proposed by the Vickers Commission to ring-fence retail banking.

He has ample business experience outside banking as well. He is a director of Pearson Group, the major educational publisher which also owns the Financial Times. He has numerous other appointments, including chair of Channel Four TV company, president of The National Institute of Economic and Social Research, president of the Society of Business Economists, chairman of the Governing Body of the Royal Academy of Music. He has been asked to run several official committees of inquiry.

All Bank of England governors need to have an active interest in at least one sport – Terry qualifies as a lifelong football fan.

In his Memoirs published in 1999 John Major, former prime minister, called Burns “tousle-haired, youthful, genial and without pomposity or malice”.

Now 68, some may consider him a bit long in the tooth for such a gruelling role, but in this ongoing crisis, age should not be a factor. He can still summon up a boyish grin.

His ambition matches his abilities. During dinner one evening a few years ago I asked him why he had taken on so many appointments. He replied

“Well, look around; there are not many people who can do these jobs, are there?”

A touch of arrogance there. In my view, there are a few others, and I have written elsewhere about the merits of economist John Kay, but so far as I know Kay has not put his name forward…

Right now, in the betting stakes Burns lags far behind the favourite, Bank insider Paul Tucker, but….

Is Burns the candidate most likely to help get us out of the money trap?

That’s the only question that really matters. It’s the key question that George Osborne should think about.