Kingman loss is a huge blow to Brown
THERE is a great anecdote about John Kingman, the civil servant who yesterday shocked the City by announcing his resignation as CEO of UKFI, the holding company for state-owned banks. Back in 1994, the 25-year old Kingman, still fresh out of Westminster School and Oxford University, was working as private secretary to the financial secretary, the Tory Stephen Dorrell.
But when John Major, then prime minister, decided to move him to the Cabinet as national heritage secretary, Dorrell was unconvinced, partly because he wasn’t sure what the point of the department really was. In the end, he agreed but stipulated one – by the fusty, hierarchical standards of the civil service – very unusual condition: Kingman had to come with him.
If he was already seen as a star in those Tory days, Kingman truly thrived under Gordon Brown, where he established himself as one of the brains at the heart of his machine, a highly intelligent, hard-worker with an excellent understanding of politics. He was right at the centre of the system, involved in everything that mattered in the Treasury (he rose to be its number two) and hence in domestic policy. Needless to say, he therefore shares the blame for the many disastrous decisions taken since 1997; it is a shame that he quit UKFI so soon as he would have had the chance to prove himself in a much more neutral, objective way.
All governments need Kingmans; so his departure matters on many levels. Perhaps he had enough of coming under pressure from the Labour left, who were trying to force him to smash the banks rather than nurture them back to health. He was close to Brown; but ever since the European election the prime minister no longer controls the Treasury or Alistair Darling, the chancellor. Perhaps he was sick of being paid a fraction of what the top executives at Lloyds, RBS or Northern Rock will earn this year.
But one thing is clear: the government increasingly feels like a sinking ship, with the best and brightest beginning to jump off. There will be a flood of similar departures from men and women who did well in the Labour years and who are now moving into the private sector before their market value take a hit. In the case of the FSA, which will be axed by the Tories, its chief executive Hector Sants will undoubtedly stand down by next July at the latest. Many other top executives are likely to leave.
The City is gradually waking up to the fact that change is in the air. What remains unclear is whether the Tory appointments and changes, assuming that they win next year’s election, will be mainly managerial – or whether there will be real, far-reaching changes in policy. The answer to that question will determine whether Britain bounces back from this crisis, or whether we return to the days of managing decline.
US HOUSE PRICES
Good news of the day: the Case-Shiller US home price index rose 0.45 per cent in May, its first rise after 34 straight months of decline. This is the first sign the asset price carnage that started in May 2006 is finally coming to an end. No fewer than 14 of the 20 US cities enjoyed a (minuscule) rise in house prices. Admittedly, the figures are trivial and when seasonally adjusted they still fell in May; but we seem to be at a turning point. [email protected]