Had Richard Dannatt held his post just a few years ago, he would be leaving office in the rank of Field Marshal rather than General, five-star rather than four-star rank. A peculiarity of the baton is that holders are appointed on the active list for life; FM Lord Inge remains a serving soldier at the age of 74. This has caused us some problems in the past - notably with Herbert Kitchener.
After being created FM in 1910, Kitchener lobbied ministers blatantly for the Viceregency of India; the Liberal government of the day were suspicious of a man known to be a Tory and an Imperialist, and Asquith eventually refused Kitchener the appointment. In 1914, however, Asquith had no such qualms in appointing Kitchener Secretary of State for War - and so, with a seat in the Lords, he joined government - as a serving soldier.
When 'Wully' Robertson, the first British soldier to rise from trooper to Field Marshal, took office as CIGS at the end of 1915 there was bound to be a clash with Kitchener. The War Secretary would visit France in full military rig, and found it difficult to distinguish his political role from his service rank. Robertson demanded - and secured - the right to speak directly to cabinet on strategy, leaving Kitchener with responsibility for manpower and recruitment. It was a strained artifice, and Kitchener's death in 1916 was perhaps fortuitous in solving the problem.
I'm not sure how long retiring generals remain on the reserve these days, but this is not an issue that Gen. Dannatt is likely to face. We are also seeing a groundswell of reaction against Secretaries of State sitting in the Lords - not least of which is the power or otherwise of Commons Select Committees to summon them to account. I think the most he can hope for is a Defence Minister post - perhaps responsible for procurement. Which would be a neat trick on Cameron's part on many levels. And Lords Inge and Guthrie would no doubt keep an eye on him there.