In January 2001, he was appointed vice-chairman of the BBC Board of Governors. He was promoted to chairman just 10 months later for a five-year term after being recommended by Tessa Jowell. Upon becoming Chairman, Davies resigned his membership of the Labour Party. In January 2004, he resigned from the board after the publication of the Hutton Inquiry which heavily criticised the BBC's news reporting, for which Davies had pledged support. In his resignation statement he said he was "happy to accept ... ultimate responsibility" for everything the BBC does. However, he raised questions about the conclusions of Lord Hutton, including the question of the use of unverifiable sources and possible threats to the freedom of the press.