Gus O'Donnell: No wonder they call him God

Britain's most senior civil servant has a reputation for ruffling prime ministerial feathers. But is he becoming too powerful?

(Alan Davidson)

On one of his trips abroad with the former prime minister John Major, Gus O'Donnell – Sir Gus, as he is now – intrigued the attendant press corps by claiming to have a system for winning at roulette, which only required a casino foolish enough to have a roulette wheel with no zero for it to be infallible.

It was simple, but required a big pile of chips and a steady nerve. The idea was to make only those bets that had a 50-50 chance of success, such as putting everything on red. If you won, you would keep your winnings and repeat the bet. If you lost, you would double your stake, and keep doubling until you won. If you started by betting a pound, and lost 10 times in a row, your 10th bet would have to be £1,024 – but win that, and you would recover all that you had lost.

Patience, a steady nerve, an aversion to wild risks and a willingness to forego the excitement of the unpredictable are qualities which saw this quietly spoken man rise to the very top of his profession. Indeed the Cabinet Secretary gives the impression of being so quietly spoken and deferential that you would expect to hear no more out of him than a muted "Yes, Prime Minister", but there is a steeliness behind that exterior, and a determination to uphold the reputation of the civil service, even if it means clashing with the most senior politician in the land.

This month, PR Week magazine learnt of a remarkable letter from Sir Gus to David Cameron, protesting that a Tory spin doctor working for the Communities Secretary Eric Pickles had launched a personal attack on a public servant, Jenny Watson, who now heads the Electoral Commission. That attack, Sir Gus wrote, was "unacceptable" and "will not be tolerated". When David Cameron made a speech in Cardiff suggesting some civil servants were "enemies of enterprise", the Financial Times reported that at the next meeting of senior civil servants, Sir Gus demanded an explanation from the senior civil servant in No 10, Jeremy Heywood.

The Prime Minister is taking a foolish risk if he thinks he can do without the goodwill of the man who, because his initials are GO'D – and for other reasons – is known around Whitehall as GOD. It was O'Donnell whose steady hand made the transition to the first coalition government since 1945 so apparently simple and painless. And as the government presides over a fairly brutal regime of cutbacks, while potentially getting embroiled in a civil war in Libya, it will be O'Donnell who ensures that civil servants stick to the task of carrying out the will of the elected government regardless of their private opinions.

Sir Augustine O'Donnell, 58, has been Cabinet Secretary since September 2005, having joined the Treasury in 1979, after a brief spell as a university lecturer. He is married with a daughter, and has been a footballer of some distinction, having played for Warwick University as a student. He supports Manchester United.

Mr Cameron is not the only Prime Minister to have encountered the steely side of Sir Gus's character. He had similar brushes with Cameron's predecessor, delivering the notoriously bad-tempered Gordon Brown a warning about his behaviour towards his staff. Sarah Brown revealed in her diary that she refused to shake hands with Sir Gus as she and her husband left Downing Street for the last time last year, because of their "difficult" relationship.

In his earlier post as Permanent Secretary of the Treasury, O'Donnell sacked a Treasury official who was too partisan in attacking the Tories. The sacked official was then taken on by Gordon Brown as a political adviser. His name was Damian McBride.

It might seem, then, that Sir Gus likes a good fight with politicians. On the contrary, he is, in a good sense, a modern Vicar of Bray, the good civil servant who adapts without any visible difficulty to changes in the elected government, always putting public service before party politics. He has been close to most of the major events in British political history for the past 20 years, without being tainted by any accusation of political bias. During the first Iraq War in 1991, he did the job that Alastair Campbell did 12 years later, but so discreetly that no one has thought it necessary to do a lengthy analysis of the Government's propaganda campaign during that conflict.

During the first four years of Major's premiership, O'Donnell was in one of the most visible and politically sensitive jobs any civil servant can do, as the prime minister's official spokesman. His predecessor, Bernard Ingham, had become so identified with Margaret Thatcher that he quit the civil service on the day she resigned. Sir Gus's successor, Christopher Meyer, stayed in public service but was suspected by Labour of being, as John Prescott put it, "a red-socked fop". Meyer's successor, Jonathan Haslam, left the job in 1997.

But Sir Gus managed to defend John Major, with whom he had strong rapport, without making enemies among Labour-supporting lobby journalists, of whom Alastair Campbell was one. "Where Ingham would attack a journalist for writing 'bunkum and balderdash', O'Donnell would look puzzled and patiently give the reasons why a different interpretation might be justified," Lance Price, a BBC journalist who went on to work for Tony Blair, said in his book Where Power Lies. Sir Gus lost his cool on one notable occasion, when he called the BBC's John Sergeant a "jerk" in the hearing of other journalists, but one lapse in four years was remarkably restrained given the pressures of the job.

After he left Downing Street, in 1994, to work as an economic adviser in the Washington embassy, Sir Gus shrewdly struck up a rapport with then shadow Chancellor, Gordon Brown, a frequent visitor to the US. If Brown had had his way, Sir Gus might even have had a very rapid promotion when the Permanent Secretary to the Treasury, Terry Burns, agreed to bow out, having failed to get on with Brown. Sir Terry was able to insist that his place should be taken by Andrew Turnbull, who had the requisite seniority, and was the civil-service choice. Sir Gus, eight years younger than Turnbull, was called back to London to be his deputy.

It was common talk in Whitehall that Turnbull was outside the circle of people whose advice Brown trusted, while Sir Gus managed to be on the inside. A telling detail was that in 2001, for the first time ever, a book went on sale which, according to the dust jacket, was written "by the Treasury". Its two editors were a civil servant and a political adviser – Gus O'Donnell and Ed Balls.

One of the many rows between Gordon Brown and Tony Blair flared up in November 2001, when Downing Street tried to poach Sir Gus to take over from Jeremy Heywood as the prime minster's principal private secretary, but Brown refused to let him go.

As head of the Government's economic service, Sir Gus was a central player in the intense debate over whether the UK should sign up to the European single currency. Tony Blair was in favour; Gordon Brown laid down five economic conditions which he insisted must be met before the decision was made, while in the background, Sir Gus was warning against entering the chaotic set of relationships between the 12 states in the eurozone and the European Central Bank.

Early in 2002, the mandarin who had built a career on keeping out of the public eye suddenly propelled himself into the limelight by speaking the blunt truth to a student audience, when he told them that the five conditions would never be met, and that the decision to join the euro was not economic but political. This was gleefully picked up as evidence that Brown's carefully built economic case against the euro was a sham.

That was a rare case of the mandarin emerging from the privacy of Whitehall and letting people know what he really thought. Luckily, his relationship with Brown and his professional record were good enough for the incident to do his career no harm. He took the lesson to heart, and since then the nation's mandarin has never been heard of except as the smartly dressed figure in the background.

A life in brief

Born Augustine Thomas O'Donnell, 1 October 1952, London.

Family Married with one daughter.

Education Attended the Catholic grammar school Salesian College in Battersea. Read economics at University of Warwick; gained an MPhil from Oxford.

Career After lecturing at Glasgow University he joined the Treasury as an economist in 1979. He became Chancellor Nigel Lawson's press secretary in 1989, then John Major's. He was the UK's executive director to the International Monetary Fund and the World Bank. In 2002, he was made Permanent Secretary at the Treasury and Cabinet Secretary in 2005, a position he has held ever since. He was knighted in 2005.

He says "From my office it is – and I've counted it – 50 paces to get to the Prime Minister's office and 50 paces to get to the Deputy Prime Minister's office. That's a very nice balance to have."

They say "You just have to know you have confidence in everyone that is working there [No 10]. I wasn't sure I felt that with him." Sarah Brown