Lord Turner’s criticisms damage City prospects
The 2009 Party Conference season marks a critical moment in our electoral cycle – the next time the Parties reconvene in 2010 we will have a new government, be it Red, Blue or even Yellow.
It is understandable that in the run-up to a General Election, politicians will seek to reflect the anger of the public at what has happened in the past six months. We all know that we will have to live with the legacy of actions taken to prevent the financial crises from turning into an economic slump for years to come.
Politicians have to communicate with the electorate and keep the messaging fairly short – a snappy “sound-bite,” or even a tweet, will often take the place of an in-depth debate.
Focussing on bonuses remains a popular diversion although, as Lord Turner made clear during his speech at last week’s City Banquet, failures in capital adequacy and liquidity regulation played a more important role in causing the current crises.
Lord Turner’s speech echoed the now infamous Prospect Magazine article which proved somewhat controversial to say the least. With the benefit of hindsight, I’m sure many thoughtful people in the City would agree with many of the points he made about irresponsibility or recklessness or both.
The real controversy centres on Lord Turner’s use of the term “socially useless” which, if applied to certain products or activities must also apply to the work of those dealing in them. His lack of specificity led to the term “socially useless” being used in a broader context than he intended and has left many people feeling offended and unfairly tarnished.
Whilst Lord Turner admits the FSA cannot define precisely how large the financial system should be, he still seems to suggest there are certain activities that need to be banned or reined in. These suggestions that we are over-dependent on the financial services industry or that call into question the social utility of certain sectors are incredibly damaging to our prospects of attracting firms and jobs to the UK – especially if they are from the man leading the agency setting the regulatory framework.
At this time of great political and financial upheaval, I understand public figures are under pressure to respond to public anger at what happened.
However, we must remain alert to the consequences, intended or otherwise, of the actions we take and the words we write. We cannot afford to sacrifice our responsibilities for the sake of an easy headline, or mortgage our long-term future for short-term gain. That applies to politicians and public servants alike.
Stuart Fraser, Chairman of the Policy and Resources Committee at Canada Corporation.