Profile - The dream regulator

Two years ago, ‘a hugely solid, dull, middle-aged chartered accountant’ joined millions of eager Brits glued to their TV screens for the first-ever National Lottery draw hoping that the right configuration of little coloured balls would make their dreams come true. Not that there was much in it for him. Peter Davis doesn’t play the lottery: he regulates it.

Few people have had to wait so long to get the nod on a new job. It took three years, a civil service selection process and an Act of Parliament before Davis was officially appointed Oflot director general. Since then, some people have pointed to his relationship with G-Tech, part of the successful lottery operating consortium, and questioned whether he was the right man after all. So how did this solid individual get himself into such a pickle?

‘I always knew the job would have a public profile, but I underestimated that aspect,’ he admits. ‘It is difficult for people from the private sector to move into a public appointment with a lot of political sensitivity.

I’m not a political person: it’s not my style. And the truth is that it was probably one of the reasons I was chosen in the first place. Being a regulator should not be political.’

G-Tech accusations

Davis was frankly taken aback by the suggestion that he might have approached his task with anything other than complete professional independence and integrity: ‘disturbing and distressing’ is how he describes the accusations.

But he did accept from G-Tech the offer of its corporate jet to visit various US state lotteries. ‘It also happened that the wife of a New York banker who was a non-executive director of G-Tech was a personal friend of my wife’s. They’d met when they’d given birth to babies in the same hospital in 1975. So when I went to New York, we visited the family. And why not?

‘This all happened six months after I had awarded the licence. There was no question of it influencing my decision, and to say I had prior knowledge of Camelot is not a fair statement at all. I resent the implications that my independence was at risk.’

Choosing the real lottery winner – the operator – was always going to be controversial given the huge sums, political pressures and forceful personalities involved. But Davis insists it was entirely his decision: National Heritage minister Peter Brooke was ‘absolutely impeccable’ in his non-interference. Camelot may have been the clear winner – ‘best prepared, the most professional and most experienced’ – but the selection was difficult. Oflot had asked for huge amounts of paper and got it. Who better to crunch the data than an ex-auditor.

‘I’m sure it was the right decision and it is one that has been endorsed by the National Audit Office. We now have a National Lottery that is the biggest in the world, and the best in the world in the sense that it raises most by way of surplus, with costs that are among the lowest.’

Now that sounds like an accountant. An Oxford law graduate, Davis joined Price Waterhouse in 1964, jumping each promotional hurdle in smart succession.

‘I did think about other professions, but not very seriously. I felt it was a good business training, it was secure, well-paid, and that seemed enough to me. I probably thought I’d be there for the rest of my days.

I was always likely to be a sticker, partly because I knew I could do well. There was always something to shoot for.’

Partner at Price Waterhouse

Partnership came in 1974, and responsibility for training, the largest departmental budget and commissioning a new training centre. PW ‘was, and probably still is, a nice firm’ run on a one-partner-one-vote-one-profit share principle (not so common then). For six years, Davis relished his elevated status. Then he moved back to the discipline of general auditing.

The Camelot decision isn’t the biggest he’s ever taken. Nor was accepting the Oflot job. It was the plunge into the unknown when he quit the womb of PW (coincidentally the lottery’s official auditor and scrutineer) to become a carpet salesman.

‘You think you have achieved a state of grace when you become a partner.

But then you say to yourself “I’ve got another 20-odd years of this”.

I didn’t want to look in my shaving mirror in 1999 and say all I’d done is work for one organisation all my life.’

As deputy chairman of Harris Queensway, it was the carpet premier league.

Phil Harris had been a client since 1974 and Davis had declined the invitation to become his finance director once already. ‘But a couple of years later he came back and said he would like me to join him as deputy chairman.

I was flattered and it was the right time in my life to embark on such a change.’

He was only the third partner since the war to leave PW for another job.

‘I didn’t really like the direction the professional firms were going in. When I started, I was much more a general financial adviser. It wasn’t so systematised, there weren’t so many rule books and accounting standards, and there wasn’t the same atmosphere of having to watch your back all the time. The culture and climate were very different. By 1980, it had begun to change significantly.’

It was a time of massive change at Harris too. The 80-strong chain expanded to 850 during the six years he was there – into furniture and electrical goods among other things. The rate of growth caused some professional friction between Davis, who wanted breathing time to consolidate, and Phil Harris, who was determined to keep growing.

In 1986 things went wrong. The company bought Hamleys and a whole load of shops from Great Universal Stores. Financially, it was in good shape, Davis claims, but it was a step too far for the pile-it-high carpet men.

‘Some of the things we went into, like Hamleys and electrical goods, are to do with highly-branded, highly price-sensitive products requiring different marketing techniques.

‘Phil was a lovely guy and it was a classic arrangement. He was the driving force, a great retailer, and I was the professional balance. I was having to say “stop, slow down” too often. I had to say that I thought we were making some strategic mistakes. It meant I was becoming a professional pain. We agreed, in a perfectly nice way, that it was his business and not mine (he still owned 40% in those days).’ Davis left Harris at the end of 1987, difficult again ‘but the right decision’. In 1988, the company was sold. In 1990, it went under.

Outside interests

Davis had built up a number of interests outside Harris, including his 1982 appointment as non-executive director of Abbey National, which he retained until 1995. By 1988, shortly before the Abbey board had decided to convert the building society to a bank, Davis was appointed deputy chairman.

‘I had to find something after Harris Queensway that was compatible with my commitment to Abbey National.’ He didn’t have to wait long. Just the right opportunity presented itself in the form of Sturge Holdings, a listed company with City interests ranging from management of Lloyd’s syndicates to stockbroking. It was also audited, coincidentally, by PW.

A board bristling with accountants invited Davis to join it as finance director. Very soon, David Coleridge, the chairman, took on the same role at Lloyd’s, which pushed Davis into the Sturge deputy chairman’s seat, ‘effectively running’ the non-technical side of the business.

‘It was a completely different culture. I’d always said that insurance was one of less well managed bits of Britain, and Lloyd’s was one of the less well managed bits of the insurance industry,’ he says. ‘Sturge was a very successful business, doing very well with highly-rated shares.

I was asked to go out and make some acquisitions, but it soon became clear that we had a lot to do internally to get all the commercial and financial disciplines in place. It was a narrower focus than I was used to, which was a good thing in a way. And it was balanced by what I was doing at Abbey National.’

By 1990, problems at Lloyd’s had started to emerge, and while Sturge was on the fringes, its share price and room for manoeuvre were affected.

Davis might have soldiered on longer if a headhunter hadn’t introduced him to the notion of the National Lottery. Initially, he said no. But then …

‘I soon realised it was a fascinating prospect, the opportunity to build something from nothing, a job which nobody had ever done before. So I let my name go forward on condition that I could retain my Abbey National appointment.’

It has been fascinating. Davis feels privileged and proud: ‘I can say that I have contributed to building an institution which has changed the face of Britain. Perhaps that’s overstating it a bit, but lottery money is making a difference to people’s lives in every corner of the country.’ There are no regrets.