A match for her master

WHEN Gordon Brown, the Chancellor of the Exchequer, defended his economic policy to the Treasury Select Committee in December, Ruth Kelly, the 30-year-old Labour MP, came armed with her own calculations.

She said it was "extremely unlikely" borrowing would be as high as the Chancellor was forecasting and, after some lively debate, Brown conceded. A few weeks later the Government reported its biggest monthly surplus ever, and Brown looks set to revise his pounds 9.5bn deficit forecast.

Kelly, an ex-journalist and former economist at the Bank of England, is fast emerging as a star among the young Labour MPs swept into the House of Commons in May.

Snapped up by the Treasury Committee within days of the election, she's already being tipped for a minister's post that could propel her to Chief Secretary to the Treasury in years to come. She may even, perhaps, become Britain's first female Chancellor of the Exchequer.

"Ruth is an ambitious young woman, and so she should be," says Ruth Lea, head of policy at the Institute of Directors. "She's a high flyer."

Kelly's home-town newspaper, the Bolton Evening News, gloated after the interchange with Brown, commenting that: "Managing to tie Mr Brown up in knots when he appeared before the Treasury Committee will have encouraged him to find her a place on his team as soon as possible."

"A member of the Treasury Committee acts as an individual," Kelly says. "It's not about toeing a political line."

Four weeks before giving birth to her first child, she wrenched Bolton West from 13 years of Conservative rule by a majority of more than 7,000. Her platform: jobs, jobs, and more jobs; her argument: that the 5 per cent unemployment rate should be cut to zero.

At Kelly's red-brick Victorian Bolton home, she settles into a plump, white sofa to tell the story of how she came to view economics as a tool for social change.

Raised a Roman Catholic in Northern Ireland, Kelly and her family moved south to the Republic for a time until violence there forced them to England - just in time for the 15-year-old to watch the recession of the early 1980s more than double unemployment.

"There were real social issues around me: unemployment, homelessness, poverty," Kelly says, her slow, deliberate voice punctuated by gurgles from nine-month-old son Eamonn down the hall. "I had a very strong feeling that it was unjust and that if I could do anything to help alleviate those problems, I should be doing it."

Kelly's mathematical bent drew her to economics. She graduated with an economics and politics degree from Oxford, then earned a master's part- time at the London School of Economics while working as a researcher for the Guardian.

Richard Leyard, her head tutor at the LSE, reckons she's an ideal politician. Her economic know-how plus "a very strong character, clear values and great inner strength" could take her to the top in her political career, he says.

What does he make of the suggestion that she could eventually become Britain's first female Chancellor? "I could imagine it," Leyard replies.

Kelly supports full employment, believing that if the Government trains unemployed people with the skills industry needs, jobs will be created to utilise those workers, particularly as technology becomes important in all walks of life.

She also believes in setting monetary policy to keep inflation at a predetermined speed, and reckons the Bank of England has got its current benchmark lending rate "about right" at 7.25 per cent. She hasn't always agreed with the bank's policies, though.

In a 1994 article, she accused the bank of "misdiagnosing the disease and continuing to inject inflationary fears into the system". Kelly claimed growth and jobs were suffering because of attempts to slow inflation to what she considered an arbitrary pace.

Two and a half years working for the bank changed her mind on inflation targeting. In late 1994, the Bank of England decided it needed to recruit a writer to liven up its inflation bulletin, a quarterly publication that serves as the blueprint for its monetary policy.

Kelly, her eye on a career in Parliament, got the call - and accepted, figuring it would bolster her experience and further those political ambitions. "I wanted experience in policy-making on the inside. I knew I wanted to make policy."

Some things haven't changed, though. Her vision of economics as a lever for social change is one she still preaches to her constituents, convincing them economics isn't a discussion confined to the City, but one that should be heard 200 miles northwest of the capital as well.

"With Ruth, people realise economics and social issues are very much linked," says Eve Walker, a Bolton resident. "Economics is the most important thing and everything else follows from there."

Keeping her constituents convinced takes hard work. This picture-book residential region of green lawns and old, sprawling brick schools has strong Conservative ties. To keep it on her side, Kelly leaves the House of Commons at the end of every week, spending Fridays and alternating weekends in Bolton.

The rest of the time she lives in London with husband, Derek Gadd, a history teacher, and Eamonn. She starts her day around 6 am to allow some time with the baby, and works at home until Westminster requires her in person. Her days often don't end until long after midnight.

She aligns herself with the Christian Socialist Movement, along with the Prime Minister, Tony Blair, and some 5,000 others. Some Conservative legislators say the group's employment policies will push up wages and are inconsistent with keeping inflation low.

"The Bank of England has been given the task of keeping inflation at a certain level," says Sir Teddy Taylor, the Conservative MP who sits with Kelly on the Treasury Select Committee. "They haven't got the flexibility to do what she might want them to do."

Whatever the different views of the Committee members, Kelly's time at the Bank of England makes her invaluable in furthering the Committee's aim of holding the Bank of England accountable, since Labour gave control of official interest rates to the Bank of England.

"She only recently left the Bank of England, and from that perspective she is able to take on a very high level of questioning when interviewing members of the Monetary Policy Committee," says Tony Colman, a fellow Labour member of the Committee and former director at Burton Group.

Each month, Kelly gets to grill Bank Governor Eddie George - her former boss. "The tables really have turned," says Kelly. "I think it's probably more difficult for him than for me. It's not easy, me being in such a position. I have quite a good insight into his policy views."

If Kelly's star does rise, securing her a junior minister's job next time Blair reshuffles his team, Kelly will be sorely missed on the Committee. The panel only has two economic advisers to assist its members, some of whom are economic novices.

"Ruth will be one of the next to get appointed to a higher post," Colman says. "But it would be a great loss to the Treasury Select Committee should she leave."

Questioned about her political potential, Kelly's usually rosy cheeks turn crimson. "Not yet," she concedes, then shies. "I really don't think ahead. I've got a family to raise."

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